FORSETH – Something hinky going on with announcement of Hydro rate cut

SO OUR PROVINCIAL NDP government has announced that we will be paying …  less for electricity next spring if the BC Utilities Commission (BCUC) approves BC Hydro’s request for a decrease in rates.

“For the past two years, our government has been focused on making sure BC Hydro works for people again,” said Michelle Mungall, Minister of Energy, Mines and Petroleum Resources. “I am thrilled that BC Hydro is now able to apply for a rate reduction for the first time in decades. If approved by our independent regulator, lower rates would make life better and more affordable for British Columbians.”

Here’s the thing though — that decrease, if approved by the BC Utilities Commission, will be 1% beginning in 2021 … but it will be followed by an INCREASE of two point seven percent (2.7%) in 2021.

Then in 2022 Hydro has requested to reduce our rates, this time by by POINT three percent (0.3%) … which will again be followed by another INCREASE of three percent (3%) in 2023.

WHAT’S THE BOTTOM LINE?

We have a total decrease in our BC Hydro bill, if approved by the BC Utilities Commission of 1.3% over the next four years … which will be wiped out with a 5.7% increase during the same time period.

Getting back to the BC Government News media release, it states that:

BC Hydro’s application to the BCUC is based on its audited fiscal 2019 financial results and latest financial forecast that reflect, among other things, higher-than-anticipated income from its trading subsidiary Powerex, lower-than-anticipated forecast debt financing costs and lower-than-anticipated purchases from independent power producers (IPPs).

“As a result of our updated financial forecast, we’re in the unique position to apply for a rate decrease for our customers that would start on April 1, 2020, if approved by the BC Utilities Commission,” said Chris O’Riley, president and chief operating officer, BC Hydro.

“We’re committed to continue to work with government and the B.C. Utilities Commission to keep rates affordable while ensuring we continue to provide safe, reliable power to the province.”

BUT … hold on a minute, Chris.  What did CBC News have to say less than six months ago?

“Customers on the hook for $5.5 billion in deferred BC Hydro operating costs: report”

Auditor General Carol Bellringer says BC Hydro has deferred $5.5 billion in expenses that it plans to recover from ratepayers in the future.

Bellringer focuses on the deferred expenses in a report on the public utility’s use of rate-regulated accounting to control the prices it charges customers.

“As of March 31, 2018, BC Hydro reported a total net regulatory asset of $5.455 billion, which is what ratepayers owe,” says the report. “BC Hydro expects to recover this from ratepayers in the future. For BC Hydro, this is an asset. For ratepayers, this is a debt.”

She says rate-regulated accounting is used widely across North America, but cautions that Hydro has largely overridden the role of the independent B.C. Utilities Commission to regulate rates.

There’s something hinky going on with BC Hydro’s application to the Utilities Commission. Despite the claim by Minister of Energy Michelle Mungall that there is going to be a ‘rate reduction for the first time in decades’, that is in fact a fallacy.

Increasing rates by 5.7%, while decreasing them by 1.3% is not a rate reduction that computes for me …

… and I defy any mathematician to prove otherwise!

Alan Forseth is a Kamloops resident and former member of the Reform Party of Canada and the B.C. Reform Party, and a past and current member of the BC Conservative Party. His blog is My Thoughts on Politics and More.