The provincial government has done a good thing in scaling back BC Hydro rate increases. The way it is doing so raises more questions than answers.
On Tuesday, Energy Minister Rich Coleman announced that the government was cancelling a B.C. Utilities Commission hearing into Hydro rate increases, which have already been scaled back from the 50 per cent premium increases which were initially proposed about two years ago, under former premier Gordon Campbell.
At that time, the rate increases were suggested to allow for introduction of the smart meter program, purchase of private power under long-term contracts and major capital expenses, including turbine installation at several dams and other upgrades.
When Coleman was named energy minister under new Premier Christy Clark, she asked that he review Hydro’s plans. The review said that the smart meter program should stay, and that other projects should proceed, but also said that rates didn’t need to go up as steeply.
Hydro then asked for an eight per cent increase in 2012, 3.91 per cent in 2013 and 3.91 per cent in 2014. Planned increases had been 9.73 per cent each year.
On Tuesday, Coleman said Hydro received an eight per cent increase in 2011 and a 3.91 per cent increase in 2012, along with a rate rider of five per cent. The government is now saying it wants a 1.44 per cent increase in 2013, making the rate increase 17 per cent over three years. There was no word of what is planned in 2014 or beyond.
It all raises these questions. Why is there a B.C. Utilities Commission, if the government can simply override its mandate and role (as it has done before, notably with smart meters)?
The government is helping “pay” for a smaller increase by agreeing to take $75 million less in Hydro dividends. Why does the government need to get dividends from BC Hydro, when the corporation needs to retain earnings for capital projects?
Perhaps the biggest question is this: Is this all politics, in preparation for the 2013 provincial election? Is the 2013 rate increase being kept artificially low on the expectation that the NDP will win government, as polls suggest? Is this a time bomb being left by the current government for what may be a new government?
So far, there are no clear answers.