BC Business
Charles Reid, President and CEO, BC Hydro | BCBusiness
After focusing on the corporation’s balance sheet as CFO, Charles Reid is taking the helm of BC Hydro, the province’s second-largest Crown Corporation.
BC Hydro has earmarked $2 billion a year through 2016 for upgrades and expansions, which is leaving all B.C. residents wondering how this massive investment will affect their monthly energy bill. Add this to the always important issue of demand – will these upgrades provide enough energy to sustain the province, and what role, if any, will sustainable energy play in the equation – and you begin to get just a glimpse of the weighty issues resting on Reid’s shoulders.
What is your immediate priority for BC Hydro? When people ask me what I worry about the most – and it’s a bit unusual for me because I’m more of a financial background person – I say I’m mostly about safety. Our focus in the last year and leading into this year has been on improving our safety performance. We created a safety task force. We actually went and gathered a group of front-line employees and we sent them all around the province and we said, “you tell us: what are the things that are important for us to do differently?” That’s where our focus has been and we’ve had really good support on that front from our workforce and from our unions as well.
Is there a long-term goal you’re looking to achieve during your time with BC Hydro? We want to be the safest, most efficient utility in North America. And there are a lot of parts to that, in terms of defining what that means: safe for our employees, as I mentioned, but also safe for the public. Most efficient is a little tougher to define, because you can talk about most efficient in terms of a reliable system that works for people when they need energy. You can talk about it in terms of having long-term supplies so that there’s always electricity there when we need it when we grow. You can talk about it in terms of rates. All of those things are tied into that. I want British Columbians to be proud of their utility. It’s an icon and it’s a tremendous asset that all British Columbians own. I think there’s been a fair amount of pride in it in the past and I would like to maintain and grow that.
There are some upgrades to existing infrastructure coming up. Are those upgrades going to produce enough power to meet future demand? We’re in the process of doing what we call an integrated resource plan, which looks out over the next 20 or more years at what we are going to need to match the growth of demand in our system. We’re predicting a 50 per cent growth in demand over the next 20 years. So we have to plan for that, and there are long lead times that are required for our facilities to upgrade. We’re confident that we will meet the needs of British Columbia going forward.
How much does alternative energy contribute to B.C.’s overall energy needs? It’s growing. We’ve been focused a lot on clean and renewable energy in B.C., things like wind and solar. The challenge has been cost: in the last little while they’ve been fairly expensive resources to get. And so although we do have some in our mix of energy, the challenge will be that we’re focused on keeping rates as low as we can for our ratepayers, so we’ll have to be very careful about that. We’re very excited about all those things, but it has to be measured against the cost side of it. We have some today, but it’s very small.
BC Hydro plans to spend $2 billion a year through 2016 on upgrades and expansions. How big a factor will that be when it comes to deciding rate increases? Obviously, there’s sensitivity around rate increases. So we’re very conscious of the rates. However, there’s no doubt that we will reinvest in our system, and there’s a tremendous amount of reinvestment going on right now. The majority of the BC Hydro electrical system was built many years ago, so they’re 50 to 60 years old on average, and many of them have to be renewed. That’s going to cost money. But it’s also an investment in our future. Now, that investment will attract debt, interest costs and all the things that go with that. That will be a driver for rate increases, but our job is to manage that in an orderly way as we go forward.
How have your day-to-day responsibilities expanded with this new role? I’ve not been a CEO before, so it’s a new experience for me. I would say the difference is that, as a CFO you worry about a lot of things. In those days, I thought of myself as the chief worry officer, and I worried about all the financial affairs of the company and the regulatory issues. But now all of a sudden I have to worry about everything, every single thing that goes on in the company. It’s not just financial: it’s safety, it’s union relations, it’s employee morale, relationships, the public, the government relationships. I’ve found it quite challenging and kind of neat.
How does your background in finance inform your approach as the president of BC Hydro? Well, I consider myself very financially prudent, and I’m very focused on cost and cost efficiencies. I mean, coming out of the forest industry where many times it was survival mode, you were always into being very careful with the dollar. I think that stands me in good shape, because we have to be careful with our dollars in BC Hydro. It’s public money that we’re spending and we have to prove to the public that we’re handling that prudently.
As the public face of BC Hydro, has the media attention affected your personal life? Personally I’m more the introverted than the gregarious type, so I find that bit unusual. I do it because it’s part of the job; it’s not something I look for. It is part of the job and it’s important to do it well so that the public sees the face and the individuals who are managing their assets. It’s maybe not my favourite thing to do, but I handle it okay.