B.C. Auditor General Carol Bellringer released a report on rate-regulating accounting at BC Hydro. The report says BC Hydro has accumulated about $5.5 billion in deferred costs to be recovered by ratepayers. File photo.
B.C’s Auditor General says BC Hydro has not charged customers enough to cover operating costs and has accumulated about $5.5 in expenses to be covered by ratepayers.
In her 41-page “Rate-regulated Accounting at BC Hydro” report, Bellringer says the BC Utilities Commission (BCUC) is responsible for controlling the price or rate BC Hydro charges customers.
The report says the B.C. government has “largely overridden BCUC’s role in regulating BC Hydro”, and has not allowed the corporation to charge customers enough to cover expenses.
Bellringer says on March 31, 2018, BC Hydro had 29 regulatory accounts, with a net regulatory asset balance of approximately $5.5 billion of deferred expenses to be recovered by ratepayers.
The provincial auditor used the example of a storm destroying a power grid resulting in higher than expected repair costs, a regulator could allow a utility to recover those costs over future years instead of sudden drastic rate increases, or potentially incurring a financial statement loss.
Due to past government direction, BC Hydro has not used rate-regulated accounting correctly and has deferred $5.5 billion in operating costs that it needs to recover. https://t.co/iYrvblSqI5
— B.C. Auditor General (@BCAuditorGen) February 6, 2019
Bellringer says regulators, such as the BCUC that can act independently, are critical to rate-regulating accounting.
According to the report, the government has taken over much of BCUC’s role to regulate BC Hydro’s rates, costs and use of regulatory accounts, limiting the commission’s authority.
Bellringer says the government began to make changes in November that affect BC Hydro and the BCUC by removing a regulation that prevented the utility from implementing appropriate accounting standards.
The province has told the auditor’s office more changes are coming and Bellringer says she is “waiting to see how these changes will roll out and how they will affect both BC Hydro’s and government’s financial statements.”
There was one recommendation that came out of the report, calling on BC Hydro to prepare its financial statements in accordance with the Canadian Generally Accepted Accounting Principles, without modification.
We recommend BC Hydro prepare its financial statements in accordance with Canadian GAAP. https://t.co/iYrvblSqI5 pic.twitter.com/7fzXvCXO2r
— B.C. Auditor General (@BCAuditorGen) February 6, 2019
CHEK News
