BC Hydro's customers will be spared a 3-per-cent rate hike next April, but the promised freeze comes as the Crown corporation's finances are under significant pressure.
"The new NDP government is going to be delivering on its commitment to freeze Hydro rates," Energy Minister Michelle Mungall told reporters on Wednesday. The rate hike of 3 per cent would have brought BC Hydro an additional $150-million over one year. "This is going to be a big savings in ratepayers' pockets," she said.
The NDP had promised in last spring's election campaign to freeze rates. The New Democrats had hammered the former Liberal government for presiding over rate increases of 24 per cent for the past four years.
Ms. Mungall told reporters BC Hydro can make do without the revenue. A broad review by the government of the Crown corporation's finances will determine if the one-year freeze can be sustained.
BC Hydro is committed to costly upgrades to its aging assets and, because rates have not kept up with Hydro's real revenue requirements, the corporation has amassed $5.6-billion of debt in what it calls "deferral accounts," which the Auditor-General has criticized.
Any cost and revenue adjustments that result from the review will be reflected in rates starting in April of 2019.
"We have tied the rate freeze to a one-year review of Hydro," the Energy Minister said. "We know there are savings to be had there."
But first, the provincial cabinet will decide whether to terminate the $10-billion Site C dam project.
During debates this week on her ministry budget, Ms. Mungall confirmed that BC Hydro has estimated that to stop the construction and restore the dam site would result in rate hikes of 9.5 per cent.
The Energy Minister said the effect on rates is still open for debate.
At a separate news event earlier in the day, Premier John Horgan told reporters his cabinet is still seeking new information before a decision will be made on the dam. He said he is asking BC Hydro for more details on what would happen to rates if the dam is completed or if the project is stopped.
"This is not an easy choice we're going to be grappling with in the next couple of weeks," Mr. Horgan said.
The cabinet is also reviewing a report tabled on Nov. 1 from BC Hydro's independent regulator that shot down the utility's claims that construction of the Site C dam would not lead to increased energy rates.
The B.C. Utilities Commission report also found that the project is over budget and concluded that the cost of alternate power would be about the same as the power that Site C would generate.
Another important question for the Ministry of Finance is what happens to the debt that would result if the cabinet kills the project.
Cabinet is looking at the option of shifting the cost of stopping construction and restoring the site – an estimated $3.8-billion in total – from Hydro's books to the direct provincial debt.
In Question Period, the opposition Liberals suggested the fix is already in for the cancellation of Site C, noting several members of the NDP cabinet had campaigned against the project, including Agriculture Minister Lana Popham, Environment Minister George Heyman and Ms. Mungall.
They also circulated a photo of Mr. Horgan standing next to a "Site C Sucks" protest sign during a visit to the Peace River valley when he was in opposition.
Mr. Horgan told the legislature on Wednesday that no decision has been made, and blasted the Liberals for launching the Site C construction when they were in office without conducting a regulatory review to assess the cost of building it and the alternatives.
"This decision will come down to what's in the best interests of British Columbia," the Premier said.
The earliest date for a cabinet decision on Site C would be Nov. 22, after two cabinet ministers consult with the Treaty 8 First Nations in the region where the dam is being built.
Some have reached settlement agreements with BC Hydro, and others are fiercely opposed to the project.