The "family friendly" overhaul of BC Hydro's planned rate hikes will save the average BC household almost enough cash for an extra latte a week, but the average large industrial consumer will gain $100,000 a month in relief.
When BC Hydro announced late last year that it required rate increases of 32.1 per cent over three years, its biggest customers pushed back, hiring lawyers and lobbyists to demand that the rate increase be halved. They also called for the province's Clean Energy Act to be revamped because it was deemed responsible for much of Hydro's escalating costs.
Last week, the government-ordered review of BC Hydro landed on the same points.
The review panel, led by three senior bureaucrats, recommended that the rate increase be cut to 16.6 per cent over three years and provided the basis for watering down the Clean Energy Act.
The review was conducted under Premier Christy Clark's "families first" agenda, but all classes of BC Hydro customers – residential, commercial and industrial – will get the same reprieve on rate hikes. Highland Valley Copper, the province's biggest copper mine, with an annual $4.7-million electricity bill, calculates the government directive will save the company $724,000 in Hydro costs next year, compared to what the utility had planned to charge for electricity.
The difference between what Hydro wanted and what the government has ordered will mean savings, by the end of the three years, of $100,000 per month for the province's average industrial-scale customer, according to figures provided Tuesday by BC Hydro.
By the end of three years, the average household will be paying $11 per month less than they would have under the original Hydro proposal.
Richard Stout, executive director of the Association of Major Power Customers of B.C., welcomed the government's intervention. His members were unhappy with the 2010 Clean Energy Act because it included new self-sufficiency requirements that would drive up electricity costs.
The Crown corporation has spent $2.6-billion on net electricity imports over the past decade, but creating new clean energy supply is more costly than importing electricity at current prices.
"I don't think it's a big victory specifically for the industrial class, I think it's a big victory for every class," Mr. Stout said in an interview. "Why should any class of customer be paying to generate a worthless surplus of energy every year?"
When then-premier Gordon Campbell announced the 2010 Clean Energy Act, he said it would usher in an "exciting new age of economic growth and job creation by unleashing British Columbia's full potential in clean energy."
But critics said the requirements of the Act would force BC Hydro to commit to long-term contracts with independent power producers, leaving it with a glut of energy in good times in order to ensure it wouldn't have to import power during a drought.
The review panel concluded that the province has in effect bought too much insurance, and its self-sufficiency targets "place an undue burden on ratepayers."
Energy Minister Rich Coleman has now ordered his staff to review the Act and he expects to bring forward recommendations to cabinet in September. Amendments to the Clean Energy Act could be ready by the fall legislative session.
George Hoberg, a public resource policy expert from the University of B.C., said the Clean Energy Act delivered gains to the clean energy business, but the B.C. Liberals under Ms. Clark seem prepared to appease a different sector of the economy.
"It really is a significant shift, to the relative advantage of the industrial energy consumers," he said. "The core interest of the industrial sector is inexpensive, reliable power." But choosing cheaper power in the short term, he said, will mean B.C. will continue to rely on electricity imports generated by burning fossil-fuels. "Green electricity is more expensive," he said.