Message from the CEO & Chairman
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(L) Mossadiq S. Umedaly, Chairman BC Hydro’s 2009 Annual Report was prepared under the Board’s direction in accordance with the Budget Transparency and Accountability Act and in accordance with the Global Reporting Initiative G3 Guidelines. This report represents a balanced presentation of BC Hydro’s economic, environmental and social performance for the fiscal year ended March 31, 2009. All significant decisions, events and identified risks as of May 31, 2009, have been considered in preparing this report. The information was prepared in accordance with the B.C. Reporting Principles [PDF] and represents a comprehensive picture of our performance in relation to our 2008/09 to 2010/11 Service Plan [PDF, 656 Kb]. The measures focus on aspects important to the company and are consistent with BC Hydro’s values, purpose, goals and objectives. The Board is responsible for ensuring internal controls are in place to measure and report on performance of the company in a timely fashion. This report contains estimates and interpretive information that represent the best judgment of management. Any significant limitations in the reliability of data are identified in the report. Our people: Making a differenceAs this year’s Annual Report will attempt to highlight, all of BC Hydro’s achievements are dependent upon the dedicated and talented employees that work at our facilities and offices across the province in roles as wide-ranging as dam engineers, designers, power line technicians, financial and energy planning experts, and all those working to establish a culture of conservation across the province. We have approximately 5,800 people working at BC Hydro. In the past five years we have hired about 2,000 people. We have deliberately sought more diversity. Our workforce is younger, comes from around the world, includes many more women, and we have a greater mix of private and public experience. On behalf of the Board, we’d like to thank the entire BC Hydro staff for their dedicated service to our customers. We’d also like to acknowledge the 20th anniversary of our Power Smart program, and the visionary leader who made it all possible, former BC Hydro Chairman and CEO, Larry Bell. Once again, energy saved through our Power Smart programs surpassed expectations and continued to deliver cost-effective energy over the last fiscal year, producing cumulative energy savings of 983 GWh, an increase of 657 GWh over fiscal 2008. This increased saving is equivalent to powering over 65,000 homes for a year. It was also a year highlighted by a world-wide economic downturn that affected our business. For example, our load forecast was adjusted downwards reflecting expectations of reduced economic activity, in particular to our industrial customers. BC Hydro operates within a triple bottom line framework. This includes a balance between financial and non financial performance targets. In fiscal 2009, we met or exceeded 10 of 14 non financial targets, such as the improved all injury frequency, improved employee engagement, and steady customer satisfaction over the previous year. We did not meet our reliability (customer) targets, due to transmission and substation outages, a largely overhead system of lines which are susceptible to trees falling on them, and distribution equipment failure. However, BC Hydro’s reliability is also impacted by aging assets, adverse weather due to the nature of where we live and the changing climate. In addition to the 14 non financial targets, we also have 10 financial measures. We met four of these in fiscal 2009. BC Hydro’s net income was $366 million which is comparable to the previous year and exceeds target. BC Hydro was also able to provide a return on equity of 12 per cent to our shareholder which is similar to the Service Plan targets. The remaining six metrics were below target. These were related to debt levels coverage, interest coverage and operating costs. Meeting our performance targets safely is one of the highest priorities at BC Hydro. In fact, our all-injury frequency rate for fiscal 2009 is a performance record and a significant improvement on what we had forecast. We have made progress on increasing this focus on safety by introducing to employees improved planning, identification of hazards and putting appropriate barriers in place. We believe these improvements are having a positive impact on the much improved injury rate; however, we will not be able to identify that this is the primary reason for the improvement until we have further information over time. Sadly, BC Hydro experienced two employee fatalities in fiscal 2009. Dirk Rozenboom and Rob Lehmann, both power line technicians, were killed in May 2008 in a helicopter crash while conducting a transmission line patrol at Cranbrook. The pilot and a pedestrian on the ground were also killed in the accident. In response, we have implemented some of the recommendations of our internal investigation, including more rigorous assessment of when to use helicopters. Our people: Planning for the futureBC Hydro continues to be guided by the Province’s 2007 BC Energy Plan: A Vision for Clean Energy Leadership. The Energy Plan calls on BC Hydro to meet two critical energy planning targets, which we have embedded in the Long Term Acquisition Plan (LTAP) that was filed with the British Columbia Utilities Commission (BCUC) in June 2008. One of the targets is to become self-sufficient in energy and capacity by 2016. The other is to meet at least 50 per cent of our incremental resource needs through demand-side management by the year 2020. We are also