The provincial government says hydro bills could go down for the first time in decades, as part of a smaller than anticipated five-year rate hike, if the B.C. Utilities Commission approves BC Hydro’s request for a decrease in rates.
On Aug. 22, BC Hydro submitted a request for a rate reduction of one per cent starting in April 2020. This would be followed by a 2.7 per cent increase in 2021, a 0.3 per cent decrease in 2022 and a three per cent increase in 2023.
If approved, the cumulative bill increase over the next five years is estimated to be 6.2 per cent, a drop from the eight per cent announced by Energy Minister Michelle Mungall in February after a report found customers would be on the hook for $16 billion over the next two decades.
That report, commissioned by the NDP government, found the former Liberal government manufactured an urgent need for electricity but restricted BC Hydro from producing it, forcing the utility to turn to private producers and sign long-term contracts at inflated prices.
The ministry says the new application is based on its audited fiscal 2019 financial results and the latest financial forecast, that reflect 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 B.C. Utilities Commission,” Chris O’Riley, president and chief operating officer, BC Hydro, said in a statement.
“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.”
The commission is expected to make its decision early next year.
“For the past two years, our government has been focused on making sure BC Hydro works for people again,” Mungall said in a statement. “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.”
B.C.’s auditor general Carol Bellringer also said in February that BC Hydro had amassed $5.5 billion in 29 deferred expense accounts, of which some are scheduled to be repaid over 40 years.
B.C.’s auditor general Carol Bellringer said in February that BC Hydro had amassed $5.5 billion in 29 deferred expense accounts, of which some are scheduled to be repaid over 40 years.
The NDP government wrote off $1.1 billion in deferred expense costs on BC Hydro’s books to reduce the burden on ratepayers, Mungall said.
“That was a one-time write off to deal with some of the debt at BC Hydro that was incurred under the previous Liberal government,” she said.
“That’s what brings us to this point where we can actually apply for a rate decrease,” she said, adding that it’s part of a broad financial management strategy.
The new plan would not see BC Hydro take on any additional debt, she said.
The utilities commission has already approved an interim net bill increase of 1.8 per cent for 2019-20, which came into effect April 1 as part of BC Hydro’s fiscal 2020-21 revenue requirements application.
Mungall said she’s hopeful the utilities commission will approve the request, even though it rejected the government’s previous request to freeze rates.
With files from Amy Smart, The Canadian Press