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The B.C. Liberal government has pushed aside the regulator of Hydro rates to suit its political needs since 2012.HO

BC Hydro filed a 4,900-page application on Friday with its regulator, a complex document that proposes, for the most part, a status quo rate structure for its captive base of 1.8 million customers. It's just a prelude to the big show, when the Crown corporation heads into its first complete rate review since 1991.

"It will be 'open the kimono' time for BC Hydro," as the Minister of Energy, Bill Bennett, indelicately puts it.

The B.C. Liberal government, no fan of the independent B.C. Utilities Commission, has pushed aside the regulator of Hydro rates to suit its political needs since 2012 – conveniently, before the last provincial election. And the cabinet has approved billions of dollars' worth of pet projects without the regulator's scrutiny.

When the commission hearings begin in February, years of pent-up questions about those decisions will finally have a forum in a formal revenue requirement application, which promises the courtroom spectacle of seeing Hydro's top brass under cross-examination.

"Frankly, you are going to have a year to feast on all of the information that will become public," Mr. Bennett promised.

After years discounting the need for independent regulation of BC Hydro, Mr. Bennett seems to have had a conversion: He has promised to restore the commission's ability to set hydro rates, and his officials are drafting legislation designed to bolster the commission's authority.

But he will continue to keep Hydro, and the commission, on a short leash.

The government has set hydro rates for the next two years. After that, the commission can determine rates – limited to a government-imposed cap that will ensure rates don't spike before the next B.C. election in 2017. The government says this is to "keep rates predictable while funding investments in aging and new infrastructure."

Mr. Bennett is adamant that government should determine energy policy, and he is likely to exclude another two major projects from a regulatory review before this year is out. Although a public consultation is still in process, Mr. Bennett is very much leaning toward bypassing the commission again, to fast-track a pair of transmission lines that would bring electric power to natural gas operations in the province's northeast.

"How can people be opposed to something that is going to dramatically decrease the GHG emissions in the gas fields?"

But there is opposition, on the grounds that ratepayers will have to pick up the tab at some point for all these government-driven decisions. Critics – chiefly ratepayers – argue the best way to ensure that Hydro is spending only what it needs, is to let the independent regulator do its job as the watchdog.

The BC Public Interest Advocacy Centre has been calling for the commission's role to be restored for that reason. Now the group is taking advantage of the rate structure review to propose new relief for low-income residents who make up about 11 per cent of Hydro's residential customers. BC Hydro's residential electricity rates have increased by 47 per cent over the past decade, they argue, while social assistance rates and the minimum wage have been almost frozen.

The group is just one of the stakeholders that will be lining up to try to influence the shape the coming rate increases. They know there is a reckoning due for all the years of government tinkering and "rate smoothing."

Mr. Bennett says he has a 10-year plan to keep rates low, but there is undeniably upward pressure. The Crown corporation's capital plan calls for spending $2.4-billion each year for the next 10 years. Because rates haven't kept up with Hydro's real revenue requirements, the corporation has been amassing debt in what it calls "deferral accounts" – those accounts will reach more than $5-billion by 2018. At the same time, demand for Hydro power is falling short of its forecasts, and the cost of producing energy is climbing.

Mr. Bennett promises a year of disclosure of BC Hydro's business operations. But the watchdog will need to slip its leash if British Columbians are going to finally see the cost of those decisions when the government decided it knew best.

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