BC Hydro Releases 2001 Annual Report

VANCOUVER - -- BC Hydro has posted a record revenue of $7.9 billion for fiscal 2001, $4.4 billion higher than the same period last year. Net income for the year ended March 31, 2001 was $446 million, $30 million higher than 2000. Before the transfer to the Rate Stabilization Account (RSA) and Customer Profit Sharing, net income was $859 million, $314 million higher than earned last year. The increase in income was mainly a result of higher electricity trade revenues with the U.S., related to an increase in market prices for energy. A total of $103 million of BC HydroÂ’s income was transferred to the Rate Stabilization Account, an account created to offset potential future rate increases for domestic customers.

Domestic revenues of $2,431 million increased $80 million from the prior year largely due to the return to production of two major large industrial customers that had shut down temporarily in the prior year. Customer growth in the residential and light industrial and commercial sectors also contributed to the increase in revenues. Domestic tariff rates have not increased since April 1993. As a result real electricity rates have declined by approximately 12 per cent over the last ten years, after taking into account inflation.

For BC Hydro, fiscal 2001 was an unprecedented year as a result of electricity trade revenue and the opportunities that arose as a result of market volatility. Revenue from electricity trade reached $5,458 million, $4,329 million higher than last year," said BC HydroÂ’s Executive vice-president of Corporate Affairs and Chief Financial Officer, David Harrison. "The effective management of BC HydroÂ’s system allowed us to maximize the value of our hydro-based assets, by timing our market purchases and sales at prevailing market prices, without any negative impacts to our reservoirs.

Transactions into the California market were primarily executed through the California Power Exchange (Cal Px) and the California Independent System Operator (Cal ISO), where California utilities were required to purchase the power at market prices. As California public utility regulation has not allowed them to recover the full cost from their customers, some utilities defaulted on their obligations to the Cal Px and Cal ISO, resulting in an unpaid balance to BC Hydro. At March 31, 2001, the amount owing from Cal PX and Cal ISO was $289 US ($455 million Cdn). BC Hydro has recorded provisions for uncollectable amounts, which in managementÂ’s best estimate are sufficient to cover any remaining exposure.

Finance charges were $20 million lower than last year, at $559 million. The decrease is related to lower average volume of net debt resulting from the increase in cash flows from electricity trade. An increase in finance charges as a result of higher short-term interest rates partly offset the favourable variance. Energy costs of $5,162 million increased by $3,828 million over last year due to an increase in the price of electricity and gas purchases as well as an increase in the volume of those purchases due to a decrease in low-cost hydro generation and an increase in demand. An increase in electricity trade transmission costs were also a factor. The increase in operations, maintenance and administration (OMA) to $755 million reflects a provision for uncollected receivables related to California, an increase in environmental and maintenance expenses, as well as higher pension costs due to a change in accounting standards.

Customer Profit Sharing totaled $310 million for fiscal 2001. On February 7, 2001, the Province directed BC Hydro to pay its residential tariff customers as of December 31, 2000, West Kootenay Power and the Corporation of New Westminster payments equivalent to $200 per residential customer. These payments were deducted from BC HydroÂ’s income.

With the goal of becoming a sustainable energy company, BC Hydro is moving forward on work to acquire energy from green, renewable energy sources. In addition to several wind monitoring towers recording promising data across B.C., small and micro hydro projects, such as our first independent power producer agreement to create a 25-megawatt run-of-river facility in Pemberton are beginning to take shape. Woodwaste and investigation into the potential of hydrogen are also part of BC HydroÂ’s energy future.

Through promoting Power Smart use of energy in 2000, annual energy savings totaled 2500 gigawatt hours, enough to power all the homes and businesses in Victoria and Prince George. The Power Smart program recently expanded to include a three-year campaign called the Home Energy Learning Program, or h.e.l.p. The program is designed to continue the success of Power Smart by providing customers with more information, education and incentives to save energy and money.

Despite the volatility of the electric utility industry, BC Hydro is positioned well to continue to assure adequate electricity supply to its domestic customers at prices among the lowest in North America. BC Hydro plans to remain committed to being competitive while providing value for customers and shareholders.

For a copy of the annual report in its entirety, please call Elisha Odowichuk at (604) 623-4099.

CONTACT: Elisha Odowichuk Public Affairs Coordinator Phone: (604) 623-4099