BILL Bennett, Minister of Energy and Mines and Minister Responsible for Core Review, on Tuesday announced a 10-year plan that he claimed will keep electricity rates as low as possible while BC Hydro makes investments in aging assets and new infrastructure to support British Columbia’s growing population and economy.
He said that over the past several months, government and BC Hydro have worked together to reduce pressure on rates. This effort builds on the 2011 review that identified over $391 million in savings. New measures in the 10 year plan will reduce the amount of money that government takes from the utility, free up additional cash to support investments in infrastructure and lower BC Hydro’s operating costs.
Decades ago, BC Hydro built the backbone of our electricity system. Today, major components of that system need to be repaired or replaced. Meanwhile, British Columbia’s population and economy are growing and new technologies have increased household power use. On Tuesday, the government released BC Hydro’s approved Integrated Resource Plan which sets out cost effective investments in infrastructure, conservation and clean energy to meet an expected 40-per-cent increase in demand over the next 20 years.
To keep rates predictable while funding investments in aging and new infrastructure:
* The government will set rate increases for the initial two years of the 10 year plan at nine per cent and six per cent;
* The BC Utilities Commission (BCUC) will set increases for the following three years within caps of four per cent, 3.5 per cent and three per cent; and
* In the final five years of the plan, rates will be set by the BCUC and actions by government and BC Hydro will ensure increases remain low and predictable.
To help industrial customers and customers on low incomes reduce their bills by using less electricity, BC Hydro will invest $1.6 billion in Power Smart programs under the 10 year plan. In addition, a rate design review process will be launched to examine ways to provide industrial customers with more options to reduce their electricity costs, as recommended by the Industrial Electricity Policy Review Task Force.
In response to another recommendation from the task force, government will initiate a review of the BCUC, through the Core Review process, with the goal of increasing the commission’s effectiveness and efficiency so that BC Hydro rates can be set by the commission starting in the third year of the plan.
Currently, 80 per cent of the balance in BC Hydro’s regulatory accounts is being paid down under amortization schedules approved by the BCUC. Under the 10 year plan, the remaining balance will start being paid down. In addition, to keep rate increases as gradual as possible, a new account will be created to spread costs that occur in the earlier years of the plan, over a longer period. This account will be paid down to zero within the term of the plan.
Bennett said: “This is a balanced and responsible plan that keeps rates as low as possible while funding infrastructure investments to support our growing economy and population. Since 2011, government and BC Hydro have worked hard to reduce pressure on rates and we will continue to work together over the course of this plan to keep our electricity system affordable, reliable and sustainable.”
Charles Reid, CEO, BC Hydro, said: “BC Hydro has worked hard to keep costs down for our customers and we will continue to work with government to find savings wherever possible as we make the investments required to keep our system reliable and meet growing demand.”