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$5.8 billion doesn't go as far as it once did at B.C. Hydro

Dermod Travis
By Dermod Travis
November 4th, 2017

It started out innocently enough.

One task: how successful were the cuts at B.C. Hydro following former premier Christy Clark’s “hard look” at the Crown corporation in 2011?

Annual reports from some Crown corporations have gone the way of the dodo bird – the numbers now buried in their three-year service plans – so first step: find the utility’s 2016/17 Financial Information Act Return.

And there is was – scrolling through the 188 pages – $236,698 to Retirement Concepts Seniors Services. Everything kind of went south from there.

It was a bit of a head-scratcher.

Must have been for someone else at B.C. Hydro, because there’s a $39,865 payment to Headscratchers LLP.

So checking Clark’s 2011 hyperbole against actual results went out the window, in favour of another question: exactly how did B.C. Hydro spend $5.8 billion on goods and services last year?

First the tax man cometh, better known as how to balance a provincial budget creatively.

Say goodbye to $566 million to the B.C. government, local governments ($165 million), payments to First Nations ($24.9 million) and a $39.4 million payment into the corporation’s pension plans.

The two pension plans are one of the lesser known ticking time bombs at the utility.

Another actuarial review will take place in 2018, but right now they face a shortfall of $1.6 billion. It’s right there at the bottom of page 37 of the return.

The utility’s wholly owned energy trading arm, Powerex, accounted for $803 million.

After that it didn’t take much for the utility to blow through another $3.3 billion. In fact, it only took 89 suppliers, among them many of the former government’s best pals.

The utility’s financial return is also interesting for who’s in it and who isn’t.

Innergex Renewable Energy Inc. owns, or has an interest in, eight independent power facilities in B.C., but the company isn’t listed among the suppliers. The facilities are, though.

Add them all up, $75 million, after adjusting for the ownership stake Innergex holds in each.

Duz Cho Construction ($20.8 million) did well, possibly all of it through a direct award contract for work on Site C.

The construction firm has former transportation minister Blair Lekstrom in its corner, as a lobbyist.

His 2013 mandate reads in part: “(to assist) Duz Cho Construction…negotiate opportunities with B.C. Hydro.”

The developers behind Vancouver’s Trump Tower – West Georgia Development Ltd. (part of the Malaysian-based TA Global Bhd) – saw $40,061.

The law firm that had former New York city mayor Rudolph Giuliani’s name on the door until last year is down for $4.4 million.

Canada’s finance minister didn’t do too badly. His family firm – Morneau Shepell Ltd. – billed $999,758.

If tolls are any indication the Port Mann bridge ($103,129) proved more popular than the Golden Ears ($42,055), which proved more popular than WestJet ($27,485).

Even Air Canada came in at only $169,645, which is odd since the utility’s employees claimed $36.3 million in expenses last year, an average of roughly $6,000 per employee.

At least 10 expensed more than $50,000.

One came in tops at $109,574, and it wasn’t former president and CEO Jessica McDonald ($43,379).

What’s missing from the return?

In what must be a first for a B.C. government operation, companies that have shred in their name.

As for the 2011 cost-cutting, another 40 severance agreements were signed with non-unionized staff – that’s on top of the 175 signed since 2013/14 – some representing up to 18 months in pay.

There’s another ticking time bomb in the return buried on page 55 in the second to last note to the financial statements: “A contractor has filed a Notice to Arbitrate a claim against B.C. Hydro. B.C. Hydro has filed a counterclaim.”

Likely over those “faulty steel towers from India that twisted, bent and collapsed,” which Flatiron-Graham brought in for the Lower Mainland Transmission line.

As for Retirement Concepts, undoubtedly tied to one of the boutique breaks that select companies saw through B.C. Hydro’s Power Smart program. Last year a few of B.C.’s wealthiest property developers took home $8 million from the utility.’

Oh, I don’t recommend spending any of Clark’s hyperbole when it comes to that 2011 cost-cutting exercise. The results don’t match the glowing spin.

Dermod Travis is the executive director of IntegrityBC.     

Categories: BusinessOp/Ed

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