B.C. Hydro to get $1.1B from province in bid to limit huge rate hikes
The cost of electricity in B.C. is going up by more than eight per cent over the next five years, but it’s 40 per cent less than previously forecast by the former Liberal government, the province’s energy minister said Thursday.
An internal review at the Crown corporation found ways to cut rate increases forecast by the former government. Michelle Mungall said the NDP government will write down $1.1 billion in deferred expense costs on B.C. Hydro’s books to reduce the rate increases.
The first increase of 1.8 per cent will be implemented April 1, if the independent regulator B.C. Utilities Commission approves the added expense, Mungall said. She said the rates proposed by the former government were set to rise by 2.6 per cent this April, with further increases over the coming years. A second increase of 0.7 per cent is planned for April 1, 2020.
“We were committed to finding the best possible reduction, as much reduction as we possibly could from the existing plan under the B.C. Liberals, and we have looked in every corner to find every penny that we can pinch,” Mungall said at a news conference. “We have found that and were able to reduce the rate increases by 40 per cent.”
B.C.’s auditor general Carol Bellringer recently said Hydro has amassed $5.5 billion in 29 deferred expense accounts, of which some are scheduled to be repaid over 40 years.
“We are able to do this because we accepted a recommendation from the review for B.C. Hydro to stop using the rate-smoothing reg- ulatory account and to write off its balance to zero in 201819,” Mungall said, referring to an account that delays repayment of debt until sometime in the future.
The government also pledged to allow expanded oversight over B.C. Hydro by the B.C. Utilities Commission.
Mungall said the utilities commission can provide B.C. Hydro’s outside eyes. “Governments, they sometimes play politics, as we have seen.”
She said the review is the first step in taking politics out of B.C. Hydro and setting it back on a solid financial path.
Opposition critic Greg Kyllo said in a statement that government plans to keep rates affordable are misguided.
“B.C. currently has the fifth-lowest rates in North America, thanks to investments made by our former government, but our system is aging and our population is growing,” Kyllo said. “That means we need to invest more than $2 billion per year in new and upgraded infrastructure.”
The announcement comes after a report commissioned by the NDP government said BC Hydro customers will pay $16 billion over the next two decades because the Crown utility was pressured by the former government to sign contracts with independent power producers. Mungall said that finding made it impossible for the NDP to keep a promise rate freeze.
The report says the Liberals manufactured an urgent need for electricity but restricted B.C. Hydro from producing it, forcing the utility to turn to private producers.