BC Hydro is not ready for a widespread disaster such as an earthquake because it does not have a proper disaster preparedness program, an internal audit says.

The December 2012 PricewaterhouseCoopers audit concluded BC Hydro does not have adequate management oversight of its disaster planning, has no effective process for assessing risks and has no comprehensive and integrated disaster plans.

The audit singled out the potential for damage to facilities and power lines in the Lower Mainland and Vancouver Island. The audit’s scope included other significant disastrous events such as a dam breach and widespread flood or fire, but not windstorms that bring down power lines.

Among the issues the audit highlighted:

• Only about 40 of 140 plans had been completed to prepare for specific effects throughout Hydro of a major disaster. But even these plans are not tied together in an meaningful way.

• Hydro’s insurance — $2.25 billion to cover for general liability and loss to property, boilers and machinery — is not enough to cover a major disaster.

• Some emergency preparedness staff did not have the required capabilities and experience.

BC Hydro officials said Wednesday they were acting on the audit’s recommendations.

“It clearly outlined some deficiencies, took a critical look at our operations and helped us identify areas where we can improve. That’s what we have (audits) for, and now we are about to respond,” said Hydro spokeswoman Simi Heer.

Hydro has given itself three years to improve its major-disaster plan to industry’s best standards.

“We are making every effort to accelerate that,” Heer said.

The audit’s finding came as a surprise to disaster management expert Paul Kovacs, particularly since the risk of a catastrophic earthquake in British Columbia has been well known for several decades.

“My reaction is I am certainly shocked,” said Kovacs, executive director of the Toronto-based think-tank Institute for Catastrophic Loss Reduction and an adjunct professor at the University of Western Ontario.

He said particularly concerning to him was the report’s findings the Crown corporation may not be meeting regulatory requirements.

The B.C. Emergency Program Act requires Crown corporations to have a plan and procedures to describe how essential services will be provided in an emergency or disaster. No overall plan exists for Hydro, but the audit said it was unclear whether the BC Hydro Act would exempt the Crown corporation from this requirement.

Kovacs, who delivered a keynote address in Toronto last month at the World Conference on Disaster Management, said he would have liked the audit to also assess how Hydro intended to mitigate the effects of a disaster, including the ability of dams to withstand earthquakes.

It’s also important for the public to know how soon after a major disaster Hydro would have power restored, said Kovacs, whose institute partnered with Hydro in 1999 to investigate the failure of a concrete dam in Taiwan following an earthquake.

Heer said Hydro has already set up a dedicated management team to prepare an emergency response and recovery program, and to ensure it can continue to deliver power after a catastrophe.

The Crown corporation has reached mutual aid agreements with utilities in Canada and the U.S. to ensure resources are available when needed, responding to an issue identified in the audit seven months ago.

Employees will also receive better training and participate in more frequent emergency exercises, Heer said.

Hydro is already investing in seismic upgrades to its dams, she said.

PricewaterhouseCoopers was selected as auditor by Hydro because its consultants had worked as emergency responders and planners for catastrophic events such as the Southeast Asia Tsunami of 2004 and hurricanes Rita and Katrina.

The auditors noted recent earthquakes such as those in Japan, New Zealand and off the coast of B.C. should be a wake-up call that a significant event could occur any time here.

Recent research suggests a 40-per-cent chance of a catastrophic disruption by a major earthquake in the Pacific Northwest any time in the next 50 years.

Large-scale events can be as costly as Hurricane Katrina, the audit noted. New Orleans was unable to fully restore power for months and was in bankruptcy for nearly two years.

ghoekstra@vancouversun.com