The price of power in BC

The price of power in British Columbia is shaping up as a hot-button pre-election issue with Premier Christy Clark's Liberals promising to zap electricity rate hikes and the Opposition New Democrats warning about future costs of keeping rates artificially low.

The Liberal power play to slash BC Hydro rates weeks before next year's spring election campaign appears to be in keeping with political tradition to jam the circuits at the Crown-owned utility at election time.

The New Democrats, just before the 2001 campaign in which they were wiped from office and left with just two seats, handed British Columbians $200 rebate cheques as their share of exporting BC power on the spot market.

About the only power generated from the hydro rebates was the shocking 77-to-2 election result in favour of former premier Gordon Campbell's Liberals.

Independent energy consultant David Austin said the politics of BC Hydro rates is an issue for politicians to handle, but when it comes to maintaining the business at BC Hydro, rates need to keep rising.

"We are in real terms paying far less for electricity than we did 30 or 40 years ago," said Austin. "We absolutely have to have rate increases, and they are going to be large increases."

He said BC Hydro needs to collect more money to pay for the upgrades and developments it has planned to ensure British Columbia's hydro needs continue to be met.

Some of the multi-million-dollar hydro projects in the planning and building stages include replacing the John Hart Generating Station at Campbell River, installing more power-generating turbines at the Mica and Revelstoke dams near Revelstoke and developing the massive Site C dam near Fort St. John.

"We will have to have very large increases to pay for the upgrades and expansion of the BC Hydro electricity system," Austin said.

Clark said Wednesday she won't back down from her government's decision to overrule the province's independent utilities regulator, the BC Utilities Commission, which called for a significant BC Hydro rate increase next year.

BC Hydro asked the utilities commission in March 2011 to approve a three-year cumulative rate increase of 32 per cent, but the Liberals on Tuesday ordered BCUC to require BC Hydro to cap the rate increases at 17 per cent over three years.

The cap drops next April's scheduled hydro rate increase to 1.44 per cent, about $1.20 for an average monthly bill.

"The legislation allows the government to override their decisions precisely because sometimes we end up in situations where the B.C. Utilities Commission decides that a 50-per-cent increase is appropriate, and the government decides that it's not," Clark told a news conference Wednesday.

Clark said she's keeping her promise of low electricity rates.

"When I became premier, I told British Columbians that I was going to wrestle that rate increase down. And we spent lots of money and many, many months doing a really thorough audit of BC Hydro to try to get that rate increase down. And we did find a way to get it down, we've got it down to 1.4 per cent over this next year."

Clark said higher Hydro rates would add another burden on taxpayers during tough economic times.

"I know that the union was arguing hard for a 50 per cent rate increase at the BC Utilities Commission, and I just disagree with that," she said in reference to CUPE, Local 378.

NDP energy critic John Horgan said the Liberals are in danger of doing long-term damage at BC Hydro by keeping rates low in an election year.

He accused the Liberals of making decisions that suit their political interests, but not the interests of British Columbians who own BC Hydro.

Horgan said ordering the utilities commission to implement the rate cut ensures the utilities commission will not offer a transparent and accountable review of the Crown corporation during public rate increase application hearings that were scheduled for next month.

Horgan said he expected hydro rates to increase after next year's election.

Horgan said if the NDP were to win, then his government would allow the utilities commission to fully review the rates and the NDP would try to keep the rates as low as possible.

He acknowledged this might mean an increase.

"I don't see how we can't," he said.

Hydro's request last year for 30-per-cent increases, prompted the government to order a complete 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. Cobb was replaced by Charles Reid.

BC Hydro referred comment on the rate increases to the government.