BC Hydro Rate Increases Must Go Into Upgrades

While no one wants to pay more for electricity, the rate increases B.C. Hydro is proposing for 2004 and 2005 are not unreasonable.

In fact, considering Hydro has operated under a rate freeze for 10 years, British Columbians have actually enjoyed rate decreases during that decade -- if you take annual inflation into account.

But it can also be argued that the extended rate freeze, initiated by the NDP, did a disservice to ratepayers. Because Hydro couldn't increase rates, it had to postpone or sideline the crucial upgrading of its extensive power grid.

Much of Hydro's infrastructure -- major transmission lines, dams and power generation stations -- were built in the 1960s and 70s. As Hydro chief executive officer Bob Elton told The Province's editorial board yesterday: "We're at the point where a lot of our equipment is getting old and it needs upgrading."

Had Hydro been granted modest rate hikes instead of a decade-long freeze the upgrading could have begun sooner and would have been cheaper.

Instead, the utility needs to spend about $900 million next year -- and similar amounts in following years -- to bring the system up to standard so that we don't experience major blackouts such as the one that hit eastern Canada and the U.S. this year.

Nor has Hydro been able to build new generation to keep up with B.C.'s growing electricity demand. It's no surprise that B.C. now has an electricity shortfall and must meet growing demand with out-of-province purchases.

However, under the B.C. government's new energy policy Hydro will now turn to private sector producers to build new generation supply in B.C.

We think that's the way to go -- it keeps new jobs and new investment in the province as well.

Meanwhile, the nine per cent Hydro's seeking over two years (seven per cent in 2004 and two per cent in 2005) will cost the average residential customer in a two-bedroom detached home heated by natural gas about $5.51 per month. It means we still will have the third lowest power rates in North America.

However, if customers get savvy about Hydro's Power Smart conservation program, they'll be surprised at how much they can shave off their electricity bills with the use of more energy-efficient products and by weather-proofing their homes.