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Electricity supplier BC Hydro is just 18 months into the eight-year plan to trim the increase in demand by 7,800 gigawatt hours.

John Lehmann/The Globe and Mail

BC Hydro is missing its energy conservation targets by a wide margin and may have to turn to private power producers to make up the difference, Energy Minister Bill Bennett said Thursday.

The Crown corporation spent $150-million last year on its annual program that is designed to persuade industrial, commercial and residential customers to reduce their energy demands. It is a critical part of BC Hydro's long-term plans to meet the province's future electricity requirements.

Mr. Bennett said he questioned BC Hydro's ambitious targets when they were presented to him in 2013. BC Hydro said then it would trim the anticipated increase in demand by 7,800 gigawatt hours by the year 2021. "When I saw it, I said, 'Really? That's high,'" he said in an interview.

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He signed off on the integrated resource plan after being assured the Crown corporation could manage. "They are now saying they cannot meet that," he said.

Just 18 months into the eight-year plan, BC Hydro now projects it will miss its target by 20 per cent.

Adrian Dix, the NDP energy critic, said the failed conservation program will likely lead to additional costs for BC Hydro's customers.

"They are spending $150-million a year and failing, utterly, to meet their goals at a time when they are raising rates by 28 per cent," Mr. Dix said.

He said the prospect of scrambling to buy private power to meet any gap will only mean higher BC Hydro rates. "This is not good news for ratepayers."

The Energy Minister has been grilled this week during budget debate about the biggest Crown corporation in his portfolio. He has faced off with Mr. Dix over a series of conflicts and setbacks that has dogged the construction of a $725-million transmission line that is needed to serve Metro Vancouver's growing electricity demands. And he has fielded questions about the escalating use of outside contractors after BC Hydro was ordered to trim its work force.

Mr. Bennett has largely defended BC Hydro's actions throughout the debates, and on Thursday offered only a mild rebuke over the failure to meet conservation targets. "It gets my interest," he said.

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The Energy Minister added he also believes BC Hydro has been too conservative in anticipating new demand. He noted that B.C. has already exceeded the Crown corporation's forecast for new mine development.

However, he said there may be a silver lining for an industry that has lobbied intensely for a greater share of the B.C. energy market: BC Hydro may have to sign new contracts to purchase more electricity from independent power producers.

BC Hydro is in court this week facing two challenges to its plan to build the $8.8-billion Site C hydroelectric dam, but that project would not be supplying new power until 2024 – at best.

"For the clean-energy industry, they'll probably be jumping up and down, because it could mean more opportunity for them," Mr. Bennett said. "If you can't find conservation to the extent that you thought you were going to, you're going to need more generation. We just don't know what that is going to look like yet."

Mr. Dix said the Energy Minister helped lay the groundwork for the shortfall by pressing BC Hydro to trim spending on the conservation program, formally known as Demand Side Management. The program originally had a $236-million budget last year but it was then cut to $150-million. That meant less money was available to help BC Hydro's customers to reduce their electricity demands.

The budget cut was recommended "to better match BC Hydro's resource requirements," according to BC Hydro's planning documents. With no shortage of power supply right now, the corporation has gambled on ramping up its conservation programs closer to its 2021 target date.

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