Government is acting on two of its 10 Year Plan commitments for BC Hydro by beginning an independent review of the British Columbia Utilities Commission (BCUC) and launching a public rate design review, announced Bill Bennett, Minister of Energy and Mines and Minister Responsible for Core Review. The reviews are part of government’s plan to keep electricity rates as low as possible while BC Hydro makes investments to maintain our electricity system and meet growing demand.

Government has been clear that it wants the BCUC to resume its role setting BC Hydro rates. The review of the BCUC responds to concerns, raised by customer groups and utilities, about the commission’s ability to deliver clear and timely decisions.  In recent years, the number of information requests and the cost of funding interveners in commission proceedings has increased dramatically, resulting in additional costs and delays. The review will be led by an independent task force and will make recommendations on how to improve the commission’s effectiveness and efficiency so it can start setting BC Hydro rates by the third year of the 10 Year Plan.

The rate design review will help identify opportunities to provide large industrial customers with more flexible rate options to manage their costs and stay competitive. It will also evaluate current industrial, commercial and residential rate structures to ensure they support key objectives including energy conservation and fairness.

The BCUC review task force will begin consultations this month and will report back to government by Nov. 17, 2014. The consultation process will include meetings with First Nations, utilities and interveners as well as current and former BCUC staff. Members of the public will also be able to make written submissions to the task force. Rate design consultations will begin in May and will include a web site where customers can submit feedback and suggestions. Those consultations will inform the rate design application that BC Hydro will submit to the BCUC in the summer of 2015. 

April 2014 marks the first month of government’s 10 Year Plan for BC Hydro. Today, government released a progress update on key commitments including investments to maintain and upgrade BC Hydro’s system as well as measures to pay down regulatory accounts, limit BC Hydo’s operating costs and reduce the amount of money that government takes from the utility.

Quotes:

Bill Bennett, Minister of Energy and Mines and Minister Responsible for Core Review −

“We know that the BCUC has a very important role to play in overseeing British Columbia’s utilities and we have always been clear that we want to get them back to reviewing and setting BC Hydro rates. This review will make sure they have the tools and processes in place to start setting BC Hydro rates by the third year of the 10 Year Plan.”

“We also know it’s important for BC Hydro’s large industrial customers to stay competitive. The rate design review will help identify opportunities to provide those customers with more flexible rate options to manage their costs.”

Learn More: 

BCUC Review consultation: www2.gov.bc.ca/govtogetherbc/consultations/bc_utilities_commission.page 

BCUC Review: www.empr.gov.bc.ca/EPD/Electricity/BCUC_Review/Pages/default.aspx

Two Backgrounders follow:

BCUC Review - Task Force Member Biographies
10 Year Plan Progress Update - April 2014

Media Contacts:

Jake Jacobs
Media Relations
Ministry of Energy and Mines and Responsible for Core Review
250 952-0628

BACKGROUNDER

Independent Review of the British Columbia Utilities Commission

Task Force Member Biographies

Bill Bennett, Minister of Energy and Mines and Minister Responsible for Core Review has appointed a task force to conduct the independent review of the British Columbia Utilities Commission (BCUC). The members of the task force have extensive experience in electricity policy and utility operations.

Peter Ostergaard (chair)
Ostergaard was previously the ADM of Electricity and Alternative Energy in the Ministry of Energy, Mines and Petroleum Resources. He also served six years as chair and CEO of the BCUC. Ostergaard is one of the foremost experts on utility regulation in B.C. and represented the Ministry of Energy and Mines as the technical liaison for BC Hydro’s current Integrated Resource Plan. He also served as a task force member for the recent Industrial Electricity Policy Review. 

Michael Costello
Costello is retired from BC Hydro and BC Transmission Corporation, where he served as president and CEO.  Prior to this, he held the position of deputy minister of Finance and secretary to the Treasury Board in British Columbia. He also served as chair of the Canadian Electricity Association and chair of the Energy Council of Canada. At present, he is board member of InTransit BC, Conifex Timber, BC Health Benefit Trust and the Ontario Power Authority.

R. Brian Wallace, Q.C.
Wallace has been practising law in the energy and environmental area for over 30 years.  He has represented clients before the National Energy Board, the BCUC and the Alberta Utilities Commission. Wallace is recognized as a leading lawyer in the area of energy regulatory law.

Media Contacts:

Jake Jacobs
Media Relations
Ministry of Energy and Mines and Responsible for Core Review
250 952-0628

BACKGROUNDER

10 Year Plan Progress Update - April 2014

On Nov. 26, 2013, government announced a 10 Year Plan to keep electricity rates as low as possible while BC Hydro makes investments in aging assets and new infrastructure to support British Columbia's growing population and economy.

The plan included measures to reduce the amount of money that government takes from the utility, free up additional cash to support investments in infrastructure, pay down regulatory accounts and lower BC Hydro's operating costs.

10 Year Plan commitments and progress

1. Set rate increases for the initial two years of the 10 Year Plan at 9% and 6%. Set rate increase caps of 4%, 3.5%, and 3% for the following three years.
On March 5, 2014, government issued Directions 6 and 7 to the BC Utilities Commission (BCUC) setting rate increases and rate increase caps as outlined in the 10 Year Plan.

2. Fund investments in aging assets and new infrastructure.
BC Hydro’s capital plan is on budget and totals approximately $1.7 billion per year for the next 10 years. Projects that have recently started construction include the $748 million Ruskin Dam Safety and Powerhouse upgrade, the $272 million GM Shrum Turbine replacement and the $1.093 billion John Hart Generating Station replacement. Recently completed projects include the Revelstoke turbine, Stave Falls spillway gates, Columbia Valley Transmission Line and Seymour Arm capacitor station, which came in under budget by more than $150 million combined.

3. Limit BC Hydro’s operating costs.
As a result of the 2011 government review, BC Hydro reduced its operating costs by $391 million over three years, cut executive compensation by 20% and eliminated 900 non-operational roles. Operating costs are limited to increases of less than the rate of inflation over the next two years.

4. Pay down regulatory accounts. 
Prior to the 10 Year Plan, BC Hydro was paying down 19 of 27 regulatory accounts. As of April 1, 2014, 25 of 27 regulatory accounts are being paid down. By March 2016, nine of those accounts will be paid off.

5. Reduce the amount of money that government takes from the utility.
BC Hydro’s net income and dividend - which represent the amount of revenue they send to government each year - have been calculated using the same formula since 1992. On March 5, 2014, government issued Direction 7 and an amendment to Heritage Special Directive HC1. Direction 7 changes how BC Hydro’s net income is calculated starting in fiscal 2018 and will reduce BC Hydro’s contributions to government by $2 billion over 10 years. The amendment to Heritage Special Directive HC1 changes how BC Hydro’s dividend payment to government is calculated starting in fiscal 2018 and will allow BC Hydro to keep $3 billion more in cash for infrastructure investments over 10 years. 

6. Invest $1.6 billion in Power Smart Programs.
BC Hydro’s Power Smart budget over the next three years totals $445 million. This includes funding for the Energy Conservation Assistance Program which provides fridge and insulation upgrades to low-income customers as well as funding for programs to help large industrial customers invest in more efficient equipment.

7. Launch a rate design review process.
A public rate design review process will start this May.

8. Initiate a review of the BCUC.
An independent task force has been appointed to conduct a review of the BCUC so that the BCUC can start setting BC Hydro rates by the third year of the 10 Year Plan.   

Media Contacts:

Jake Jacobs
Media Relations
Ministry of Energy and Mines and Responsible for Core Review
250 952-0628