The B.C. government continues to siphon hundreds of millions of dollars out of B.C. Hydro and the Insurance Corp. of B.C., in a bid to balance the provincial budget with profits that don’t really exist, the Opposition says.
B.C. Hydro is providing the government with a $245-million dividend payment, while ICBC will contribute $226 million in 2013, according to Tuesday’s provincial budget documents.
The money appears key to helping government table a $197-million surplus in the next year.
The payments are just a small slice of the billions paid by both Crown corporations to government in recent years. At the same time, the cash-strapped organizations are seeking rate hikes from customers.
But they are particularly galling coming from B.C. Hydro, said the Opposition NDP, because the auditor general noted last year that the Crown corporation was deferring billions in debt into future years to try to paint a picture of annual profit.
“I’m not surprised they are trying to leave the impression of profitability where none exists,” said NDP energy critic John Horgan. “What surprises me is how brazen they are about it.”
Hydro has $4.2 billion in future deferral accounts, a surplus of energy it can’t sell and is in an overall dire financial situation, Horgan said.
Finance Minister Mike de Jong “is balancing his budget on the Hydro dividend — and it doesn’t exist,” Horgan said.
Hydro did not comment on Wednesday. It raised electricity rates eight per cent in 2012, 3.91 per cent in 2013 and plans another hike of 3.91 per cent in 2014.
Energy Minister Rich Coleman said he thinks Hydro has the money.
He disputes the auditor general’s criticism of pushing debt into future years using deferral accounts, saying it is an accepted method of financing expensive projects.
He also wouldn’t rule out future rate hikes.
ICBC’s dividend to government is called “excess optional capital” from the optional-insurance side of its business.
Transportation Minister Mary Polak said the government returned a payment from ICBC in 2012 (estimated to be $350 million) to try to keep basic insurance rates low and affordable for drivers.
Nonetheless, ICBC increased basic insurance rates in 2012 by 11.2 per cent, resulting in an average hit of $27 per driver.
The government will accept ICBC’s 2013 payment of $226 million, Polak said.
“We’re sensitive about what happens to ICBC and the upward pressures they get, especially bodily injury claims, so we’re always open to ICBC coming to us with other ideas as to how to keep the rates low,” she said.
Combined, the two Crown corporations will provide government with $1.2 billion over the next three years.
The government has a worrisome reliance on dividends from financially troubled Crown corporations, with no strategy to wean itself from the cash, said Jordan Bateman, B.C. director of the Canadian Taxpayers Federation.
“The debt load in Hydro has grown to the point now that it’s starting to constrict the money flowing into government,” he said.
“That’s pretty interesting because that’s the first sign we’ve ever had, really, that these things can’t just be milked forever.”
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