THE RATES WILL RISE

BCUC blocks Hydro freeze

VICTORIA B.C.’s New Democrat government was forced to abandon an election promise to freeze electricity rates Thursday, four months after it had announced the move to ratepayers.

The province’s independent energy regulator, the B.C. Utilities Commission, shot down Energy Minister Michelle Mungall’s request for a one-year freeze effective April 1, saying B.C. Hydro could not afford to forgo the money and her government had not provided a sufficient argument to justify the move.

Instead, Hydro was ordered to hike rates three per cent, as it had originally planned before the NDP assuming power. That will add $2 a month to an average Hydro bill, or $23 per year.

The commission ruled “there is not sufficient regulatory justification for approving real rate decreases — unless cost reductions justify those decreases, and that is not the case here.”

Mungall’s ministry responded within minutes by announcing a Hydro lifeline program that could reduce electricity rates for some low-income people, and provide $600 grants for customers who find themselves in a crisis, such as a job loss, medical emergency or eviction. Details of those programs are to be released this year.

Mungall had announced the rate freeze in a press release Nov. 8 as if it had already been approved.

After the press release — under the headline “Province delivers on commitment to freeze B.C. Hydro rates” — the government and Hydro faced tough questions at BCUC hearings.

The commission was worried about Hydro’s ability to cover the $140-million cost of the rate freeze, and said it would put a 10year rate plan at risk.

The commission suggested if the government wanted rates reduced, it could have lowered its net income from Hydro, rather than sticking the Crown power corporation with the bill for the freeze. Hydro planned to cover the costs though a rate-smoothing account to be paid by ratepayers in future years.

“The panel acknowledges the issue of affordability caused by real rate increases,” the BCUC wrote in its decision.

“We further agree that freezing the rate for one year increases the affordability of electricity for that year, thereby reducing the hardship that may otherwise be faced by some customers. However, under the current legislative and regulatory framework, the panel is unable to consider the economic circumstances of individual ratepayers.”

The NDP government could have directed the commission to pass the rate freeze through a cabinet order, but it had for years criticized the former Liberal government for issuing such orders, and promised to better respect the independence of the regulator.

Instead, Hydro’s lawyers tried to argue that Premier John Horgan’s public comments and mandate letter to Mungall were regulatory justification. The commission disagreed, ruling the premier’s comments held no more weight than any other evidence.

The commission also expressed concern a rate freeze would imperil Hydro’s precarious financial situation. Hydro had spent months, before the NDP assumed power, arguing it badly needed the revenue from the three per cent rate increase.

The commission warned Hydro’s expenditures “have risen faster than revenues. A company with expenditures that exceed its revenues is not sustainable.”

Mungall said she was “very disappointed.”

“But I appreciate their rationale,” she added. “They were very clear, in a nutshell, that there’s a mess at B.C. Hydro. It needs to be cleaned up and I hear that.”

Opposition Liberal Leader Andrew Wilkinson said it’s another example of the NDP failing to live up to its promises in government.

“The Hydro rate freeze now joins the renters’ rebate, the 114,000 new units of affordable housing, $10-a-day child care and massive tax hikes on the NDP’s growing pile of broken promises,” he said.

Green Leader Andrew Weaver praised the BCUC decision.

“The BCUC would have had mud all over their face if they’d approved conditionally the previous rate hikes based on information B.C. Hydro had presented, and now suddenly they were going to go back on that just because of political reasons,” he said.

“If you respect the independence of the BCUC, you let them do their job, and they did their job, so good on them.”

They were very clear, in a nutshell, that there’s a mess at B.C. Hydro. It needs to be cleaned up and I hear that.