An open letter to an international credit-rating agency
As a major credit-rating agency, Moody's would be wise to more closely investigate the province of British Columbia and its major electric utility, B.C. Hydro. It is actually a financial disaster waiting to implode.
Mining commodity prices are still low; chemical production is low; oil and gas prices remain low, very slowly “recovering”, except liquefied natural gas, which is probably dead; and forestry faces imminent collapse as the U.S. is about to impose hefty duties on Canadian softwood.
Manufacturing is not much better, with both the U.S. and Canadian dollar remaining strong, resulting in expensive worldwide exports. Agriculture and fishing are mostly domestic and show little likelihood of improving substantially, and with crazy land and housing prices in major cities and towns, construction and home-building are lacklustre.
Provincial revenues might appear to be encouraging, but the rot is from the inside. A recent tax on foreign absentee home buyers' “money laundering” has created the illusion of a balanced budget but it is based upon deferral and regulatory accounts hiding losses and overspending.
Look at the debt. B.C. Hydro already has huge obligations to date, plus commitments to independent power producers: $50 billion over 20 to 30 years, billions each year as “capital” projects, plus the disastrous Site C Dam and power plant in northern B.C.
At $9 billion, plus another $2 billion for transmission lines, Site C will result in electricity costing $135/MWh to $145/MWh. There are alternatives costing from $30 (or less): repatriating the Columbia Treaty power; Burrard Thermal for a few hours each year; massive conservation at up to $50; plus solar, wind, and geothermal, all at much less than $135/MWh.
Sure, the B.C. Hydro debt is “backed” by the province and “ratepayers”. Are you aware there were 30,000 disconnections last year alone? This is not the sign of a healthy or progressive utility. B.C. Hydro is an anachronism locked into 50-year-old massive-dam technology for supply while, worldwide, other utilities are rapidly moving forward into true renewables and conservation. B.C. Hydro is like driving down the freeway in reverse while looking “clearly” into the rearview mirror. Would you want to be a passenger? Bad decisions permeate, from projects to rates to revenue and forecasting.
By giving B.C. and B.C. Hydro your “optimistic” ratings you are badly misleading people relying upon those ratings. In fact, it reminds one of the ratings given to the mortgage packages in the 2005-2008 time frame. Please come to B.C. and talk with the people here: the closed businesses' owners, the mining and chemical companies, and the forestry communities with closed sawmills and paper mills—one after another. Talk with the oil-and-gas workers looking for work. Talk with the 90,000 signatories to petitions demanding that B.C. Hydro’s Site C Dam be stopped. Talk to the more than 350 scientists who wrote to the prime minister opposing Site C, and to the Royal Society, which opposes this Site C disaster (which must be stopped to save the province from bankruptcy).
B.C. Hydro’s CEO, Jessica McDonald, and Premier Christy Clark are misleading Moody's and others about the Site C project and the provincial economy and debt.
Talk with our First Nations, our aboriginal families and leaders, who have had so much taken from them in the guise of “progress”. Talk to them about the mercury-contaminated fish in the upstream reservoirs of the Site C project, and the flooded historical-treaty lands that used to support them and are now lost; ignored by our “leaders”, the politicians. Talk with the people who have challenged decisions in provincial and federal courts and have had their concerns dismissed or ignored.
This is not the healthy, thriving province you paint it to be. It is a train wreck, slowly unfolding.
Please come visit and talk with us.