British Columbians can expect a “rate shock” on their electricity bills in coming years as B.C. Hydro is set to lose almost $1 billion because of an enormous surplus of power, says the Opposition NDP.
Newly released Hydro documents show the Crown corporation, which in 2008 was warning of blackouts caused by a maxed-out power grid, has so many long-term private power contracts that it’s running a 10-year surplus of power, said NDP critic John Horgan.
“Over the course of the next government [four years], B.C. Hydro will lose $1 billion,” Horgan said.
“That’s a tragedy for B.C. Hydro and it’s a calamity for ratepayers, who have already seen their rates go up in the neighbourhood of 36 per cent over the past number of years.”
Energy Minister Rich Coleman disputed the claim and said Hydro can use the extra power for new mines and liquefied natural gas projects that are set to come online in future years.
“This could quite easily balance itself out over a two-year cycle,” he said.
“John’s just taking a snapshot today and saying nothing will change.”
Horgan blamed the Liberal government’s push to sign numerous long-term contracts for power with private companies, most recently in 2010 with an unnecessary call for clean power sources.
Coleman said it’s important for the government to find clean energy sources.
But all those long-term deals have locked B.C. Hydro into purchasing expensive private power when it’s not needed, Horgan said.
“As a result of the ideologically driven approach that the Liberals have taken, rather than doing what any reasonable person would do, we instead have been buying [power] high and forcing B.C. Hydro to sell low,” Horgan said.
Hydro is set to run a 5,200-gigawatt-hour surplus in 2013 and lose $296.4 million, according to figures the NDP pulled from Hydro’s Environmental Impact Statement on its Site C dam proposal.
Meanwhile, the Crown corporation is in a dire economic situation, with more than $14.5 billion in debt, Horgan said.
There’s also more than $2 billion in “deferral accounts” that push off debt to future years and have been criticized by the auditor general as helping Hydro project the image of profitability where it doesn’t exist.
“There appears to me to be rate shock in the future,” said Horgan. “I know no one wants to hear that, but it’s pretty difficult to look at a billion of losses in energy purchases when you used to make a billion in surpluses. That’s a big turnaround in a decade.”
Hydro customers faced a 1.44 per cent rate hike this year, instead of the 7.1 per cent proposed, after the B.C. government pushed aside the independent utilities regulator to lower the rate. Electricity prices will rise 17 per cent between 2012 and 2014.
Coleman argued that Hydro is in “pretty decent shape” even with additional capital projects such as the $1.3-billion upgrade to John Hart Dam near Campbell River. B.C. enjoys the third-lowest power prices in North America, he said.
The $7.9-billion Site C dam project in northwestern B.C. is still a good investment, Coleman said.
But Horgan said that given all the surplus energy, an NDP government wouldn’t proceed on the project for at least the first two years of its mandate if it wins the May provincial election.