he Liberal government has badly lost its way - and sight of the public interest - on B.C. Hydro.
T The once embraced. Crown corporations, the Liberals government has betrayed a principle it insisted, should have proper management and oversight, rather than being run by politicians.
In the case of B.C. Hydro, the Liberals were clear. The B.C. Utilities Commission should review all rate increases and projects, receive submissions from stakeholders and report publicly on the soundness of the Crown corporation's plans. The commission should approve or reject rate increases.
Energy Minister Rich Coleman and Premier Christy Clark have abandoned that principle. Just before the B.C. Utilities Commission was to hold hearings on B.C. Hydro's proposed rate increases, the government shut them down. The rate increases - about six per cent a year over three years - would be set by the politicians, with no independent review to see if they were justified or sustainable.
It's a betrayal of the public interest, especially given the questions about B.C. Hydro's current direction and the effect on customers, and the provincial economy.
Consider just four issues that have not been properly reviewed. First, B.C. Hydro initially sought increases of 10 per cent a year to cover the costs it sees in the near future. A government review of the corporation claimed to discover savings, allowing a smaller increase. But the utilities commission could report, independently, on whether those were realistic.
The risk is that the Liberal government is reducing rate increases for customers now for political advantage, and rates will rise even more after the 2013 election.
Second, B.C. auditor general John Doyle sounded a loud alarm last year about the abuse of "deferral accounts" at B.C. Hydro. The government and B.C. Hydro have not been accurately reporting its financial performance, he said. The Crown corporation has $2.2 billion in deferred costs - money it has spent, but not reported. That is expected to rise to almost $5 billion within another six years. The practice has allowed the government to claim B.C. Hydro was "profitable," and extract billions - $595 million last year - in revenues to covers its expenses.
But ultimately, that money must be recovered or the corporation will be insolvent. That means electricity rate increases or future spending cuts.
The utilities commission would have examined those accounts.
Third, the commission would have looked at the effects of the government policy of requiring new power to come from private companies, with B.C. Hydro committed to purchases at high rates. The Crown corporation is buying power at $68 per MWh, New Democrat MLA John Horgan alleges, when it is available on the spot market for $10.
And finally, the utilities commission would have looked at B.C. Hydro's projections of future demand and the cost of meeting it. The government has committed to rapid development of energy-intensive liquid natural gas projects. Major industrial customers fear that will require new, expensive electricity generation and they will face much higher costs for their energy as a result.
These are all issues important to B.C. Hydro customers and the province's future. If there are risks, the public should know. But the government shut down the statutory independent review of how the province would be affected.
This continues a pattern of abuse. In 2010, the government passed a law exempting some $10 billion in projects from B.C. Utilities Commission review, including the Site C dam and the $1-billion smart meter program.
If the government's plans for B.C. Hydro are sound, the commission's review would have confirmed that. If they were not, it would have offered important oversight.
The Liberal government, betraying its own principles, has chosen political expediency over accountability and competent management.
© Copyright 2013