If it looks wrong, and it doesn’t add up, and it leaves a trail of miscalculation and debt, and it costs every ratepayer money personally, and it pretends debt is profit, and it was implemented by exempting the current government from regulatory review, welcome to the B.C. Liberals’ 10-year B.C. Hydro plan.
Premier Christy Clark and her appointees have taken billions out of B.C. Hydro, damaging this Crown corporation for decades to come. And they are doing it to get through one more election.
B.C. Hydro and the B.C. Liberals chose the Thursday afternoon before the B.C. Day long weekend to present their 1,500- page revenue-requirement application to the B.C. Utilities Commission. B.C. Hydro has had some bad moments in its history, but this performance ranks among its most disastrous. Some of the high(low)lights include:
• B.C. Hydro and the Liberal government announced they had missed their 10-year-plan revenue target by $3.5 billion in spite of rate increases of 28 per cent.
• B.C. Hydro missed its deferral-account target by $1.1 billion, and as a result, customers are stuck owing, in addition to long-term debt, $5.9 billion to B.C. Hydro itself: Specifically, every ratepayer owes an additional $500 for deferral accounts alone, bringing the total to $3,000 per ratepayer.
No other utility in North America misuses its deferral accounts like a credit card the same way the Liberals and B.C. Hydro do. Deferral accounts represent 132 per cent of equity at B.C. Hydro, compared to 11 per cent at Manitoba Hydro and seven per cent at Hydro-Québec.
B.C. Hydro missed its forecast for domestic demand for electricity in 2016 by 3,361 gigawatt hours, the same estimate that provided the justification for Site C. Energy predictions are most likely to be accurate in the early years of a plan, but three years into a forecast that predicted domestic demand would grow by 40 per cent over 20 years, it is going in exactly the other direction.
This means that Site C will be built not for domestic purposes, but rather to subsidize American and Alberta customers at huge cost for at least a decade after it comes into service. According to B.C. Hydro, such surplus power is “sold off at 10 to 50 per cent” of its domestic value.
There was one target, however, Hydro achieved. From 2012/13 to 2015/16 B.C. Hydro delivered net income of $2.29 billion to the B.C. Liberal government, which was counted as government revenue.
How did they meet their net-income target while disastrously missing revenue targets, these modern-day alchemists? The answer is by borrowing money and pretending it was revenue, and stiffing the ratepayer.
What lessons have Clark and B.C. Hydro learned from this debacle? Apparently, like a gambler on a losing streak in Las Vegas, to double down on failure. On the very day that B.C. Hydro submitted its latest full rate-hike application and related update to the government’s 10-year energy plan, the Liberal cabinet secretly passed an order-in-council ordering B.C. Hydro to achieve net income of $2.094 billion over the next three years, regardless of its actual performance, and to borrow to pay a cash dividend of $259 million in 2017.
No one takes responsibility in this premier’s world. The B.C. Hydro press release announcing this debacle stated: “Prudent actions mean 10-year rate plan on track.” Like Officer Barbrady on South Park, B.C. Hydro is saying: “This isn’t happening, everyone look away please, nothing to see here.”
Before the 2013 election, Clark tried the same gambit. She pretended rate increases would be low, and then delivered 28 per cent afterward. Now, after saying deferral accounts would be gradually paid down, that demand forecasts were accurate and that the corporation would earn billions more in revenue, the opposite has happened in each regard.
So, as we look ahead to another election, one thing clearly resonates throughout the 1,500 pages of detail in B.C. Hydro’s application: B.C. Hydro customers and the corporation itself cannot permit four more years of this.
Adrian Dix is the New Democrat MLA for Vancouver Kingsway.