British Columbians should brace themselves for further BC Hydro rate increases. This past Thursday, BC Energy Minister Bill Bennett acknowledged that the utility needs to hike its rates to cover the cost of capital projects and to service existing debt. But the Minister was unable to provide specifics, indicating that the government will discuss the issue and make a decision in the coming months.
BC Hydro is currently in the middle of a $3.4 billion, province-wide capital program. Much of BC Hydro’s infrastructure has been in operation for decades and requires substantial upgrades to maintain operational efficiency and meet current safety standards. BC Hydro is also planning to construct the $7.9 billion Site C hydroelectric project once the project receives the required regulatory approvals.
BC Hydro rate increases have been a hot topic in recent years. In March 2011, BC Hydro filed its Revenue Requirements Application with the British Columbia Utilities Commission (BCUC) for the fiscal years 2012 to 2014, seeking permission to increase electricity rates by 9.73% in each of those three years. Not surprisingly, the utility indicated the increases were, in part, required to cover the costs of its current capital campaign. In response, the BC government undertook a critical review of the utility’s business and filed a revised application with the BCUC that lowered the rate increase requests to 8.0%, 3.91% and 3.91% for F2012 to F2014.
After BC Hydro’s recent surprise revisions to the provincial budget (discussed in our earlier blog post), the BC government appears to have renewed its focus on reforming the utility.