Hydro debt grows, B.C. deficit shrinks

Energy Minister Rich Coleman is examining BC Hydro's rapidly growing deferred expenses.

The 80-year-old Ruskin dam and powerhouse is getting an upgrade expected to cost up to $850 million. B.C.'s auditor general has criticized BC Hydro for deferring debt for projects such as the Fraser Valley dam

VICTORIA – Energy Minister Rich Coleman is examining BC Hydro’s rapidly growing deferred expenses, part of which end up as a dividend to ease the provincial government’s deficit.

Auditor General John Doyle reviewed BC Hydro’s books and found that as of March, $2.2 billion of the utility’s debt was placed in deferral accounts. Deferred expenses are expected to grow to $5 billion by 2017.

In a report released Friday, Doyle said deferral accounts for major capital costs are an acceptable practice to smooth out rate increases, but BC Hydro’s use of it runs ahead of other Canadian utilities. The practice can “mask the true cost of doing business, creating the appearance of profitability where none actually exists, and place undue burdens on future taxpayers,” Doyle warned.

Doyle added that “there does not appear to be a plan to reduce the balance of these accounts.”

Coleman acknowledges that the share of declared profit BC Hydro is required to pay to government has reduced the provincial deficit. BC Hydro paid $463 million to the province in March, based on a legislated formula that it provide 85 per cent of net income to its only shareholder, the B.C. government.

Coleman said he is studying Doyle’s report, including the conclusion that deferred debt is creating an illusion of BC Hydro profit when the corporation is running at a loss. He said he will also review bonuses paid to senior management for achieving profit goals.

The province’s deficit for the current fiscal year is expected to be $2.3 billion, an estimate that tripled when the harmonized sales tax was defeated in a referendum and the government had to budget for paying back transition funds to Ottawa.

NDP leader Adrian Dix pressed Coleman in the legislature Tuesday to account for bonuses paid to BC Hydro executives. Coleman replied that profits were only one determinant of bonuses, along with worker safety and customer satisfaction.

Current electricity rates include 2.5 per cent that raises $100 million a year to pay down deferred accounts.

Coleman also defended a deferral account set up to pay the $930 million cost of installing BC Hydro’s smart grid. Savings from that upgrade are sufficient to pay for the capital cost, he said.

NDP finance critic Bruce Ralston reminded Coleman that the association of major industrial power users has also raised concerns about BC Hydro’s growing deferred debt, and the potential to deter new mines and other investments that face higher rate increases in the future.

Just Posted

Rossland council agrees to finish skateboard park

Will cost taxpayers about $30,000 to complete project

Core funding to boost spending on tourism services for Rossland

Resort Municipalities grants will pay for a public washroom, better signage, and shuttle services

Passenger counts still rising at West Kootenay Regional Airport

Reliability rates also on rise in second quarter.

Third cannabis store in Greater Trail opens next week

The City of Trail has had six applications from non-medical pot retailers to date

Last stop: The inside story of Queen City Shuttle and Charters’ closure

Former employees open up about the Nelson company’s final days

Rich the Vegan scoots across Canada for the animals

Rich Adams is riding his push scooter across Canada to bring awareness to the dog meat trade in Asia

A year later, ceremony commemorates victims of the Danforth shooting

It’s the one-year anniversary of when a man opened fire along the bustling street before shooting and killing himself

Japanese Canadians call on B.C. to go beyond mere apology for historic racism

The federal government apologized in 1988 for its racism against ‘enemy aliens’

B.C. VIEWS: NDP pushes ahead with Crown forest redistribution

This isn’t the time for a radical Indigenous rights agenda

Two dead in two-vehicle crash between Revelstoke and Golden

RCMP are investigating the cause of the crash

Ottawa fights planned class action against RCMP for bullying, intimidation

The current case is more general, applying to employees, including men, who worked for the RCMP

Alberta judge denies B.C.’s bid to block ‘Turn Off the Taps’ bill

He said the proper venue for the disagreement is Federal Court

Most Read