[Backgrounder added May 22, 2012, updated May 24, 2012]

VANCOUVER - Minister of Energy and Mines Rich Coleman today announced the British Columbia Utilities Commission (BCUC) has been directed by the provincial government to reduce BC Hydro's rate increases over three years by 50 per cent. This is consistent with last year's BC Hydro review.

In keeping with the Province's commitment to provide affordable electricity rates for families, the 2011-12 increase will stay at 8 per cent as previously directed by the BCUC on an interim basis and implemented by BC Hydro on May 1.

For 2012-13, rates have gone up by 7.1 per cent, allowing BC Hydro to pay down its deferral and regulatory accounts at an accelerated pace. This increase was also recommended by the BCUC and put in place on April 1, 2012. An average household has seen bills change by about $5.40 per month.

On April 1, 2013, rates will be kept to a minimum, rising by only 1.44 per cent or $1.20 for an average monthly bill.

The total rate increase over three years will be about 17 per cent, ensuring that British Columbian families pay among the lowest electricity rates in North America.

The provincial government and BC Hydro have achieved this rate reduction by lowering BC Hydro's costs and by the Province forgoing $75 million in dividends over three years.

Quotes:

Minister of Energy and Mines Rich Coleman -

"Our government has taken major strides to keep electricity rates affordable. Keeping rates down has taken a lot of hard work by BC Hydro and the Province, and I am pleased that we're in a position to both lower rates for B.C.'s families and pay back deferral accounts at an accelerated pace."

Charles Reid, president and CEO (acting), BC Hydro -

"Our goal is to keep rates as low as possible for our customers and we are going to continue looking for opportunities to become a leaner and more efficient organization going forward so that we can keep rates low while delivering the investments in our system for future generations."

Quick Facts:

• BC Hydro filed an amended revenue requirements application with the BCUC on Nov. 24, 2011, requesting an eight per cent rate increase for 2012 (down from 9.73 per cent), 3.91 per cent for 2013 (down from 9.73 per cent) and 3.91 per cent for 2014 (down from 9.73 per cent).

• On an interim basis, BCUC approved an eight per cent increase effective May 1, 2011, and a 3.91 per cent rate increase effective April 1, 2012. The BCUC increased the rate rider from 2.5 per cent to five per cent, also effective April 1, 2012.

• BC Hydro submitted more than 24,000 pages of evidence and responded to 4,200 information requests from the BCUC and customer groups during the review of its rate application.

• Deferral and regulatory account balances will be reduced by more than $250 million by March 31, 2014, under the rate scheme announced today.

• In August 2011, the findings of the Review of BC Hydro report were released detailing comprehensive recommendations by a provincial government panel of senior officials on BC Hydro's finances and administration.

Learn More:

Learn more about the BC Hydro Review at: www.newsroom.gov.bc.ca/downloads/bchydroreview.pdf

A backgrounder follows.

Contact:

Sandra Steilo
Ministry of Energy and Mines
250 952-0617

BACKGROUNDER

Direction to the British Columbia Utilities Commission (BCUC)

• This decision to direct the BCUC to reduce BC Hydro's proposed rate increases over three years by 50 per cent was not taken lightly.

• The Province's goal has always been to keep rates affordable for B.C. families.

• Families need to know how much their electricity bill will be so that they can plan their budgets. That's why we are confirming the following:

o rates increased by 7.1 per cent in April 2012, which will mean about $5.40 per month more for an average residential customer; and

o rates will increase again marginally in April 2013 by 1.44 per cent or $1.20 a month more for an average customer.

• The rate increase of 7.1 per cent for April 1, 2012 - March 31, 2013 are consistent with the interim decision of the BCUC.

• This process has already taken two years. Today's resolution not only saves time, it will save B.C. families about $2.1 million in legal fees and other costs for an oral hearing.

• BC Hydro has already spent about $1.3 million on this process and submitted more than 24,000 pages of evidence and responded to 4,200 information requests from the BCUC and customer groups during the review of its rate application.

• As a result of steps taken by BC Hydro to reduce costs, higher Powerex power trading income, and the Province's $35 million contribution, BC Hydro is in a position to lower rates.

• Directions to the BCUC is nothing new, governments have been issuing directions since the 1980s.

• Since 1981, the Province has issued 11 directions. During the 1990s, the government used legislation to establish a rate freeze which minimized the need to issue Directions.

Contact:

Sandra Steilo
Ministry of Energy and Mines
250 952-0617