July 30, 2002

Re-Regulating BC Hydro Rates UP

Why would the Campbell government let a nice guy like Richard Neufeld go out on a limb without being told government's direction? Neufeld, MLA for Peace River North and Minister for Energy Mines and Petroleum Resources, was grilled Monday on rate increases for BC Hydro.

Appearing on CKNW's Bill Good show with guest host Ravi Baichwal, Neufeld said that turning over one third of BC Hydro's staff to Accenture is not really privatization. Apparently Neufeld was not aware of last week's announcement by the State Treasurer for California to ban Accenture from state contracts because of its business practices.

When questioned about future Hydro rate increases,Neufeld said that rate increases are up to the BC Utilities Commission. The interim report of the government Task Force, which includes one of the Premier's Deputy Ministers, has recommended that prices rise by 30% or more to "market rates".

Apparently the Minister responsible for BC Hydro doesn't understand BCUC rules on a detailed application made by BC Hydro. BC Gas is currently engaged in exactly that procedure. It's more than 400 page application is available for download from its website (4.95 KB pdf).

Neufeld told the CKNW listening audience that it would be no big deal for the average rate payer to face a 2% increase in Hydro bills. After all, argued Neufeld, the company has had a rate freeze for several years. On domestic revenue of almost $2.5 billion, a 2% rate increase would yield almost $50 million per year. Neufeld was part of the Campbell opposition caucus when they argued that the rate freeze was keeping Hydro rates artificially high (even though they are amongst the lowest in North America).

When asked whether government would instruct BC Hydro on its rate application to BCUC, Neufeld mumbled that government wouldn't get involved because BCUC looks at all the aspects of BC Hydro as they do for BC Gas. The Minister would benefit from reading the BC gas application where they are currently arguing for a rate increase in order to protect the company's revenues at a time when sales are declining due to conservation. In the words of the BC Gas application:

BC Gas is proposing to take its 2.85% on delivery margin from the rate stabilization account and to make up the remaining 0.95% by increasing delivery charges.

Keep in mind that the Campbell government has just made an announcement about privatizing liquor stores without allowing competition so that it can still make at least $650 million per year on the sale of booze. Does Richard Neufeld seriously expect anyone to believe that his government does not have revenue targets for BC Hydro? Is he any less obligated to reach those targets than his colleague, the Minister responsible for booze? Anyone can read page 32 of the Minister of Finance's February budget documents to see that government is planning on a $283 million "contribution" from BC Hydro this year and a further $301 million in fiscal 2003-04 and $297 million in fiscal 2004-05. Premier's Office to Neufeld: BCUC had better not interfere in those revenue projections! Of course those numbers do not include water taxes and other means used to direct money from BC Hydro to general provincial revenue.

Minister Neufeld can claim that government is simply "re-regulating" BC Hydro, but all the New Speak he can muster will not hide another revenue grab.