In deciding how much power rates should increase, the sa国际传媒 Liberal government should do what鈥檚 practical and realistic, not just what鈥檚 politically comfortable. A leaked sa国际传媒 Hydro report says an increase of 26.4 per cent is needed over 2015 and 2016 to meet obligations and pay for new capital projects. Energy Minister Bill Bennett admits electricity rates need to rise, but says he will not accept that big an increase.
It鈥檚 kind of him to be concerned about the cost to sa国际传媒 families 鈥� the proposed rate increase would add $260 a year to the average household power bill 鈥� but that kindness is misplaced if it is only postponing the inevitable.
The increase is needed in part because the sa国际传媒 Liberals have deferred rate increases despite evidence that they were needed.
In 2011, sa国际传媒 Hydro proposed a 32 per cent rate increase over three years. In the face of public outrage and with an election in the offing, the government booted the problem down the road by cutting the increase in half and ordering sweeping cuts to Hydro jobs and administration.
Political interference is a fact of life for Crown corporations, but there鈥檚 good political interference and bad political interference.
The good kind happened in 2012 when Kevin Falcon, finance minister of the time, ordered public agencies to phase out bonuses. As a result, sa国际传媒 Hydro cancelled bonuses for 2,000 employees in June.
The bad kind of interference is when a needed rate increase is deferred to spare the governing party a drubbing at the polls, or when Hydro is locked into contracts with private power producers for electricity it must sell at a loss on the spot market.
The leaked report says Hydro needs to increase its revenues from $3.8 billion a year to $4.8 billion in 2016 to pay for past deferred rates, debt, new capital projects and those independent power contracts.
Bennett is candid about the situation.
鈥淚 think we are feeling the impact of decades of difficult decisions by successive governments,鈥� he said. 鈥淪ocreds, NDP and sa国际传媒 Liberal, all of us have difficulty looking the ratepayer directly in the eye and saying: 鈥楤y the way, we鈥檙e going to increase your rates by X.鈥� 鈥�
No one relishes the thought of paying more for electricity, but sa国际传媒 is better off than most provinces. Surveys by Ontario Hydro and Manitoba Hydro show sa国际传媒 households have the third-lowest electricity bills in sa国际传媒. Quebec has the lowest, Manitoba the second-lowest.
That鈥檚 not to minimize the effects of a rate increase 鈥� it will be especially painful for those who must count every penny to balance the family budget.
In addition to enjoying relatively moderate power rates, British Columbians also benefit from the government鈥檚 share of sa国际传媒 Hydro revenues, which will amount to $1.3 billion in the next two years. Don鈥檛 look for that to change 鈥� Bennett said the provincial budget cannot be balanced without that money.
Cutting the government out of Hydro鈥檚 revenues would result in higher taxes, something the sa国际传媒 Liberals want to avoid. But consumers of electricity are, in effect, paying taxes with part of their power bills.
Deferring needed rate increases is like taking off a large bandage a bit at a time 鈥� it might be a little less painful initially, but it only delays the agony and spreads it out over a longer period of time.
While the province might find a way to shave a percentage point or two off the increase, it鈥檚 clear it鈥檚 needed, and it鈥檚 clear it will come.
Just rip off the bandage and get it over with.
