POT GROWERS COST BC HYDRO $154 MILLION ANNUALLY, STUDY
SAYS

Electricity Theft and Illegitimate Use Equivalent to Five-Per-Cent
Surcharge on Customers

Electricity theft and "illegitimate" power purchases by indoor
marijuana growers is costing BC Hydro customers $154 million per year,
according to a new study.

That's roughly the equivalent of a five-per-cent surcharge on
electricity bills for its 2.2 million customers.

The study, co-authored by University of the Fraser Valley researchers
Darryl Plecas and Jordan Diplock, says marijuana-growing operations
expanded in number and power consumption during the past decade, and
estimates that 52 per cent of them are stealing electricity.

That's twice the proportion of power thefts from growing operations
estimated by Plecas and others six years ago after reviewing
information collected between 1997 and 2003.

The study was produced by the university without financial assistance
from Hydro.

Diplock and Plecas say that although the other 48 per cent of growers
pay their BC Hydro bills, they are effectively diverting power that
would otherwise go to legitimate purposes, such as deferring
investment in new generating projects, or exporting electricity to the
United States at a profit.

The study authors calculate that theft annually costs Hydro $109
million, and notes the company's estimate that power consumption by
bill-paying growing operations is $28.1 million.

That adds up to $137 million. However, the final number is bumped to
$154 million based on the highest marginal cost Hydro pays to add new
power generation facilities to its grid.

"Although electricity providers do not lose revenue from 'paid'
growing operations, legitimate electricity consumers are still
affected," the study says.

Hydro believes that a conversion of its home metering system to
digital "smart" meters will make it easy to detect electricity theft.

Stopping theft is the biggest financial rationale for the $930-million
smart meter conversion project. Hydro calculates that theft detection
will allow it to protect $732 million of revenue, including inflation,
over 20 years.

Last year, Plecas and Diplock suggested in a research article
published in the Journal of Criminal Justice Research that there were
at least 10,000 commercially viable growing operation in B.C., and
that 20 per cent were stealing power.

Now they're saying they believe there are 13,206 active locations and
6,867 are stealing power.

"This is not surprising given the increasing size of growing
operations and the risk of detection that accompanies the increased
energy consumption," the study says.

In an interview, Plecas said the increase is partly attributable to
the "conservative" nature of previous theft estimates by himself and
his research partners.

"We predicted this when we first looked at this whole business of grow
ops, the nature and extent of them, back in 2000," Plecas said.

"The size of grows has increased dramatically and one of the things we
know is that the larger the grow op the more apt people are to be
stealing hydro[electricity].

"It's like any other enterprise, I guess, the grow-op industry has
become increasingly sophisticated: fewer players, and the big guns are
taking over the business. Most of them have markings of one organized
gang or another."

Jim Quail of the B.C. Public Interest Advocacy Centre, a group that
has questioned the consumer benefits of the $930-million smart meter
investment, said the new numbers "just don't make any sense."

He said the study seems to suggest that B.C. has a relatively bigger problem
than Northern California: 11 per cent of residential electricity consumption
in B.C. derived from growing operations compared with eight per cent in
California.

"If B.C.'s incidence of marijuana growing is approaching California I
would say that's phenomenal. But to have it almost 50-per-cent more
sort of defies reason," Quail said.

He said Hydro and the provincial government in particular are looking
for rationales -such as an assertion that power theft costs Hydro $100
million a year -to bolster the business case for smart meters.

Quail says they are "working backwards to try to find a number that
justifies the investment in smart meters because they have given up
arguing that they conserve electricity."

According to Gary Murphy, chief project officer for BC Hydro's smart
meter program, the report is one of "several sources of data"
referenced by Hydro in calculating the cost of theft.

He said one of the Crown corporation's best indications of the scope
of theft has been the drop in demand for power relative to the number
of growing operations that have been shut down.

"Over the last five years we've identified and shut down over 2,600
thefts. So we have built up a pretty robust source of data," Murphy
said.

One component of that data is the amount of money that has been
recovered from power thieves through litigation.

Another is the drop in the cost of importing power to cover demand
from B.C. consumers, compared with the number of power thieves
apprehended, Murphy said.

"The larger component of the $100 million is frankly the energy
purchases we don't have to make as a result of shutting these folks
down."