B.C. Hydro cutoff forces California to pay bill

Shutdown lasted two hours Monday until the Americans wired Hydro a cheque

Scott Simpson Vancouver Sun with Bloomberg News

B.C. Hydro shut off the supply of electricity to California for two hours earlier this week after the energy-starved U.S. state failed to meet the deadline for a routine electricity payment.

The shutoff occurred on Monday morning as Hydro's international subsidiary Powerex was awaiting payment for power it sold to California on Friday, Saturday and Sunday.

Hydro turned the power back on after the California department of water resources wired Hydro a cheque, department spokesman Oscar Hidalgo said Tuesday.

Hidalgo said Hydro is sticking to the letter of its contract, which allows it to demand immediate payment as the state's credit limit is approached.

Hydro spokesman Wayne Cousins would not confirm that the corporation shut off the power to California, saying that its out-of-province dealings are subject to corporate confidentiality.

"We view California as a valued customer of ours and we have done for years. We want to be part of the solution to their electricity needs," Cousins said.

Hydro is owed $475 million Cdn by two financially troubled private power suppliers in California and there are doubts that the provincial Crown corporation will recover its money.

The state has taken over responsibility for much of the California electricity supply and is spending about $50 million a day to keep the lights on.

It has already burned up 70 per cent of its annual budget surplus and the most energy-consuming months are looming.

Hidalgo said that of all the electricity suppliers selling onto the California grid, Hydro is showing the least flexibility in the exercise of its contract.

"We seem to be reaching a threshold quicker with them than with the others at the moment. It's the only one that's really an issue," Hidalgo said.

Hidalgo said the Hydro shutoff did not affect California consumers because the state was able to replace the B.C. supply with electricity from other providers.

California was hit by rolling blackouts at 5 p.m. on Monday, but Hidalgo said those blackouts were not connected to Hydro's earlier action.

About 96,000 customers in California experienced hour-long blackouts because of high temperatures and a temporary electricity shortage among outside suppliers.

The blackouts were the first since March and are widely seen as the harbingers of a long, hot, dark summer in California.

Since its privatized system collapsed in January, the state has been buying power on behalf of PG&E Corp.'s Pacific Gas & Electric, which is in bankruptcy protection, and Edison International's Southern California Edison, which has failed to pay some creditors and can't borrow money to buy more power.

The $475 million the two agencies owe B.C. Hydro is far in excess of the $158 million credit limit established in a 1999 Powerex document.

Hidalgo said the current arrangement is that California stays under the credit limit established for it by B.C. Hydro, and sends a payment each time that limit is approached.

"We didn't run over our credit limit. We were close to it. We didn't want to exceed it, nor did they.

"We paid them on Friday for energy used till Thursday midnight. Then we went to the weekend. Monday morning they were waiting. We were close to the credit limit. They wanted to make sure they had a cheque in hand before we went further.

"That happened in the morning hours. That was accomplished, we wired them money, and we proceeded.

"That's all it was. There is a certain credit limit and we want to make sure we stay, and obviously they want to make sure they stay, within the limit."

-- PHO (owennos@bigfoot.com), May 09, 2001