BC Hydro agrees to settlement in California

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CALIFORNIA (NEWS1130) – California has won a long-running battle with BC Hydro over high prices charged for electricity during an energy crisis, and it will cost the government utility three-quarters of a billion dollars.

BC Hydro’s Powerex energy-trading unit has been pursued for more than a decade by California, which also went after dozens of other electricity suppliers.

Hydro has agreed to pay $750 million US to settle the case: a $477 million credit for monies owed by California buyers to Powerex, plus $273 US million in cash. Powerex says it will result in a loss of $101 million Canadian this year.

California claims Powerex engaged in market manipulation during power crises in 2000 and 2001. But under the settlement, Hydro and Powerex admit no wrong-doing.

Hydro and the provincial government say the settlement protects BC from a potential $3.2-billion legal liability, $50-million in future legal costs, and $125 million per year in interest.

The deal comes days before a US regulatory hearing into the case.

NDP Energy Critic John Horgan expects BC Hydro customers will take a hit because of this.

“Where does Hydro get its money from? The money tree in the backyard? They get it from rate-payers. If they have to now find $250 million-plus to be the cherry on top of this settlement, the only place that can come from is rate-payers,” he maintains.

According to Horgan, the BC government is spending hundreds of millions of dollars to say it did nothing wrong. He believes the province should have fought the case and he can’t understand why it didn’t.

“[They’re] claiming victory because the resolution of this is that BC Hydro and Powerex did nothing wrong; if that’s so, why are we giving $250 million in addition to those receivables back to the utilities?”

BC Energy Minister Bill Bennett insists this settlement is the best solution for taxpayers.

“I know that there will be some folks over the next few days who will say ‘Well, if they didn’t do anything wrong, they should just fight it out in the US court system.’ That is a huge risk to the taxpayers,” he tells us.

“I don’t think it’s one of those kinds of decisions that you’re happy about,” admits Bennett. “I think we probably all made decision in our lives that we weren’t necessarily happy about, but we knew they were the right decision and we were making the decision for the right reasons.”

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