BUSINESS

B.C. Hydro Rate Increases Cut In Half

05/22/2012 05:15 EDT | Updated 07/22/2012 05:12 EDT
VICTORIA - Energy Minister Rich Coleman has ordered a 50-per-cent cut in proposed rate increases for BC Hydro customers, saying families need the break and the Crown corporation can afford the cut.

But the Opposition New Democrats, who have been decrying hydro rate hikes for years, immediately accused the Liberals of using their power to bypass an independent regulatory body.

The union representing hydro workers said the government is hiding its own mismanagement at BC Hydro, while holding back rate increases until after next May's provincial election.

Coleman said he directed the B.C. Utilities Commission to reduce the proposed rate increases without holding two weeks of public hearings set for next month.

"It stops us from going into a lengthy oral hearing process where we already had agreement from all the people who were basically interveners for the most part," he said. "These rates make sense and they are better for the consumer, and we don't need to have higher rates."

Hydro originally proposed to increase hydro rates by about 30 per cent over three years starting last May. Coleman said the overall increases will now be about 17 per cent over the same three years.

Rates increased by eight per cent in May 2011 and they went up 7.1 per cent last month.

Next April, during the provincial election campaign, hydro rates are due to increase by 1.4 per cent, Coleman said.

Last year when BC Hydro proposed the 30-per-cent increases, the government ordered a review of the corporation.

The review resulted in BC Hydro agreeing to drop rates and cut expenses by more than $800 million over three years by putting some projects on hold and making changes to how it awards contracts and manages its finances.

The review panel also recommended the utility cut up to 1,200 jobs.

The panel's report noted the corporation currently had about 6,000 workers, and suggested it could get by with 4,800. While it didn't detail exactly where to make cuts, the report noted several areas in which BC Hydro may have too many people doing the same job.

For example, BC Hydro employed about 650 engineers _ about six times more than the Ministry of Transportation and Infrastructure, which has a comparable capital program.

The corporation may also have too many workers in the areas of finance, human resources, information management and communication, the report said.

Last fall, former BC Hydro chief executive officer Dave Cobb resigned to return to the private sector after barely 17 months on the job.

Hydro referred comment on the rate decreases to Coleman, but acting president and CEO Charles Reid issued a statement, saying "our goal is to keep rates as low as possible for our customers and we are going to continue looking for opportunities to become a leaner and more efficient organization going forward so that we can keep rates low while delivering the investments in our system for future generations."

Coleman said the government believed the utilities commission didn't fully appreciate the results of the hydro review report, which found ways to save money and lower rates.

"The B.C. Utility Commission has been ignoring basically what we found out in the hydro report and that is that we thought we could keep rates lower than we thought, and they wanted us to keep them higher," he said.

Philip Nakoneshny, the commission's director of rates, said the independent regulatory agency will follow the government's demand to cut the rate increases, but still will decide whether or not to convene some sort of hearing process into the ordered rate cuts.

The commission will likely decide within a week if it will hold a conference to hear submissions from interveners or call for written submissions, said Nakoneshny.

NDP energy critic John Horgan, who consistently criticizes the Liberals for rising hydro rates, said the cuts are merely an attempt to get around a public hearing process that would likely reveal financial mismanagement at hydro and impending rate hikes.

"This is the culmination of a decade of disastrous energy policy in British Columbia," he said. "Now they're putting in what they characterize as a rate reduction as a disguise to again thwart a public hearing into the activities at BC Hydro under the B.C. Liberals."