California and the International Green Energy Racket

Last week, the premier of British Columbia, Gordon Campbell, paid a visit to the California State Legislature. He spoke at length about his province’s green energy partnership with California in supplying California with electricity while helping the state meet its greenhouse gas reduction goals.

I listened to the leader of the Western Canadian province of 4.4 million people and I found myself asking, “What is he selling?” So, I decided to follow the money. What follows is a summary of an international green energy scam that costs California taxpayers millions while robbing California of jobs due to higher electricity costs and electricity imports.

The Scam

Decades ago, the West Coast began exchanging electricity. During the summer, when air conditioning use spiked in California, Washington State and British Columbia would ship hydropower down to the Golden State. Later in the year, during California’s mild winters, when rivers levels were low in the Northwest, California would return the favor. The power exchange worked well for everyone.

During California’s 2000-2001 energy crisis, our northern neighbors took Enron-like advantage of us. BC Hydro, a state-owned utility, through its marketing and trading subsidiary, Powerex, aided in the rampant market manipulation that ended up costing California consumers millions. Bill Lockyer, then California Attorney General, sued. In March 2005, Powerex settled and refunded a fraction of the profits they made at the expense of California ratepayers.

The current version of this energy scam is breathtaking in its scope.

Further, the victim, California, actually knows most of what’s going on and either doesn’t care or doesn’t want to know the messy details.

California has become America’s largest electricity importer. With 37 million people producing about 13 percent of the U.S. gross domestic product, California imports about 23 percent of its electricity. This situation is compounded by the state’s environmental laws which, if a power plant can be built at all, typically consume seven years for permitting and construction vs. three years in competing Texas.

Complicating matters are a trio of California energy policy laws passed in 2006: AB 32, SB 1368, and SB 107. AB 32 mandates a 30 percent reduction in California’s greenhouse gas emissions by 2020 (BC Premier Campbell was particularly enthusiastic about this law). SB 1368 outlaws the renewal of coal-fired electricity contracts–imported coal energy powered about 16 percent of California’s grid in 2008. While SB 107 accelerated the requirement that California derive 20 percent of its electricity from renewable sources this year, renewable being defined as small hydro, geothermal, wind, solar, and biomass (we missed the target, meaning utilities, read ratepayers, get dinged).

Enter government-owned BC Hydro and its Powerex subsidiary. With abundant hydro power potential, British Columbia is seeking to become the Saudi Arabia of “green” energy. California environmentalists don’t see the irony in British Columbia damming rivers to provide power to California, while in California, environmentalists fight to demolish dams as unsightly threats to salmon.

The irony gets even deeper, though. British Columbia, perhaps due to Premier Campbell’s business-friendly tax and regulatory policies, is growing. That, combined with a severe drought (yes, when California gets a good water year, British Columbia often sees a drought) means that BC Hydro will be importing $220 million more electricity than it did last year. You read it correctly, hydro energy colossus British Columbia will be importing almost a quarter billion dollars more electricity this year than last. In fact, BC Hydro has imported more energy than it has exported in 10 out of 11 years. And, from where does this energy come? Washington State and Alberta Canada. And, what is the source of this electricity? Brace yourself. Coal and gas-fired plants.

Electrons in a grid, like dollars in an account, are fungible, meaning that “clean green” electrons cannot be separated from “dirty coal” electrons and both are mixed in with electrons from nuclear power plants. So, when the Premier of British Columbia comes to California to urge us to continue to make our state even more dependent on his province for electricity as we strive to make the planet better we shouldn’t fool ourselves. The fact is, BC Hydro is buying “dirty” power and then, in an act I’ll dub “electron laundering” is repackaging it for the silly, naïve, environmental-minded Californians as pristine green hydro power–with a nice mark up, of course (Canadians have to pay for their national healthcare after all).

If Canadian reselling of coal power to California wasn’t enough of an insult to common sense and the environment, then here’s one more. Many British Columbians oppose their government’s push to make their province an energy colony of California by submerging more tree-lined river valleys. From a greenhouse gas perspective, they’re probably right. Some studies suggest that hydro electric dams built in forested valleys aren’t a great way to reduce greenhouse gas emissions. This is because the dams drown carbon-impounding trees, which, in turn, rot when they are submerged, releasing large amounts of methane, a gas that is 80 times stronger than carbon dioxide in the greenhouse effect.

The Solution

Rather than practice electrical grid colonialism, simply importing power while sending jobs and emissions elsewhere, Californians need to get serious about generating more of their own affordable and reliable power. In many places around the world, this means modern nuclear power. California needs to lift the state moratorium on building new nuclear power plants signed into law by then-Governor Jerry Brown in 1976.