Hydro costs to jump 15 per cent in next two years

Scott Simpson
Vancouver Sun
February 20, 2008

Electricity rates will jump 15 per cent within two years, or about $120 per year for an average BC Hydro residential customer under a plan released Tuesday by the Crown corporation.

Hydro's updated service plan indicates that the increase, which requires the approval of the B.C. Utilities Commission, is necessary to support a massive increase in capital spending on expansion and upgrades to the province's aging electricity grid.

For example, in 2002 Hydro spent $531 million on grid improvements -- but that amount is projected to jump to $1.9 billion by 2011. The increase will be introduced in two stages, with annual increases this year and next year of about 7.6 per cent each.

That works out to an average monthly increase of $5 -- $60 a year -- for the upcoming fiscal year, and the same amount the following year.

According to Hydro, more than 50 per cent of customers will be paying the $5. Others will pay more, but would have the opportunity to lower their costs by cutting back on electricity consumption. Even a 10-per-cent reduction in consumption would compensate for the increase.

An application for the increase will be filed later this month with the utilities commission, the service plan indicates.

The service plan, for the three fiscal years from 2008-09 through 2010-11, shows that Hydro is also counting on a massive conservation effort on the part of British Columbians to keep electricity bills from climbing even higher -- since the only alternatives to cutting back on electricity consumption are to build more generation and increase dependence on imported power.

The amount of demand growth it proposes to curtail over the next four years is double the total amount of new power it could bring into the system by spending an estimated $6.5 billion to add a third dam, Site C, on the Peace River in northeast B.C.

About 15 per cent of B.C.'s present energy demands are met with imported power, but the B.C. government's energy plan calls for Hydro to be self-sufficient by 2015.

As part of that conservation effort, Hydro is proposing to spend up to $900 million on a "Smart Metering" program that would see all mechanical electrical meters replaced with interactive, digital devices that will allow Hydro customers to see, minute by minute, how much it's costing them to light their homes and operate refrigerators, computers, televisions and other devices.

Hydro says it will seek the rate increase to cover the cost of acquiring additional clean and renewable energy -- such as run-of-river hydro power from independent power producers -- and anticipates that in the near term, import power prices will be increasing.

Hydro also foresees expanding and upgrading its own infrastructure and that of BC Transmission Corporation "to ensure the long-term security of our electricity supply."

"This is really important work, and it's clean energy too," said Hydro president and chief executive officer Bob Elton. "It coincides with the government's climate change focus. It supports it but it is not caused by it.

"We have to do this investment. We have to rebuild these heritage assets so that, right now, we will have the reliability that we need and that it will be there for a long time to come."

Finance Minister Carole Taylor noted in a budget press briefing that the annual net in-migration to B.C. has reached 50,000 people and that it's Hydro's responsibility to ensure that their electricity needs are met.