"While the use of rateregulated accounting is acceptable under existing Canadian generally accepted accounting standards, it can mask the true cost of doing business, create the appearance of profitability where none actually exists, and place undue burdens on future ratepayers."
- John Doyle, Oct. 27, 2011
The future is now for ratepayers facing a 26 per cent increase on their BC Hydro bills over the next two years.
Were the numbers announced last Wednesday intended to shock British Columbians enough that a political fall-back to, say, 17 per cent won't sound so bad? Who knows? But word it how you will, what we can be sure of is that we are not being told the truth about the reasons behind the increases.
Regardless of the eventual number, John Doyle - one of the best auditors general we could hope for - sounded the alarm when he disrobed BC Hydro and the Campbell Liberals with his 2011 report that revealed BC Hydro's deferred expenses were $2.2 billion and rising.
Then, having tracked Hydro's reactions to his advice, Doyle released a March, 2012 sequel - BC Hydro: The Effects of Rate-regulated Accounting - to report on Hydro's "self-assessed" progress.
The first of two recommendations had been partially implemented - only to the extent that the corporation was planning to review its accounts and figure out how to recover the costs it had deferred in previous years.
Not impressive; but it was Hydro's reaction to the second recommendation that revealed one of the agency's most serious flaws.
Five months after Doyle had presented the final draft of his first report to the Hydro board for review, the corporation's only attempt to adjust its books to reflect "Canadian generally accepted accounting principles" was to consult with the provincial comptroller general and the Ministry of Finance.
In other words, Hydro's operations-level "decisionmakers" are paralysed when it comes to beefing up the accountability of its most vital management system, unless provincial politicians give them the go-ahead to make the changes.
If you are wondering why the Liberals would ever want to alter what has been, and still is, a provincially directed prop for their own budgetary problems, the answer is they don't.
Even if you are aware of the game as politicians play it, there are still more dots that need to be connected: Speaking to last week's television cameras about a provincial surplus that is on the "razor's edge," B.C. Finance Minister Mike de Jong said "We're not out of the woods yet."
That's as much of the truth as we're likely to hear; de Jong is not even close to balancing the budget.
Deduct the $190 million the province pulled in from the sale of assets - including school lands - that used to belong to the people; deduct the $230 million "dividend" Hydro paid to the province and the $234 million premium-dollars Victoria took from ICBC, and de Jong's razor-thin $136 million "surplus" becomes a very unhealthy halfbillion deficit.
But we're still not done. According to its own report, Hydro's actual "return to government" in 2012 was more than $1.1 billion. The difference between that number and the $230 million dividend is accounted for by the dollars Hydro pays to the province as "royalties for the use of provincial water resources, provincial and municipal property taxes or grants-in-lieu."
No matter; taxation by any other name is still taxation.
ICBC operations are also compromised by that devious ploy.
After quoting union president David Black who said, "This government is siphoning over $1 billion from ICBC alone," a Feb. 2012 COPE-378 newsletter said that doesn't include an estimated $110 million subsidy ICBC gives government by providing "driver licensing, vehicle licensing and registration services free of charge."
So the next important question to ask is: Why would a government that has difficulty balancing its budget go on a $1-billion, non-priority spending spree to purchase and install Smart Meters? Well, here's where we learn how low politics can get when government plays Monopoly with taxpayers' money.
First a quick reminder about the seriousness of conflict of interest, as described in the legal bible for local government: Section 101 (1-3) of the Community Charter applies "if a council member has a direct or indirect pecuniary interest in a matter."
Paraphrasing - the member must not attend any part of a meeting during which the matter is under consideration; participate in discussion of, or vote on the matter, nor "attempt in any way. .. to influence the voting on any question in respect of the matter."
Unequivocally, the Charter continues, "A person who contravenes this section is disqualified from holding an office... ." So how is it that, as journalist Will McMartin revealed in a March 7, 2011 Tyee article, ".. . the first contract under the B.C. Liberal government's $1-billion smart grid initiative just happened to go to a company (Corix Utilities) owned by another (CAI Capital Management) that is managed by a BC Hydro director (Tracey McVicar) and advised by a BC Liberal confidante (David Emerson)."
Until last week, I believed McVicar's Hydro directorship was the worst of it. Little did I know.
For taxpayers, it seems rate-regulated accounting is not the only B.C. Liberal-driven practice that masks the true cost of doing business in this province.
When all is said and done, ordinary, decent British Columbians may well decide the loss of billions of dollars takes second place to the loss of their ability to trust a single word spoken by the government they re-elected just four short months ago.
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