ensuring that all new electricity projects have zero net greenhouse gas emissions, and that clean or renewable electricity continues to account for at least 90 per cent of total generation. In fact, in the past fiscal year clean or renewable generation accounted for 94 per cent of BC Hydro’s electricity supply. BC Hydro currently supplies electricity at one of the lowest carbon intensities in the world. Concern about greenhouse gas emissions is now a permanent part of utility planning and BC Hydro has developed a climate change strategy that will manage regulatory risk and ensure compliance, reduce greenhouse emissions and prepare for the impacts of climate change. Greenhouse gas emission reduction targets have been established for the first time in the 2009/10 to 2011/12 Service Plan [PDF, 856 Kb]. Ensuring that we have adequate supply to meet customer demand is a core focus for BC Hydro. Many of BC Hydro’s dams and power-generating facilities were constructed decades ago. Therefore, BC Hydro is improving the health of our assets. Capital investment in generation assets has grown from $90 million in fiscal 2001 to $365 million in fiscal 2009. This will continue over the next five years – and likely beyond – as large projects move into the expenditure-intensive implementation phase. During fiscal 2009, BC Hydro placed into service the redeveloped Aberfeldie Generating Station, a new 24-megawatt generating station to replace the old five-megawatt plant constructed in 1922. The first energy flowed from the new station in December 2008. Another project underway is the upgrade to the Revelstoke Generating Station where we are adding a fifth generating unit that will yield 500 MW of additional generating capacity. We are also evaluating options to meet growing customer demand in the Fort Nelson area and assessing the opportunities for installing a fifth and sixth generating unit at our Mica Generating Station. BC Hydro’s overall strategy also includes buying energy. During fiscal 2009, BC Hydro made considerable progress in advancing three competitive call processes for Independent Power Producers – the Standing Offer Program, Bioenergy Call and Clean Power Call. Longer term, BC Hydro is taking a stage-by-stage approach to the evaluation of Site C, a potential third dam and hydroelectric generating station on the Peace River. Work during Stage 2, Project Definition and Consultation, involved extensive consultation as well as project engineering, environmental studies and other technical reviews. BC Hydro will make a recommendation to the provincial government in Fall 2009 on whether to proceed to Stage 3 of the potential project. BC Hydro will also issue a public report highlighting key findings during Stage 2. Significant regulatory activity continued for BC Hydro in fiscal 2009. The British Columbia Utilities Commission (BCUC) issued decisions on the fiscal 2009/2010 Revenue Requirements Application and the Residential Inclining Block Rate Application. The former will help us meet the increasing costs of doing business, while the latter is a two-step rate that went into effect in October 2008 to encourage conservation. BC Hydro also submitted its 2008 LTAP to the BCUC and an oral hearing took place in March 2009. As part of the LTAP, BC Hydro filed a 20-year demand-side management plan, which is expected to close approximately three-quarters of the gap between forecast consumption and currently available supply. As part of the demand-side management plan, roughly half of the electricity savings are expected to come from Power Smart programs, 30 per cent from government codes and standards and 20 per cent from conservation rate structures. In fiscal 2009, BC Hydro developed an industry leading Smart Grid framework to support a common understanding of the Smart Grid among utilities, and we are using it to guide our vision of the modern grid. Our people: Staying connectedThis was a pivotal year for BC Hydro in its efforts to foster relationships with aboriginal people in B.C. We concluded an agreement with Kwadacha First Nation and initialled an agreement with Tsay Keh Dene First Nation to address the historic social, economic and environmental impacts on their communities. We continue to consult with First Nations to understand and mitigate project impacts and provide accommodation where appropriate. As an official supporter of the Vancouver 2010 Olympic and Paralympic Winter Games, BC Hydro will provide clean power for the events. The electrical infrastructure and operational support planning for 17 mountain and city venues are on schedule with nine of the venues connected and the remainder targeted to be completed by summer 2009. Finally, like other employers faced with an aging workforce and a competitive external labour market, we continued to place a high priority on the attraction and retention of employees in fiscal 2009. However, our retirement eligibility remains a moderate concern with 25 per cent of our current workforce eligible to retire within the next five years. With over a third of our workforce having less than two years of service and half with less than five years, our company is undergoing a significant demographic and diversity transformation. This is a challenge for BC Hydro but also an opportunity. Along with our seasoned veterans, these are the new faces that will be planning and implementing the initiatives just described, now and in the years ahead, to ensure future generations of British Columbians enjoy the same benefits of clean, low-cost, reliable power that we have enjoyed for decades. Sincerely,
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Last Modified: Aug 23, 2011
