B.C. Hydro Will Seek Rate Increase

Hydro announced its plans after provincial budget documents tabled by Finance Minister Gary Collins revealed it will run a $70 million deficit in 2003 to 2004.

Hydro's latest three-year service plan forecasts that dry weather conditions in the parts of the province where Hydro's power-generating reservoirs are located will cause the corporation to go into the red.

The projected rate increases of between three to 6.5 per cent over three years will be needed "to meet its allowed return on equity," according to the service plan.

"We expect to make that revenue requirement application to the B.C. Utilities Commission in March 2004, Hydro spokeswoman Elisha Odowichuk said.

Odowichuk said Hydro is confident it will be able to meet its objective of achieving a $350 million return on equity by the end of fiscal 2003, which falls at the end of March.

She added, however, that the corporation will have to dip into its rate stabilization account for $65 million to do so. That will leave only $22 million in the stabilization account, a fund that B.C. Hydro pays into during years it makes profits from surplus electricity sales and draws from in years when it has to import more power than it sells.

After running a $70-million deficit in 2003 to 2004, Odowichuk said, Hydro projects it will earn a return of $125 million in 2004-2005 and $80 million in 2005 to 2006. Those amounts, however, would be below the corporation's allowed return on equity, which is why it wants a rate hike.

Energy Minister Richard Neufeld essentially paved the way for rate increases when he released the government's energy restructuring policy last November and returned to the utilities commission the authority to oversee Hydro's revenue requirements.