MLA raises flag over former Liberal aide's company receiving BC Hydro contracts

New Democrat MLA Guy Gentner is questioning BC Hydro's awarding of contracts worth more than $2 billion to a company with a former Liberal political aide in the top ranks of management.

On July 27, BC Hydro announced that it has awarded 38 contracts to independent power producers, including two with Vancouver-based Plutonic Power Corporation, to provide small-scale “run of river” hydroelectricity.

Plutonic corporate-affairs director Bob Poore worked as an assistant to cabinet minister Rick Thorpe before joining Plutonic in early 2005.

“It's a little close to the time I think he left the government and moved over, particularly to corporate affairs,” Gentner told the Georgia Straight. “That's a big jump.” Poore was executive assistant to Thorpe when Thorpe was competition, science, and enterprise minister, as well as when he was provincial revenue minister.

Plutonic president Donald McInnes called Gentner's suggestion “bullshit”.

“There's zero coincidence between any reference the gentleman is making and what our business is all about,” McInnes told the Straight. “Bob is from New Brunswick; I'm from Halifax,” he said. “He's been a personal friend for decades and I needed somebody who understood how government works, coincidentally, to come and work with Plutonic to help us, mostly in discussions with First Nations peoples.”

He noted that Poore formerly worked in public relations with the New Brunswick Electric Power Commission: “He's got the right background.”

Gentner, until recently the NDP energy critic, said there is nothing illegal about someone leaving a senior political post for a corporate position. (According to the 2004–05 B.C. public accounts, Poore was paid $53,640 in the year ending March 31, 2005.) However, in business, a “do not compete” requirement in contracts often restricts where a former employee can work for a certain period of time, Gentner said.

“For government, wheeling and dealing and trading information ””that's a whole different ball of wax,” he said.

Gentner added that he knows of nothing to implicate Poore. “But it's a very interesting relationship, I think, between when he left government and moved on,” he said.

Hydro spokeswoman Elisha Moreno told the Straight that in awarding the contracts, the corporation considers only the price, reliability, and availability of the power-generating resource. It does not examine the companies' management. “That didn't play a factor in our evaluation of the contracts,” Moreno said.

She added that the contracts have yet to be signed. BC Hydro is expecting to file them with the B.C. Utilities Commission on August 31, she said.

One of the Plutonic projects will be built at the headwaters of the Toba Inlet on the East Toba River and Montrose Creek, about 100 kilometres north of Powell River. The other is on Rainy River, near Howe Sound.

According to a July 27 Plutonic news release, both contracts are for 35 years and together have the potential to generate revenue of about $60 to $70 million annually. That means the total revenue over the length of the contracts is between $2.1 and $2.45 billion.

Shares in Plutonic, which trades on the TSX Venture Exchange, closed at $2.39 on August 14, up from less than a dollar a year ago.

The NDP's Gentner also claimed that consumers will pay too much for electricity in the future because BC Hydro is using independent power producers rather than doing the work in-house. “In order to develop this energy, [the costs are] ultimately going to be passed on to the consumer,” Gentner said.

Under changes made in 2002 by the Liberal government, all new generation must be contracted out to independent producers. The only exceptions are large-scale projects, such as Peace River's Site C, for which cabinet approval is required.

Meanwhile, a former University of Victoria public-administration professor says that Hydro's comparatively low retail rates are effectively subsidizing B.C.'s wealthy.

“If the goal is to protect the lower-income consumers, we should find another way,” Pierre-Olivier Pineau told the Straight. Pineau is now an associate professor at HEC Montreal, a prominent management school.

BC Hydro's current residential rate of 6.71 cents per kilowatt-hour is among the lowest in the world, and this amounts to an “indirect subsidy”, Pineau said. He estimates that in 2005, each residential B.C. electricity consumer received a subsidy of 3.5 cents per kWh.

In a draft research paper provided to the Straight, Electricity Subsidies in Low Cost Jurisdictions: The Case of British Columbia (Canada), Pineau says electricity consumption jumps once annual household income increases beyond about $35,000. Most B.C. households earning less than that use about 6,000 kWh annually, while most in the $90,000-plus range use 12,000 kWh annually.

Those earning $150,000 or more use an average of 15,833 kWh per year.

“Richer households have more appliances, so they benefit more from the subsidy,” Pineau said. One way of righting this is to raise the rates to market levels and send lower-income consumers an annual rebate cheque, he explained. Another is to boost the price of electricity for any household using more than 6,000 kWh annually.

As things stand, B.C. is using too much electricity, he added.

“We are an extremely rich society, and we just waste our electricity by underselling it,” Pineau said.