A recent report by B.C.’s auditor general indicates that B.C. is overdue for an increase in hydro rates.
Decades of political interference to suppress electricity rates in British Columbia has left BC Hydro’s future ratepayers with significant debt that must be repaid, Auditor-General Carol Bellringer says. Under direction from government, the Crown utility has used “inappropriate” accounting to pile $5.5 billion in what are known as deferral accounts without a clear repayment plan.
The debt can be tackled by raising rates or a government bail-out, the auditor said in a report released last week.
That debt amounts to $1,300 for every residential customer, more than $10,000 for each commercial and light industrial ratepayer, and almost $5-million for each large industrial consumer. Bruce Ralston, the acting minister responsible for BC Hydro, said Wednesday his government is committed to fixing the problem, but said it will take time given the size of the debt. “We are going to keep rates affordable. No one’s rates are going up by $1,300 in a year.”
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While other major Canadian utilities also use regulatory accounts, the auditor noted that BC Hydro’s accounts stand out in scale.
The total amount in BC Hydro’s regulatory accounts equals 87 per cent of its total revenue for last year more than twice as much as some other provinces.
It shouldn’t come as a surprise that an increase was in order as the increasing deficit was known for some time. Arthur Caldicott an independent energy analyst in Victoria, points out that the problem was laid out with painful clarity in BC Hydro’s 2015 Annual Report. Deferral accounts total $5,433 million; long term debt $16,896 million; long term energy purchase commitments $53,817 million. That adds up to 76 billion dollars. This does not include the projected $8.335 billion for Site C.
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Mr. Caldicott also reminds us that we can’t count on exporting expensive power to keep BC residents rates low. California sued Powerex (the company that sells power for BC hydro ) for $3.2 billion. Howls of outrage and protestations of innocence from British Columbia couldn’t make the lawsuit go away, and in 2013 the B.C. government agreed to a $750 million out-of-court settlement. California continues to be a reliable customer, but it shows little interest in buying more power from B.C., at the high rates charged in the past.
He also points out that exports of power in 2016 showed a loss of approximately $60 dollars per kwh which was not a winning business proposition. Electricity from independent power producers (IPPs) is also expensive, a review of BC Hydro’s website shows a range of some early contracts paid up to $120 per mega watt so basic residential rates of $86 dollars per MWH means Hydro is losing money on power from IPPs. This may not be the best time for companies like Atlantic Power and solar farms trying to reach new agreements.
It would be natural for residents to blame the politicians for the mess we are in but I for one assume some of the responsibility. I don’t like to see a rise in my hydro rates and I could do more to reduce my consumption. Also as noted above there were plenty of warnings about debts before the election and we should know by now the politicians tell us what we want to hear before we cast our ballot.
Jim Hilton is a professional agrologist and forester who has lived and worked in the Cariboo Chilcotin for the past 40 years. Now retired, Hilton still volunteers his skills with local community forests organizations.
