A U.S. federal judge says California owes more money to power sellers than the state can claim in refunds for alleged overcharging.
But British Columbia Hydro and Power Authority could still come up short if refunds recommended by the Federal Energy Regulatory Commission cut into the $290-million (U.S.) B.C. Hydro is owed by California customers.
B.C. Hydro said it was too early to judge the impact of the report, released Thursday.
"We are reviewing the report in detail to see what the implications are," said B.C. Hydro representative Elisha Odowichuk.
The report, written by Judge Curtis Wagner and released Thursday, followed two weeks of talks between California and power sellers that ended without a settlement last Monday.
In his report, the judge recommended a "trial-type, evidentiary" hearing to resolve the issue, noting that it had been extremely difficult to obtain numbers from power sellers on which to base a refund figure.
Such information is jealously guarded in an electricity market that has been extremely volatile since the beginning of last year, especially in California, where experts say a botched deregulation process created a supply crunch and helped lead to now-common blackouts.
B.C. Hydro's system of dams and reservoirs creates storage capacity that allows the utility to buy energy at off-peak times and then sell it at a higher price when demand goes up.
Sales are conducted by B.C. Hydro's export arm, Powerex Corp.
B.C. Hydro has said it expects profit of $1-billion (Canadian) for its most recent fiscal year, which ended March 31.
If B.C. Hydro fails to collect some or all of the money it is owed, that will affect the utility's bottom line and have an impact on the province, which receives an annual dividend from the utility.
A spokesman for the Finance Ministry said earlier this week that B.C. Hydro has already made provisions to take the uncertainty over its outstanding receivables into account.
The recently elected Liberal government is scheduled to give a fiscal update on July 30. B.C. Hydro is to release its annual report sometime this month.
Some power sellers have already taken provisions to deal with shaky accounts in California.
Late last year, Calgary-based TransAlta Corp. took a 50-per-cent provision against the $66.2-million (U.S.) it is owed by California customers.
Avista Corp. of Spokane, Wash., made an $18-million provision in its first quarter against money owed to it by California purchasers of electricity.
Avista spokesman Patrick Lynch said Avista still has about $24-million in exposure to California accounts. Mr. Lynch said Avista is no longer selling directly to California, but is selling to "third parties who meet our very stringent credit requirements."
Powerex is still selling to California, but as of January it has been demanding payment up front.
Invoices released by California this week show that Powerex sold electricity at prices of up to $1,000 per megawatt hour from January through March of this year.
In British Columbia, the average rate for residential customers is $61 (Canadian) per megawatt hour; industrial customers pay about $34 per megawatt hour.
Ms. Odowichuk said Powerex does not comment on specific prices, but he did say that all of the power that the company sold had to be purchased first on the open market.