For decades, the term “Power Purchase Agreement” has been a flashpoint in British Columbia, synonymous with political controversy, staggering financials, and a fundamental debate about how the province gets its power. These agreements, known as PPAs (or Electricity Purchase Agreements, EPAs), are contracts between the Crown corporation, BC Hydro, and private companies known as Independent Power Producers (IPPs).
While simple in concept—BC Hydro agrees to buy electricity from a private generator at a set price for a set time—the history of these deals is one of the most contentious episodes in the province’s modern political history.
What They Are and Why They Exist
A Power Purchase Agreement is a long-term contract, often spanning 20, 40, or even 60 years. In it, BC Hydro guarantees it will purchase the power produced by an IPP, which could be a run-of-river hydro project, a wind farm, a solar installation, or a biomass plant.
The Contracts That Cost Billions: A Look at BC Hydro’s Power Purchase Agreements
For decades, the term “Power Purchase Agreement” has been a flashpoint in British Columbia, synonymous with political controversy, staggering financials, and a fundamental debate about how the province gets its power. These agreements, known as PPAs (or Electricity Purchase Agreements, EPAs), are contracts between the Crown corporation, BC Hydro, and private companies known as Independent Power Producers (IPPs).
While simple in concept—BC Hydro agrees to buy electricity from a private generator at a set price for a set time—the history of these deals is one of the most contentious episodes in the province’s modern political history.
What They Are and Why They Exist
A Power Purchase Agreement is a long-term contract, often spanning 20, 40, or even 60 years. In it, BC Hydro guarantees it will purchase the power produced by an IPP, which could be a run-of-river hydro project, a wind farm, a solar installation, or a biomass plant.
This model was born from the province’s 2002 Energy Plan. That policy effectively banned BC Hydro from building its own new large-scale generation assets (with the later exception of Site C). Instead, it mandated that all new electricity needs would be met by the private sector. The goal was to promote private investment in green energy and achieve “self-sufficiency,” ensuring B.C. wouldn’t need to import power during dry years.
IPPs, backed by these government-guaranteed contracts, flourished. They built dozens of projects, particularly “run-of-river” hydro, which generates power from the natural flow of a river without a large reservoir.
The “Zapped” Report: A $16 Billion Controversy
For years, critics warned that the program was a disaster. They argued that BC Hydro was being forced to sign deals for power it didn’t need, at prices far above the market rate.
In 2019, these fears were confirmed by a government-commisIn 2019, these fears were confirmed by a government-commissioned review led by Ken Davidson. The report, aptly titled “Zapped,” was a bombshell. It found that:
A Massive Overpayment: The PPAs were set to cost BC Hydro ratepayers $16.2 billion more than the market value of the electricity over 20 years.