鈥淚鈥檓 not trying to minimize the fact that there is a rate increase,鈥� Energy Minister Bill Bennett said Tuesday, midway through a news conference partly designed to minimize the upcoming rate increases.
It started with a highlighted slide showing that a nine per cent rate increase equates to about 鈥�$8 per month鈥� for residential customers.
Perfectly accurate, except for the fact that the nine per cent hike coming next April is just the first year of five years of rate hikes. There will be another six per cent the next year. Then four per cent, then 3.5 per cent and then three per cent.
So it鈥檚 not a nine per cent increase. It鈥檚 likely a compounded 28 per cent increase, spread over five years.
There was no slide showing what a 28 per cent rate increase over five years means for residential customers. But over the long haul, it鈥檚 a lot closer to a $24 increase than $8.
It鈥檚 the industrial sector where these increases really hit home. A nine per cent increase will cost industrial customers an average of $139,000 more a month next year, with much more to come. With assorted LNG plants on the horizon, that鈥檚 why a special task force is looking at mitigation measures as part of the overall plan.
B.C. Hydro CEO Charles Reid was on hand as well to explain away the hikes. He suggested that of all the bills people complain about, the electricity bill is way down the list. Paying $3 a day for electricity is a good deal, says he.
True enough, except that it should be in the past tense. Because those days will soon be gone.
The main point made to minimize the series of electricity-bill hikes was the contrast to what might have been. B.C. Hydro had a tentative plan to make a play for a 26 per cent rate increase over two years soon after the election. Premier Christy Clark objected to that number and ordered Bennett to grind it down to a smaller number.
Tuesday鈥檚 announcement was the result of that work. And it鈥檚 striking the lengths they had to go to to accomplish the goal.
The big move is to start 鈥渨eaning鈥� the government off the time-honoured habit of demanding hundreds of millions of dollars a year in dividends from the utility.
It鈥檚 such a historic move that it鈥檚 going to take four years to start making the change. According to the schedule laid out, 10 years from now the dividend will be reduced to zero. Over the long march to get to that point, B.C. Hydro鈥檚 contributions to government will be $2 billion less, all told.
That and some other changes will leave Hydro with $3 billion in cash. While customers will start paying more next spring, the government won鈥檛 start reducing its take from Hydro until after the next election.
The other move is another round of layoffs at Hydro. Reid said a further 120 employees will get layoff notices this week, on top of the hundreds of back-office jobs that were eliminated during the last round of cuts two years ago.
The news conference stressed that a potential 26 per cent increase over two years has been cut to a 15.6 per cent increase. It鈥檚 a short-term break for customers, but the hikes have just been spread out over a longer time, rather than eliminated.
Although the auditor general landed on Hydro for its reliance on deferral accounts that push costs off into the future, yet another one is being set up to spread costs of the next few years over a 10-year period.
Bennett also announced the independent B.C. Utilities Commission 鈥� which has been routinely overridden by the Liberal government 鈥� will be put back on the case of watching electricity rates. Sort of. He said the BCUC will set the last three scheduled years of rate increases within the caps of four, 3.5 and three per cent.
But if the energy minister is telling the BCUC to set those rates, then it isn鈥檛 the BCUC setting those rates.
