Leaked documents indicate that BC Hydro is planning a 26 per cent rate increase over the next two years.
While the BC Liberal government says the rate hike will not be that high, this is at least the third time in the past year that there has been indications of a massive BC Hydro rate increase in the works.
There are several concerns about this, whether the 26 per cent increase comes to fruition or not.
It’s no secret that Hydro has to come up with billions of dollars to continue to upgrade the electrical utility system it operates. The infrastructure, some of which goes back to the 1960s or earlier, needs attention. Hydro also wants to build the Site C dam on the Peace River, which would cost billions in itself.
At the same time,
Hydro has been handicapped by the BC Liberal government in two very important areas. First, it has been required to make massive dividend payments to the province, its only shareholder. These have been used to keep the provincial budget from dipping deeper into the red.
While there may be some justification for the province occasionally taking a dividend from Hydro, the size and regularity of its demands are unprecedented. When a corporation needs to raise billions for capital projects, it makes sense that dividends be cut back or even eliminated. If Hydro was a private sector corporation, that is likely what it would be doing, in order to have at least some of its own cash to spend on infrastructure.
In addition, the dividends are highly political. They are used to keep the deficit down and allow politicians to boast about B.C.’s low income tax rate. This boast ignores ever-increasing Hydro, ICBC and Medical Service Premium rates, all of which must be paid by most B.C. residents.
The other handicap Hydro has is that it has been forced to buy run-of-river power from small contractors at rates far in excess of what it costs to produce its own power. Thus Hydro ratepayers are subsidizing private power developers.
There is nothing wrong with private power, but it should be developed when economical to do so — not because a higher than market rate is guaranteed.
The provincial government needs to stop interfering in Hydro’s business, and let it run the electric utility in the efficient manner which has generally been the case since its formation in 1961.