Privatizing B.C.'s Crown Jewel

Sale of B.C. Hydro would reduce province's debt by $12 billion

Release Date: 15 November 1996

Vancouver, B.C. >>> B.C.'s provincial debt could be reduced by $12.2 billion by privatizing B.C. Hydro, according to a Fraser Institute study released today.

The Case of B.C. Hydro: A Blueprint for Privatization estimates the Crown utility's market value at $14 billion. After removing $7.8 billion of Hydro's debt and applying $4.4 billion in cash to reduce direct government debt, the total provincial debt would be reduced from $30 billion to about $18 billion.

"The province's annual operating deficit would also be reduced by over $200 million," said Bruce Howe, co-author of the 46-page report and former president and CEO of Atomic Energy of Canada.

The authors conclude that there are no compelling public policy reasons for retaining government ownership of Hydro. "Developments in both North American electricity markets, and generation technology and costs point to private sector expertise: there will be no need to build new dams in the foreseeable future," added Frank Klassen, co-author and former B.C. Hydro finance vice-president.

Howe and Klassen emphasize that the individual consumer can be protected against unacceptable rate increases by a well-devised regulatory regime that is transparent in its proceedings and independent of government.

In summary, privatizing B.C. Hydro would:

• reduce the provincial debt, dramatically helping to reduce the burden on future generations;
• improve the efficiency and effectiveness of the privatized corporations;
• introduce an incentive-based regulatory regime;
• protect the consumer through regulation; and
• reduce the size of government and eliminate political interference in utility management.

Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.

For further information contact:

Suzanne Walters, Director of Communications,
The Fraser Institute, (604) 714-4582,
Email suzannew@fraserinstitute.ca

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Last Modified: Wednesday, October 20, 1999.