British Columbia's annual deficit would balloon by $447 million if the province properly accounted for expenses at BC Hydro, according to a report Auditor General John Doyle released today.
"The effect of rate regulation in 2010/11 . . . has been to increase the net earnings of BC Hydro, and thus reduce the annual deficit recorded by the Province," said the report.
The announced deficit for 2010-2011 was $309 million, an amount that would more than double if the deferred amount from BC Hydro were included.
BC Hydro is spending money but pushing it off into a deferral account so it doesn't show up on the Crown corporation's bottom line, said Bruce Ralston, the New Democratic Party finance critic. "Last year BC Hydro deferred $639 million of real expenses," he said. "They just pushed it off and as a result they were able to show a profit."
The auditor general is concerned the dollar amount is building up rapidly and there's no plan to get out of it, said Ralston, noting the total deferred amount is projected to hit $5 billion by 2017.
The government will take Doyle's report into consideration as it reviews BC Hydro's operations, said energy and mines minister Rich Coleman. "Deferral accounts are used on large projects many times," he said.
For a large project like the proposed Site C dam or smart meters the utility defers some of the costs and accounts for them later when they are balanced by revenues from the project, he said.
"In utilities you do some of that to smooth rates, but what the auditor general is concerned about is this technique is being abused," Ralston said. "There will be a day of reckoning . . . At some point there's going to be an accounting for it. That will damage the financial credibility of the province, it might even affect the credit rating of the province."
Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Reach him here.
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Skywalker
29 weeks ago
It sounds a bit like the old Socreds...
...you know their old BS Fund. It was suppose to be budget stabilization but was eventually revealed as pure BS.
North of Hope
29 weeks ago
deficit
You report, "For a large project like the proposed Site C dam or smart meters the utility defers some of the costs and accounts for them later when they are balanced by revenues from the project, he said."
Let us not forget the extra costs connected with the IPP's that with which we burdened as well.
Bailey
29 weeks ago
Enron redux
I really want to point out quite loudly that a third of BC Hydro was given as a gift to Accenture.
Accenture is what a New Jersey judge said Arthur Andersen Accounting could change it's name to after the fraud trial failed to take it's whole course due to the sudden death of the CEO of Enron.
Arthur Andersen Accounting was the unindicted financial comptroller of the Enron Corporation which had as it's whole business plan the massive defrauding of the state of California and it's people, or at least those who relied on Hydro power to run their homes and businesses. They were so successful that California came close to bankruptcy, and the Governor who exposed them was changed for an actor.
A large element in Enron's plan was to create false shortages by shutting down functional generating plants during high usage times like cold snaps to make the citizens more willing to pay the hugely inflated bill.
During the aftermath of the Enron fiasco, the state of California sued the government of BC for price gouging, based on BC Hydro's apparent collusion with Enron in the looting. That's when we handed Accenture the big gift. Mr. Campbell flew to New York personally to do that, and wrote a nice thank you letter to them for being his kind of people. That letter was leaked to a union, which was punished severely shortly after showing it.
These are the people we propose to allow to monitor our Hydro usage on a second by second basis. Their ads say it's to help us save money by making intelligent choices about our hydro use. Sounds very much like they have a plan they expect us to dislike intensely. The last power system they were allowed to manage wound up in court, and is widely held to be one of the largest fraudulent conversion schemes the world has even seen.
Please try to remember this fairly recent history, and help others to remember it as well. This will definitely end in tears.
motorcycleguy
29 weeks ago
IPP's
What's the deal? Waiting for a ferry I did something I do not normally do....I bought a newspaper. Big article on BC Hydro deficits and not one mention of the Billions allocated for private power producers to drain lakes, negatively impact our wilderness areas and supply power when it is not needed...is North of Hope right and they just "forgot"?
Jean-val-jean
27 weeks ago
I'm missing something
Can someone remind me why Bernie Madoff is in prison?