2001 Triple Bottom Line Report - BC Hydro

E L E C T R I C I T Y T R A D E T H R O U G H P O W E R E X
BC Hydro’s electricity trade throughout Western Canada and
the Western U.S. is conducted by Powerex, our wholly owned
subsidiary. Electricity trade through Powerex allows BC Hydro
to return a dividend to our shareholder, and keep rates lower
than they would otherwise be, by buying electricity from other
jurisdictions when prices are low, and selling energy in export
markets when prices are higher.
Powerex is authorized by the B.C. government and the National
Energy Board to sell electricity from B.C. and other Canadian
provinces in markets outside B.C. Powerex is also authorized
by the U.S. Federal Energy Regulatory Commission (FERC) to
buy wholesale electricity in one U.S. location to sell in another
U.S. location, and to deliver electricity from B.C. directly to its
U.S. wholesale customers.
In fiscal 2001 we bought more energy than we sold: 25 754
gigawatt-hours (GW . h) purchased versus 23 901 GW . h sold,
for a net of 1853 GW . h purchased on the year.
Staff at Powerex and our Power Supply unit worked
together to produce record electricity trade results last year.
Powerex staff contributed market knowledge, and Power
Supply staff optimized our electricity system to capitalize
on the unique conditions in California and elsewhere that
produced an unusually high demand for power in the state,
and therefore high market prices for electricity. This heightened
trade activity resulted in Powerex’s staff being expanded from
87 to 114 employees.
E C O N O M I C B O T T O M L I N E | 6 0
6000
5000
4000
3000
2000
1000
0
POWEREX SALES INFORMATION
CDN$ (millions) GW-h
97 98 99 00 01
25 000
22 500
20 000
17 500
15 000
12 500
10 000
7500
5000
2500
Canadian $ (millions) GW.h
The volume of electricity trade with other jurisdictions continues
to be subject to the uncertainties of market conditions, financial
considerations, regulatory and legislative developments, and weather.
We do not anticipate last year’s level of electricity trade to be
repeated this year. Extraordinary events in California resulted
from an unusual combination of increased energy demand,
lack of new generating capacity, higher natural gas prices and
lower-than-normal precipitation across western North America.
Water inflows to our reservoirs are projected to be much lower
this year. Low inflows increase the need for market purchases
to help support our reservoirs, and therefore reduce the amount
of power available for sale to other markets. As well, an increase
in the price of light-load-hour energy is expected to decrease
margins on electricity trade transactions.