Canadian Manufacturing

Hydro rates in B.C. to jump 40% over next decade, new plan shows

Large industry among hardest hit, with nine per cent increase equal to as much as $139,000 monthly



VICTORIA—Hydro rates in British Columbia are set to increase up to 40 per cent over the next decade, with small business and large industry hit the hardest.

Energy Minister Bill Bennett, who announced a new 10-year BC Hydro plan, said the first increase of nine per cent is set to be introduced on April 1, 2014, with another hike of six per cent planned for April 1, 2015.

The minister didn’t compound the impact of the increases, but estimated the first raise next April will add $8 to an average residential homeowners monthly bill.

The 10-year BC Hydro plan he outlined also included rate increases of four per cent in 2016, 3.5 per cent in 2017 and three per cent in 2018.

Bennett estimated annual rate increases of 2.6 per cent in the working plans for the remaining five years.

He said the B.C. Utilities Commission, the provincial government’s independent energy regulator, will set the increases for the final eight years of the hydro plan.

“So, will anybody be jumping up and down today, saying, ‘Yay, the government raised my hydro rates?’ No, I’m pretty sure they won’t,” Bennett said at a news conference at the provincial legislature.

“All of this is in the context of B.C. having the third lowest hydro rates in North America,” he said. “We’ve done everything we can to keep rate increases to the lowest level possible.

“If you adjust for inflation people are actually paying about the same thing or less than they paid 20 years ago for electricity.”

The 10-year hydro plan also impacts small businesses and large industries.

A nine per cent increase for a small business amounts to about an extra $20 per month, while for large industrial customers, a nine per cent increase is as much as $139,000 a month, he said.

Bennett said the 10-year plan is designed to keep power rates as low as possible while BC Hydro makes investments in aging assets and new infrastructure.

Hydro documents leaked shortly after the May election, when the Liberals were returned to power, revealed a working group within the Crown corporation was considering rate hikes of 26.4 per cent over two years.

The government ordered the group to come up with a lower number and it returned with increases of 15.6 per cent, Bennett said.

Opposition New Democrat energy critic John Horgan said the Liberal government blind-sided British Columbians with double-digit hydro-rate increases.

Horgan said the NDP stated prior to last spring’s election campaign it would raise hydro rates if elected, but during the campaign the Liberals downplayed rate hikes, but now they are going up for the next decade.

“We said before the election there were significant challenges on the horizon for BC Hydro,” he said. “The Liberals said everything was fine.

“It was all sparkles and shiny baubles for them and the reality now is while the premier is away in Asia and the legislature sits idle, British Columbians are getting whacked in the face by liars.”

Horgan estimated the average residential hydro customer will pay $166 more per year for the first two years of the increases.

Bennett said the plan aims to reduce and eliminate the government’s use of massive dividend payments and regulatory accounts that critics have consistently pointed to when accusing the Liberals of raiding hydro’s finances to bolster government accounts.

Bennett said by 2024 the government will no longer rely on hydro dividend funds to contribute to government accounts.

But a government graph revealed that until the 2017 provincial election, the government still plans to use $1.2-billion from its hydro dividend account.

Bennett said the plan will also bring hydro’s use of a regulatory account, which critics have called a debt deferral account, to zero by 2024, but until then the account will balloon to $1.08-billion.

Bennett said the government’s dividend reductions will give hydro $3-billion over the 10-year plan to contribute to infrastructure improvements.

“At some point, and I think we’ve reached that point, in order for the public utility to remain stable and able to invest in the critical infrastructure they need to invest in they need to be allowed to keep as much cash as possible to do that.”

BC Hydro’s chief executive officer Charles Reid said residents are still getting a good deal on their hydro rates.

“The average residential user, their cable bills and phone bills are much, much higher than their electricity bills. If you were in Calgary, instead of paying $80 or $90 a month for electricity, you’d be paying $150 a month for electricity.”

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