B.C. Hydro proposes to take edge off of years worth of rising rates
Credit to Author: Derrick Penner| Date: Fri, 23 Aug 2019 21:49:50 +0000
B.C. Hydro is proposing to take the edge off rising electricity rates in 2020 thanks to better-than-expected power trading revenues and fewer purchases from independent power producers, the province announced Friday.
A revised forecast showed that B.C. Hydro expects to need $122.4 million less from customers in 2020, thanks to those favourable results, which it plans to reflect with a 0.99 per cent reduction in rates on April 1, 2020, according to the utility’s updated filing with the B.C. Utilities Commission.
So, instead of rising 8.1 per cent over the next five years, the 2020 hiatus will trim B.C. Hydro’s forecast for rate increases between 2020 and 2024 to 6.2 per cent.
“As a result of our updated financial forecast, we’re in the unique position to apply for a rate decrease for our customers that would start on April 1, 2020, if approved by the B.C. Utilities Commission,” Hydro president Chris O’Riley said in a news release.
B.C. Hydro submitted its application on Friday to the Utilities Commission asking for an interim order approving the rate decrease for 2020. The document doesn’t specify how much that will mean for individual customers.
However, Energy and Mines Minister Michelle Mungall gave some credit to the province’s comprehensive review of B.C. Hydro’s operations and Friday’s announcement builds on Phase 1 of that effort.
“I am thrilled that B.C. Hydro is now able to apply for a rate reduction for the first time in decades,” Mungall said in the news release. “If approved by our independent regulator, lower rates would make life better and more affordable for British Columbians.”
That reduction, however, might not be lasting. B.C. Hydro’s filing with the B.C. Utilities Commission included a forecast for “net bill increases” that estimates a 2.7 per cent increase in the subsequent year and three per cent in 2024.
The province, in its 2019-20 budget, gave B.C. Hydro a considerable chunk of assistance by writing down $1.1 billion in deferred expense costs that the utility had been carrying on its books, which helped it reduce its forecast for rate increases.
In its filing to the Utilities Commission, B.C. Hydro said its update replaces estimates for 2019 financial results with the actual financial results.
Those results showed that Powerex, Hydro’s electricity trading subsidiary, earned $230 million more than forecast, one-time changes that reduced its power purchases from independent power producers and delays in spending on power conservation projects.
In its filing, B.C. Hydro said that dry weather and lower water inflows to facilities decreased its own power-generation costs and the amount of power it bought from independent power producers.
Delays in the in-service completion of independent power projects also resulted in fewer IPP purchases under long-term contracts, according to the filing.
On the more ominous side, B.C. Hydro, in the BCUC filing, said its estimate for operating costs in 2020 increased by $63 million due to storm-restoration costs and pension-related expenses.