Two-phased review of BC Hydro will look into how to cut costs and find new revenue streams to keep rates down: province

The province has launched a comprehensive review of BC Hydro to identify cost savings and efficiencies

VICTORIA (NEWS 1130) – BC Hydro is about to go under the microscope.

The provincial government has announced it’s launching a review of the crown corporation. It will be conducted in two phases, with the first looking into cutting costs and finding new revenue streams.

The province says the review is being done in an effort to “contain rate increases, control costs, and to position BC Hydro for future success.”

Phase one will be conducted by an advisory group. It is expected to submit recommendations this summer, to “inform a refreshed rates plan, and assist BC Hydro in preparing its next rates application, to be filed with the BC Utilities Commission (BCUC) in February 2019.”

The findings from phase one as well as the province’s response will then be released in the fall of this year.

According to the provincial government, the second phase will start in late 2018, and will look at more long-term issues.

This phase of the review is expected to be conducted by an “expert panel”. Who will make up this panel and other details will be decided after phase one is complete.

“It is anticipated that the panel will deliver its recommendations to government by summer or fall of 2019,” the release continues.

Don’t expect a freeze: expert

Even though the review is aimed at keeping BC Hydro costs affordable, an expert says not to expect rates to be frozen anytime soon. Just a few weeks ago rates went up another three per cent.

The hike took effect April 1st and came about a month after the BC Utilities Commission rejected a request to freeze rates. Rates have climbed 25 per cent since 2013 and 70 per cent since 2001.

BC Hydro expert Richard McCandless says it could take up to three years for the Crown corporation to break even.

“The previous government artificially kept the rates lower than what they should’ve been by deferring certain expenditures and counting revenue that didn’t exist and showing that as a deferred asset as well. It distorted the finances at BC Hydro and that’s why the auditor general is telling them this practice has to stop.”

McCandless says if rates are frozen too soon, BC could end up facing problems similar to what happened in Ontario.

“It’s a fool’s game. The Ontario government did the same thing and that went down in a crashing defeat,” he says.

“You can’t count revenue that doesn’t exist, and that’s what they’re doing. And they’re loading the increasing debt which means future generations have to pay that debt off. Current users get the benefit while future users are going to pay the cost. That’s not anyway to run a railroad, or a hydro operation.”

This new two-part review is slated for completion next year, with some cost-saving recommendations expected this fall.