It’s no secret; the cost of electricity in B.C. is on the rise
Though the rate increases announced in late November are much lower than those leaked from a BC Hydro Rates Working Group paper in August, which estimated that rates needed to increase by 26.4 per cent in the next two years. many businesses and experts are still wary of the increases.
“The economy is still struggling as are many of our members and increases to electricity rates will be a difficult challenge for many businesses including public institutions,” said Anita Huberman, CEO of the Surrey Board of Trade. “At the same time we recognize that the aging grid and power generation infrastructure across the province must be addressed.”
However, some experts claim the rate increases can be largely attributed to government policy, not infrastructure upgrades.
“These problems began with a new government policy in 2002 that changed the nature of electricity generation in B.C. It required BC Hydro to acquire almost all its new power from the private sector, reversing the role BC Hydro had played since its establishment as a public corporation,” said John Calvert, professor of Health Sciences at SFU. “The government imposed this change without legislative oversight or review, a lack of transparency magnified by new restrictions on the role of the BC Utilities Commission that prevented it from reviewing most of the major cost drivers of BC Hydro.”
Calvert cited the 2013 BC Hydro annual report, noting that it now has a total of $52.4 billion in future contractual commitments, of which about $51 billion are for long term purchases from private power developers.
“This means an average of just over $1.1 billion a year in payments over the next five years, with the remaining $45 billion to be paid in future years,” said Calvert.
Huberman said the Surrey Board of Trade’s main concern is that local businesses have not had adequate time to budget for the increases.
“It will be an increased cost to business, not forecasted for 2014 in many business budgets that have already been created,” said Huberman. “Further, most business that are major consumers of power have already completed their plans and pricing and booked sales for next year. This is a little late for these big firms to have any agility to offset these increases in the short run.”
According to Bill Bennett, minister of energy and mines, the increases are part of a “10-year plan” to keep rates stable.
“The goal of the 10-year plan is to keep rates predictable, obviously to keep them down as much as we possibly can, but also to bring in some stability for rate payers, whether they’re residential, commercial or industrial,” said Bennett.
Rates are set to increase by nine per cent in the first year, starting in April, which means an $8 monthly increase for average residential, $20 for small commercial and $139,000 more per month for a heavy industrial customer. Bennett says BC Hydro will be working with these large companies to improve their efficiency.
Over all, a 28 per cent increase is expected over the next five years.