09/11/2013 03:34 EDT | Updated 11/11/2013 05:12 EST

BC Hydro Rate Hike: Christy Clark Won't Approve 26 Per Cent Rise

VICTORIA - Premier Christy Clark and Energy Minister Bill Bennett are trying to lessen the shock of possible 26-per-cent BC Hydro rate hikes connected to a leaked report, saying that number is too high, but they warn rates are likely to increase to cover capital costs to upgrade aging infrastructure.

Clark and Bennett said Wednesday they will not approve 26-per-cent increases over two years, even though the double-digit number is contained in a recent BC Hydro report that outlines the use of rate increases to generate up to $1 billion in extra revenue to cover costs for capital projects.

The Opposition New Democrats accused the Liberals of playing politics with hydro rates — downplaying the extent of possible rate hikes before and during the election, while knowing the Crown corporation faces huge financial burdens.

"The consequences for the economy are profound," said NDP energy critic John Horgan. "The consequences for individuals are staggering. What I've seen of the (BC Hydro) material tells me hydro doesn't have a lot of room to move."

The New Democrats said a 26-per-cent rate increases adds $273 to the average residential annual bill.

But Clark said while a hike that high won't be approved, she said some sort of increase is needed to make improvements.

"We do have to renew the infrastructure. Those dams that W.A.C. Bennett had the vision to build and a generation paid for, I mean, they paid forward to make that happen," she said. "This generation is going to have to figure out how we're going to renew them. We do have to renew the infrastructure."

Bennett said the leaked documents represented the first meeting of an internal BC Hydro committee that is looking to build projects, raise revenues and cut costs. Bennett said members have met four times since, but he said they have yet to come up with a final number when it comes to rate increases.

Bennett said he hasn't given the committee a target number for rate increases, but he said the final number must be lower than 26 per cent.

"I will not accept 26 per cent," he said. "It has to be lower than that. I'd like it to be substantially lower than that, I can say that much."

The 26-page document, leaked by the Canadian Office and Professional Employees Union, Local 378, details an Aug. 23 meeting of a BC Hydro Rates Working Group. COPE represents 1,900 inside BC Hydro workers.

The document states that Hydro must raise an additional $1 billion in new revenues in 2014 to cover additional capital project additions and independent power projects.

The documents project two years of rates increases — 19.2 per cent in 2015 and six per cent in 2016 — to cover final the revenue requirement of $4.8 billion.

Bennett acknowledged the rate increase issue is a political lightning rod for British Columbians and within the government.

"We are feeling the impact of decades of difficult decisions by successive governments, Socreds, NDP, B.C. Liberal, all of us have difficulty looking the ratepayer directly in the eye and saying, 'by the way, we're going to raise your rates by X,'" he said. "It's not an easy thing to do."

Bennett defended the government's decision to take $545 million from BC Hydro to include in its budget. Bennett said the government promised to produce a balanced budget next year and the Hydro money will help achieve that goal.

Earlier this summer, Bennett said BC Hydro rates had no place to go but up because billions of dollars are being pumped into capital projects around the province to upgrade decades-old infrastructure.

In May 2012, the Liberals ordered proposed BC Hydro rate increases to be cut to 17 per cent over three years, down from a recommended 32 per cent.

Bennett said in July, Hydro is spending $2 billion doing seismic upgrades at the John Hart Dam and Generating Station in Campbell River, and the Ruskin Dam and Powerhouse, near Maple Ridge, B.C.

He said some power-generating turbines at B.C. dams are 40 to 50 years old. Bennett said he recalled a conversation he had with a former BC Hydro president, learning of one instance where equipment was 100 years old.

Last month, Bennett said at least 10 contracts with independent power producers will be cancelled and another nine will be put off as BC Hydro looks for ways to cut costs.

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