B.C. energy minister to rein in hydro rates

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BC Family Tax Burden and Rate Hikes spotlights carbon tax increases, BC Hydro rate plans, and BC Ferries fares as Premier Christy Clark's family-first agenda weighs subsidies, deficits, and policy trade-offs.

The Main Points

Combined cost pressures on BC households from taxes, BC Hydro rates, and BC Ferries fares under current fiscal policy.

Carbon tax set to rise July 1, lifting pump prices by 6 cents/L
BC Hydro proposes ~50% rate hikes over five years
BC Ferries fares may rise 18% on major routes
Premier Christy Clark orders reviews under family-first lens

B.C. Energy Minister Rich Coleman is expected to announce his plans to bring BC Hydro rates under control as part of his government’s new agenda to rein in soaring household costs.

And Blair Lekstrom, the Minister of Transportation, is taking a run at BC Ferries’ fares, which he says are rising at an unsustainable rate.

The twin reviews are part of Premier Christy Clark’s promise to look at the total tax burden on families, including utility bills like an extra $2 a month for electricity.

But the one tax hike that she’s shown no interest in reviewing is one of the most controversial: The carbon tax is set to jump on July 1, bringing prices at the pumps up another six cents a litre.

Finance Minister Kevin Falcon suggested a freeze on the carbon tax when he was seeking the party leadership. But that isn’t on the table, said the minister in charge of Ms. Clark’s so-called family-first agenda, Mary McNeil. “We haven’t had that discussion.”

It’s a reflection of the fine line Ms. Clark is walking. The new Premier has promised a rethink of the host of taxes and fees piled on to B.C. families by public institutions.

While the Liberal government has long relied on bragging about its low personal income-tax rates and has at times ruled out utility rate hikes to signal restraint, Ms. Clark has taken a broader, less flattering view. She points instead to the B.C. Progress Board assessment that puts the province in the middle of the pack, compared with the rest of Canada. The board looks at the consolidated tax burden of the provincial and local governments on a per-capita basis. By that measure, B.C. ranks fifth among the provinces for individual taxpayers.

Ms. Clark has raised expectations that families will be able to count on a break from a populist premier who has set her sights on an early election.

But at the same time, Ms. Clark has also committed to eliminating the deficit, and the present budget does not afford her significant manoeuvring room. So higher subsidies for BC Ferries, for example, are not an easy solution.

Ms. McNeil, the Minister for Children and Families, said putting a “families first” lens on government action doesn’t mean taxpayers can count on a freeze on rates, such as a provincial electricity rate freeze in utilities. “We do have some issues here, it is tough on families. Do we need to do as much as we were planning or can we scale it back and do it over a longer term? That’s the kind of realistic discussion we have to have.”

BC Hydro has proposed rate increases of roughly 50 per cent over the next five years. A rate hike that was supposed to take effect April 1 has been suspended pending Mr. Coleman’s review.

Jock Finlayson, chief economist for the Business Council of B.C., said hydro-rate increases will be tough to suppress – although he applauds any effort to try, and noted an approved 3 per cent increase as context.

He said he understands why Ms. Clark would be taken aback at the proposed rate hikes. “This is a huge jump in an essential consumption item, with higher BC Hydro rates affecting businesses and households,” he said. “She’s reflecting a common-sense reaction.”

But he said BC Hydro does need to invest in its crumbling infrastructure. “It would be a huge mistake to think as a result of this review the cost of power is going to stop rising, and the notion that cheap B.C. power is a birthright is fading.” The province needs to look at some of the policies it has imposed on BC Hydro – such as conservation and self-sufficiency targets – in order to give Hydro, and its ratepayers, some breathing room.

Mr. Lekstrom, meanwhile, has 90 days to craft a plan to address ferry-fare increases that were tentatively approved by the ferries commissioner last week, with ticket prices rising by 18 per cent on the major routes over the next four years, higher still on the money-losing minor routes.

“I don’t think anyone can continue to afford to continue to travel if the rate increases continue at this pace,” he said. “This isn’t about taking on BC Ferries. There are some cost challenges and the public is looking to government, saying, ‘We want you to fix this’ and I’m not going to sidestep that.”