The British Columbia government is taking steps to fix BC Hydro’s accounting practices, but making the needed changes will take some time, says Finance Minister Carole James.
“There lots of issues to address at BC Hydro, as you know, so we’re taking a look at all the options that are there,” James said this week. “We’re making sure we’ve got the leadership in place, making sure we’ve got the board in place, then they’ll do a full review of everything.”
Before the May election, the NDP was strongly critical of BC Hydro’s use of deferral accounts, which it said made both the utility’s and the provincial government’s books appear better than they were.
BC Hydro had used “rate smoothing” or “rate stabilization” accounts to claim about $1 billion in revenue that the Crown corporation wouldn’t actually receive from ratepayers until after 2021.
At the same time it was deferring expenses to later years, a practice former auditor general John Doyle criticized starting in 2011.
“We’re borrowing against nothing here,” then NDP energy critic Adrian Dix said in 2016. “This is a pure attempt to mislead people about the state of the province’s finances.”
Richard McCandless, a retired assistant deputy minister, said the NDP government needs to act quickly to fix the problem or it will be accused of continuing the former government’s misleading accounting practices. “They’ve got to make a decision about what they’re going to do,” he said. “You can’t keep kicking this one down the road.”
The former government’s policies were not sustainable and transferred the cost to future ratepayers, he said. “[At BC Hydro] they were handing dividends over to government, but they had to go borrow the money. It was a shell game,” he said, adding there are similar problems at ICBC, the government owned insurance company.
“It goes to the heart of honesty, accountability and transparency in government,” he said.
Ontario, which has also used non-standard accounting for its hydro provider, has been heavily criticized recently by the province’s auditor general and in the media, McCandless wrote in an opinion piece for The Tyee this week.
Ending the current practice in B.C. will mean either electricity rates will have to rise dramatically or the government will have to add debt, McCandless said in an interview. “That’s the hole they’re in and they have to figure out how to get out of that hole, if they want to.”
James said the government is aware of the issues and working on them. “We’re going through the process, we’re putting new leadership in place at BC Hydro, so everything’s going to be looked at. That’s basically as far as we’ve gotten at this stage.”