Yes, your BC Hydro bill will soon become more expensive - and why shouldn't it?
After all, most things in life become more expensive over time. Why should your electricity costs be any different? And yes, the B.C. government will continue to "take" money from BC Hydro, and why shouldn't it? After all, the government (i.e. you and I) owns the Crown Corporation so why shouldn't it be able to dip into its bank account?
However, these questions mask the real problems facing BC Hydro and its customers - many of which can be laid squarely at the feet of the B.C. Liberal government.
An internal document leaked to COPE 378, one of the unions at BC Hydro, suggests a rate hike of 26.4 per cent over the next two years is required to cover costs.
Those costs total about $1 billion. Here's the breakdown:
$515 million for capital spending, amortization and financing costs;
$160 million for "rate smoothing," which covers the rate increase that was supposed to occur last year; ¦ $135 million for contracts with independent power producers;
$130 million to pay for deferred expenses;
$65 million to cover interest and operating costs.
A closer look at those numbers shows at least half the total amount is attributable to policies of the B.C. Liberal government.
The makeup for a cancelled rate increase on the eve of the provincial election, the requirement that BC Hydro buy power from IPPs when it didn't need it (and at higherthan-market prices) and the deferring of expenses for years, plus the interest charged on all that can be traced back directly to the government.
As well, some critics claim at least part of BC Hydro's massive capital spending plan is not needed and has not been adequately explained and defended by the corporation or the government. For example, the $1-billion smart meter installation program has never been scrutinized by the B.C. Utilities Commission because the B.C. Liberals ruled it was exempt from such scrutiny.
In fact, much of what BC Hydro has or hasn't done over the past decade has occurred without any external scrutiny and that partly explains why the mess the corporation is in today is so bad. Problems flagged years ago (putting off paying for expenses, and signing more than $50 billion of dubious contracts with IPPs) have been allowed to mushroom in size and the result is the inevitable kick in the teeth to the ratepayer.
BC Hydro rates should have been allowed to increase gradually over a period of time, rather than all at once. Instead, political considerations have prevented that from occurring.
During the B.C. Liberal party leadership, the reporters participating in the televised leaders debate deliberately chose hydro rates as one of the questions.
At that time, BC Hydro had already said it required a rate increase of more than 25 per cent, and all of the candidates dodged the question of whether they agreed it was inevitable hydro rates had to be increased (to be fair, the NDP also dodged the same question in the run-up to the election campaign).
With an election looming after that, the government again put off what had to be done because it didn't want to rile a public it was courting for vote support.
But now the day of reckoning is at hand. However, more political meddling will take place before the size of the actual rate hike is arrived at.
That leaked document says BC Hydro's financial problems can be answered by three ways: a rate increase, even more deferred expenses, or a small payment to the government.
I suspect the end result will be a combination of all three, or perhaps two (the government is likely loathe to take less money at a time when it's desperately trying to balance its budget).
But the best thing would be to send the whole mess to the B.C. Utilities Commission to sort out. The B.C. Liberals don't like external scrutiny (hello cancelled fall legislature sitting) but in this case it might just save everyone some money.
Keith Baldrey is chief political reporter for Global BC. Keith.Baldrey@globalnews. ca.
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