The Province of British Columbia’s Task Force on Electricity Market Reform has recommended that BC Hydro’s industrial customers and electricity retailers should be allowed to contract directly with each other for electricity supplies. The report recommends that the utility should play the role of the common carrier, providing fair and efficient transmission services, including system operation, transmission planning and transmission tariffs.
Other recommendations cover the paring off of the utility’s transmission assets and the formation of an independent transmission company that would be owned by the provincial government and operated as a provincial government corporation. West Kootenay Power, an investor-owned utility serving south central BC, is also included in the market restructuring.
The Task Force is headed by Mark Jaccard, former chairman of the British Columbia Utilities Commission (BCUC). The report, released on an interim basis for public comment, is expected to be finalized in February this year.
At the press conference releasing the report, Jaccard said the 17-member stakeholder group could not reach a consensus on how the BC electricity market should be reformed, but that the report represents the middle ground.
The Task Force has recommended the phasing in of the market reforms, with the first phase beginning on 1 January 1999, and the second phase by 1 January 2001.
The first phase envisages the creation of a BC power exchange, allowing customer access as well as offering all industrial customers market rates for power. However, 50 per cent of the power purchases still should be made from BC Hydro or West Kootenay Power. Residential and small commercial customers would remain price-regulated. The restriction of the 50 per cent requirement is to be dropped in Phase Two of market reform.
In the second phase, the report calls for creation of a provincial government-owned company it calls the BC Grid Company that will be responsible for system operation, transmission planning, transmission tariffs and the BC power exchange. It would have an independent government-appointed board of directors and be fully regulated by the BCUC. Transmission represents about one-third of Hydro’s C$9.2 billion book value.