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Enron Mail |
Executive Summary ?=09The likely outcome of the 16 May elections is a victory by the BC Liber= al Party (currently holding polls at 70%), a pro-business, right-of-center = party led by Gordon Campbell. =20 ?=09Major changes in British Columbia energy policy are likely under a Libe= ral government. ?=09A low snow pack, a return to regulation by the BC Utilities Commission = and public concern about outstanding debts owed by US power consumers could= force BC Hydro to stop out-of-province power sales once existing contracts= expire ?=09BC Hydro's additional generation at Williston is likely undeliverable Liberal Party Platform ?=09Income tax cut that would make BC's income tax the lowest in Canada ?=09Independent audit of the province's books amid allegations of NDP misma= nagement and incompetence ?=09Review of all Crown corporations (including BC Hydro) to enhance effici= ency and management quality ?=09Campbell has also said that he wants to scrap the Corporate Capital Tax= , the Machinery Equipment Tax and the Corporate Income Tax. Energy Agenda According to sources, under the Liberal party's rule, significant changes i= n the BC government's energy policy could include a move toward the privati= zation of some BC Hydro assets, perhaps including its transmission assets, = as well as increased government support for independent power producers and= coal-fired production. At the same time, a rate review and attempts to es= tablish a broad electricity strategy for the province could lead to a lack = of clarity about the province's overall energy strategy over the next few y= ears. Campbell reportedly is a proponent of deregulation and of expanding = coal-fired production. Campbell calls thermal coal, "an asset that we want= to be able to move forward with and to encourage once again in BC." A hig= h-ranking NDP source believes that Campbell will take the province back alo= ng the path of natural resources extraction rather than promoting new techn= ology. The source expects this to lead to strong protests from environment= alists. "These are confrontational moves, and people will be on the street= s."=20 Campbell's most likely choice for energy minister is Richard Neufeldt, thou= gh we caution that this decision depends on the make-up of the legislature = after the election. Neufeldt is responsible for the Liberal Party's energy= , mining and northern development portfolio. Sources speculate that if rig= ht-wing Liberals are dissatisfied with the party's performance after the Ma= y election, Neufeldt could again defect to the Opposition. However, this g= ives Campbell even greater incentive to name Neufeldt energy minister, a hi= gh-profile position. Should the Liberals win the election, Gordon Campbell has indicated that he= would return BC Hydro to regulation by the BC Utilities Commission. The B= C government has derived $5.5 billion in revenue from BC Hydro since 1991 (= roughly 85 percent of its profit). Critics say this has undermined the uti= lity's ability to pay down approximately $7.5 billion in debt and invest in= the future. This also has left Hydro without a rate stabilization fund, so= mething that sources feel may be needed this year. Campbell reportedly int= ends to address these issues, and one can expect this to lead to calls for = change. =20 Electricity Export Policy Currently the BC Utilities Commission is demanding more information about B= C Hydro's out-of-province sales. The Commission has warned that, given the= low snow pack, the utility could be a net importer of power this year. Sup= porting this view, the Northwest Power Planning Council, representing BC Hy= dro's key trading partners in the US, has said that it would not be able to= rely upon British Columbia or Alberta during peak consumption periods over= the next few years, and that its customers face a 25 percent chance of not= making it through the winter without power losses. The combination of a l= ow snow pack, a return to regulation by the BC Utilities Commission and pub= lic concern about outstanding debts owed to BC Hydro by US consumers may fo= rce BC Hydro to stop out-of-province power sales once existing contracts ex= pire. BC Hydro Privatization A key campaign energy issue for the Liberal party is the privatization of B= C Hydro. Campbell has urged greater electricity competition, saying, "We n= eed to ensure the transmission infrastructure is available to all, producer= s and consumers, on an equal and non-discriminatory basis." He stated that = independent power producers have been discouraged at every turn. "I want to= change that big time," he told the Canadian Institute of Energy. Campbell= also urged more natural gas development, including pipelines and co-genera= tion plants. Campbell backtracked on this stance last week after being challenged by NDP= leader Ujjal Dosanjh. Campbell stated on 25 April, "We have no intention = of selling BC Hydro; we have no intentions of selling their transmission li= nes, no intention of selling their dams, we have no intention of selling th= eir reservoirs." Liberal Party spokesman Mike Morton also reiterated on 29= April that BC Hydro would not be for sale. A high-level NDP source commen= ted that Campbell has been extremely careful in his choice of words regardi= ng BC Hydro, essentially saying that he would not privatize the dams, trans= mission lines or generating stations, but that he is in favor of opening th= e sector up to competition. However, local sources believe that some parts of BC Hydro might be sold as= part of an overall review of BC Crown Corporations to enhance efficiency. = Likely sale prospects include BC Hydro's distribution channels and its ene= rgy trading subsidiary, Powerex. In addition, Gary Farrell-Collins, the Li= beral finance spokesperson and possible second choice for energy minister (= after Neufeldt), has stated that public ownership of BC Hydro's non-core bu= sinesses, such as Westech, its systems division, and customer billing, coul= d come under review. BC Hydro Williston Generation Current reservoirs levels at BC Hydro's Williston hydro-generation facility= are at 2,150ft, which allows BC Hydro to drop levels another 35 ft (170 Gw= hs/ft) under their current permit. The one drawback to this plan's additio= nal generation involves the Mackenzie pulp mill that would have to cease op= eration if water levels were to fall below 2,140ft. Sources close to the M= inister of Mines & Energy - elect, Richard Neufeldt, indicate that levels a= t Williston probably will not be drawn down below Mackenzie's operational l= imits due to concern over political backlash.=20
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