Break On Hydro Coming Even If Freeze Rejected: Minister

Even if the BC Utilities Commission refuses BC Hydro’s request for a rate freeze, the provincial government has options that will let it deliver on its election promise, Energy, Mines and Petroleum Resources Minister Michelle Mungall said Monday.

“There’s a variety of financial tools that we can use to ensure that we are not furthering B.C.’s debt while we’re also ensuring that British Columbians are getting the affordability they deserve,” Mungall said. “I don’t want to jump ahead of the gun here. I want to see what BCUC has to tell us.”

Mungall announced in early November that the government was working with BC Hydro to cancel the three-per-cent rate increase that had been planned for April 1, 2018. A freeze would save British Columbians about $150 million, she said.

BC Hydro has since amended its application for the increase that was already in front of the B.C. Utilities Commission to instead ask for a zero per cent increase. A hearing on the matter was held Thursday in Vancouver and the BCUC’s decision is expected in the new year.

Media reports have suggested the freeze is on shaky ground and opposition critic Tracy Redies, Liberal MLA for Surrey-White Rock and a former BC Hydro board member, has accused the government of lacking a plan to implement the freeze.

“[The minister] hasn't thought through simple consequences of her actions and rushed announcements,” Redies said during Question Period Monday. “Will she tell us where BC Hydro will find $150 million? And how will this affect future electricity rates?”

In the Legislature, Mungall said the previous government raised hydro rates by 70 per cent, including a 24-per-cent increase in the last four years. The new government is committed to making life more affordable, she said.

Outside the house, Mungall said how the government proceeds will depend on the BCUC’s decision. “I don’t want to preempt what the BCUC may decide and I don’t want to influence what they may decide by anything I might say now,” Mungall said.

“If they say, ‘Yes, we’re going to freeze rates,’ we know how to go forward. If they say, ‘No,’ then we need to find a way that we can ensure British Columbians are having affordable rates,” she said, adding that the BCUC may also suggest alternatives. “We’ll figure it out when we cross that bridge.”

There are, however, options for paying for the rate freeze that don’t involve adding to BC Hydro’s deferral accounts, Mungall said. In opposition, the NDP had criticized the practice of claiming future revenues and deferring expenses, saying they made the utility’s books appear better than they were.

A review is looking at ways to find savings at BC Hydro, Mungall said. “By the time the rate freeze comes into fruition we also will have completed our review, so the idea that we would have to use a deferral account is not set in stone.”

The provincial government is forecasting it will receive a dividend of $712 million from BC Hydro in fiscal 2018-2019. “That’s another way we can address this issue, in terms of reducing government dividends and so on,” Mungall said.

The amount needed to pay for the rate freeze represents about 0.3 per cent of the province’s $51-billion budget.

So what will the government do? “I couldn’t tell you,” Mungall said. “We’ve got to see what BCUC says and then we’re going to go from there.”