09/11/2013 16:06 EDT | Updated 11/11/2013 05:12 EST

BC Hydro forecasts 26% rate increase by 2016

BC Hydro customers could be facing a 26 per cent rate increase by 2016, according to a confidential document that was leaked to the media — but the government says the forecast increase has yet to be approved.

The document says the rate increase is necessary to pay for roughly $1 billion in rising costs, including contracts with independent power producers and capital projects needed to meet increasing power demands.

But B.C. Energy Minister Bill Bennett says the report was just a preliminary forecast, and no rate increases have been approved.

"It's way too early to speculate on how much rates will go up. They will have to go up some. All I can say is that was a very early document. It was the first meeting of five that was held to discuss rates and rates will not go up by what was said in that document," said Bennett

Bennett says investments in new transmission and generation facilities will power the B.C. economy in the future and British Columbians can expect an electrical rate increase to fund those projects

But NDP MLA John Horgan is asking why the issue wasn't addressed earlier.

"It's one of those, 'I hate to say I told you so,' but I've been talking about the consequences of buying more power than we need at a price that's higher than the market will bear for some time, in fact for years.

"Before the election, Rich Coleman said everything was fine. Before the election, Rich Coleman cancelled the rate hearing and [said] a 1.57 per cent increase would be adequate."

BC Hydro estimates a 10 per cent rate increase would cost the average residential customer an additional $105 a year, while small commercial customers would pay an average $240 per year.

Rate forecast leaked by union

The forecast rate increases were contained in a confidential report for BC Hydro's Rates Working Group that was leaked by the Canadian Office and Professional Employees Union (COPE Local 378), which represents 1,900 workers at BC Hydro.

The union's legal director Jim Quail blamed the Liberal government for the forecast increases, saying they had mismanaged BC Hydro for political purposes.

"There’s so much here that proves government mismanagement it’s hard to pick a starting point,” said Quail in a statement released on Wednesday morning.

"There’s the fact that by putting off a rate increase before the election Christy Clark ensured Hydro customers will pay an extra 16 per cent more that could have been avoided. There are the mounting costs of private power contracts — contracts the government is now scrambling to get out of.

"And despite all of this, the government’s siphoning off money from BC Hydro to the tune of 27 per cent of its total revenue requirement by 2016, instead of letting the utility balance its own books," he said.

"That means that of every $100 customers pay, $27 will go straight to the provincial treasury."

The B.C. government budget indicates it expects to receive $545 million in revenue from the Crown corporation this year.

“Most cynically, the rate hike arc has been managed so rates will be lowest just in time for the next election. They are actually planning on repeating what they did last time, suppressing rates before we go to the polls, hoping we all have short memories," said Quail.