Editorial: Pandemics and power megaprojects

BC Hydro’s prescription for battling the ill effects it’s suffering from the COVID-19 economy is missing a key consideration.

The province’s power utility released a report in early May documenting what has been an unprecedented drop in power demand caused by the pandemic and North America’s subsequent economic shutdown.

It noted, for example, that electricity demand in the province had dropped 10% and could fall 12% or more by April 2021 because of uncertainty over B.C.’s economic recovery.

This is bad for the power-generation business. It is also not good for B.C. and the revenue BC Hydro generates for the province.

Further complicating BC Hydro operations are increased spring snowmelt inflows that threaten to fill reservoirs at a time when there is a limited market for surplus power and its agreements with independent power producers (IPPs) that are adding to a power grid servicing a shrinking market.

BC Hydro has therefore taken several steps to reduce the power it generates by shutting down smaller power plants, reducing purchases from IPPs and spilling reservoir waters to reduce threats of flooding and damage to its infrastructure.

These are all prudent measures to address system power surpluses.

But there is more to  BC Hydro’s power surplus than the pandemic. Electricity demand in B.C. has been relatively flat for the past decade.

Considering the shutdown of lumber mills and other major industrial customers in B.C., the prospects of a dramatic increase in that demand are not good, and that is not good for a business now shouldering such multibillion-dollar capital project outlays as the $11 billion Site C dam.

If BC Hydro wanted to really mitigate the damage to its bottom line from flatlining domestic demand and low-margin export sales, it would suspend major power project construction now.

The new COVID-19 economy is looking much different from the old pre-pandemic economy, and BC Hydro’s old megaproject mentality will likely have no place in it.