It’s a basic strategy for the board game Monopoly. If you land on one of the utilities, buy it and reap the steady revenues.
Real-world investors follow the same rule. BC Hydro’s debt may be enormous, but it’s one of the safest investments around.
The crown jewel of B.C. utilities is such a money machine that it can allow extravagant practices and still deliver some of the cheapest, cleanest, most stable energy in North America.
Some of those extravagances were described in a new report on BC Hydro by three senior bureaucrats. Headline items included a 41-per-cent increase in staff in just four years, lavish management bonuses and union overtime pay, and a communications department almost as big as the B.C. government’s own.
You won’t find this kind of luxury in private companies that have to compete in today’s ruthless marketplace. And you won’t learn much about it from listening to B.C.’s political debate, dominated as usual by the NDP’s union-approved talking points. According to those, the only serious problem here is the intrusion of private power producers onto the turf of this government monopoly cash cow.
BC Hydro is only now getting a taste of the business discipline that has been applied to other areas of the provincial government. A case in point is the utility’s 650 staff engineers, part of what the reviewers termed a “gold standard” corporate culture.
Why does BC Hydro have six times as many engineers as the Transportation Ministry, which manages about the same amount of complex construction?
According to Energy Minister Rich Coleman, the Transportation Ministry used to work the same way. Staff engineers would design a new bridge down to the specifications of the last bolt that holds the handrail. Then this design would be put out to tender, with the winning bidder micromanaged at every step.
The remaining Transportation Ministry engineers now speak wistfully of this bygone golden age. Today they are expected to set cost and performance specifications and let the private sector design and build the bridge to meet those targets. Innovations are thus encouraged, not prevented, and their former colleagues do just fine in the private sector.
A brisk pruning — the report recommends reducing total staff from 6,000 to 4,800 — gives Premier Christy Clark what she asked for. An expected 32-per-cent rate increase over three years will be limited to only 16 per cent. And it leaves BC Hydro’s huge capital works program more or less alone: rebuilding old dams, preparing for Site C and expanding both the grid and generation capacity.
The review team also leaves the smart meter program alone, finding more evidence it will pay off in savings.
The reviewers found that BC Hydro’s overtime costs are higher than other electrical utilities, and 84 per cent of that is paid to unionized electricians. The top five overtime earners doubled their base salary with overtime pay between $113,000 and $130,000 last year alone.
With a smart grid, at least they won’t be collecting so much overtime to drive around searching for downed wires.
And I suppose it would be nice to have all overtime paid at double-time, and 17 to 20 “flex days” that can be taken off or traded for cash. But other public sector workers don’t get that.
The government milks this cow too. It overcharges BC Hydro for water use, for one thing. What this overhaul may also lead to is an end to former premier Gordon Campbell’s aggressive climate strategy. That’s a complicated issue that I’ll tackle in a subsequent column.
Tom Fletcher is a legislative reporter and columnist for Black Press