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Hydro Rate Freeze Makes Life ‘More Affordable,’ Says NDP

Liberal Opposition predicts more trouble ahead for utility as a result.

By Andrew MacLeod 9 Nov 2017 | TheTyee.ca

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.

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The NDP provincial government says a freeze on Hydro rates fulfills one of its election promises.

The British Columbia government says freezing rates at BC Hydro will save ratepayers money, but the Opposition says the move will add to the utility’s financial troubles.

Energy, Mines and Petroleum Resources Minister Michelle Mungall said it was “good news” that the government is taking steps to cancel a three per cent increase that had been planned for April 1, 2018. “We’re working with BC Hydro collaboratively on taking steps on how we can do that so we can save ratepayers $150 million.”

BC Hydro is amending its application that’s already in front of the B.C. Utilities Commission to instead ask for a zero per cent increase, Mungall said.

The plan fulfills an NDP campaign promise to freeze rates for a year while the government reviews BC Hydro, Mungall said. “At the end of the day we committed to British Columbians to make life more affordable for them. This is going to be a big savings in their pockets.”

BC Liberal finance critic Tracy Redies said the rate freeze will come at a cost to the utility. “That means there’s $150 million less to invest in capital projects and other investments the utility needs to make,” she said. “There’s going to be a real hole here. Really all this is is punting off decisions that should be made today in the best interests of ratepayers, BC Hydro and the province to the future.”

The freeze is a distraction from the impact that a government decision to cancel the Site C dam project would have on rates, Redies said. “That would trigger a 10 per cent rate shock.”

The government has said it will decide by the end of the year whether to continue with the construction of Site C. Some $2 billion has already been spent and the BCUC has said costs associated with stopping the project would add another $1.8 billion.

Redies said the BCUC’s recent report suggests the money would be added to BC Hydro’s regulatory accounts and would need to be paid in the future, so cancelling the project doesn’t make sense from an affordability point of view.

In opposition the NDP was strongly critical of BC Hydro’s use of regulatory or 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.

Mungall said the government shares concerns about BC Hydro’s use of regulatory accounts under the previous government and is committed to getting them in order.

The government is working with BC Hydro on how the utility will pay for the rate freeze, she said, adding it is tied to the review. “We know there are savings to be had there and we need to be taking into account the deferral accounts that already exist.”

Green Party leader Andrew Weaver said in an emailed statement that energy decisions should be made based on evidence, not politics.

“We cannot keep making political decisions while saddling future generations with debt,” he said. “If the NDP truly want to make life more affordable, freezing hydro rates without developing an energy strategy — which will simply saddle our children with these costs — is not the solution.”  [Tyee]

Read more: BC Politics

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