BC Hydro rates could go down slightly next year, for the first time in decades, but it would be a short-lived reprieve from increasing power rates.
BC Hydro has applied to the BC Utilities Commission (BCUC) for a one per cent rate reduction in April 2020.
But the very next year, in 2021, rates would increase 2.7 per cent, and again by three per cent in 2023, if the BCUC approves BC Hydro’s rate proposals. Rates would go down ever-so-slightly in 2022, by 0.3 per cent.
Overall, BC Hydro is seeking approval for a 6.2 per cent rate hike over four years. That’s still two per cent lower than what BC Hydro had been projecting for the next four years.
"For the past two years, our government has been focused on making sure BC Hydro works for people again," said Michelle Mungall, minister of energy, mines and petroleum resources.
"I am thrilled that BC Hydro is now able to apply for a rate reduction for the first time in decades. If approved by our independent regulator, lower rates would make life better and more affordable for British Columbians."
Mungall’s ministry says BC Hydro can offer a rate decrease next year thanks to higher-than-anticipated profits from its trading arm, Powerex, lower debt financing costs, and lower payments to independent power producers.
"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," said BC Hydro CEO Chris O'Riley.
One of the reasons debt financing is lower is that the NDP government wrote off more than $1 billion in BC Hydro debt.
The provincial government, though BC Hydro, also cancelled future power purchase agreements from independent power producers (IPP), is renegotiating the rates it pays to current IPPs, has cancelled its standing offer program for small power projects and is also proposing to lower the rates it pays homeowners for solar power under a net metering program.
All of which adds up to savings for BC Hydro that will allow the Crown utility to slightly lower the magnitude of rate increases in the coming years.
What’s unclear is why BC Hydro would decrease rates for one year, then raise them in subsequent years, rather than just smooth them out– 1.5 per cent each year over four years, for example.
Business in Vancouver has asked the ministry for an explanation.
More to come.