Hydro rates to rise due to debt
The B.C. Utilities Commission has approved an extra 2.5-per-cent interim increase in BC Hydro rates, which means a seven-per-cent increase in electricity bills starting April 1.
The commission's decision is a setback for the B.C. government, which conducted a cost-cutting review of BC Hydro last year that cut 700 jobs to bring the 2012 rate increase down below four per cent.
The decision is still an interim rate increase. BC Hydro can argue for a reduction, which would result in a rebate on electricity bills if it is granted by the commission later this year.
The commission ruled that the latest 2.5 per cent increase, about $5 a month on the average residential bill, is needed to pay down BC Hydro's ballooning deferred debt, which was identified in October by B.C. Auditor General John Doyle.
Doyle reviewed BC Hydro's books and found that as of March 2011, $2.2 billion of the utility's debt was placed in deferral accounts. Deferred expenses were forecast to grow to $5 billion by 2017.
Doyle said deferral accounts for major capital costs are an acceptable practice to smooth out rate increases, but BC Hydro's use of it runs ahead of other Canadian utilities. The practice can "mask the true cost of doing business, creating the appearance of profitability where none actually exists, and place undue burdens on future taxpayers," he said.
Doyle's conclusion that "there does not appear to be a plan to reduce the balance of these accounts" is supported by the utilities commission decision.
NDP energy critic John Horgan said the auditor's report showed the B.C. Liberal government was using BC Hydro as an "ATM machine," collecting $463 million in revenue last year and forcing the utility to pile up debt to do it.