Coleman takes first step on B.C. Hydro rates

Energy Minister Rich Coleman's quick review of B.C. Hydro might ease the hit from planned 10-per-cent annual rate increases.
But it remains to be seen if the three deputy ministers tapped to do the investigation will be willing to go far enough in looking at the decisions that landed the Crown corporation in this spot.
B.C. Hydro plans to raise rates by almost 10 per cent a year for each of the next three years.
Infrastructure has been neglected, the corporation says, and it needs to spend about $6 billion - $3.4 billion in the next two years alone - to get things back on track.
And B.C. Hydro has been forced into some costly ventures by the government as part of Gordon Campbell's energy plans. Those too are sending rates soaring.
Coleman has asked three deputy ministers - John Dyble from the premier's office, Peter Milburn from finance and Cheryl Wenezenki-Yolland from the environmental assessment office - to take a quick look at B.C. Hydro.
They've got a mandate to examine everything, with the goal of keeping rate increases down and will report by June 30. It's a worthwhile exercise. And keeping the review in-house is cheaper and faster.
But it also raises concerns. For example, if B.C. Hydro's dams and transmission lines have really been neglected for years, meaning customers today are being stuck with big catch-up bills, how did that happen? Will the deputies point fingers at their political masters?
And it's unclear whether the three really have a free hand. Coleman has already said he's sold on B.C. Hydro's $1-billion plan to install smart meters in every home. Will the reviewers take a hard look at the costs and benefits?
The review should include a hard look at the energy policies of the Campbell government, particularly last year's Clean Energy Act.
That act, along with past government policies, set B.C. Hydro off in some very costly directions.
The government has insisted that B.C. Hydro make the province self-sufficient in meeting electricity needs.
That means more generating capacity and contracts with private producers than are actually needed most of the time so that B.C. Hydro can meet the peak demand with in-province power production.
It might well be less costly for Hydro - and thus its customers - to continue to buy some power from sources outside the province to meet peak demand.
The requirement is linked with another policy push to make B.C. a power exporter.
But again, that requires commitments of billions of dollars in infrastructure and long-term deals with private power producers. That new power comes at a very high rate; if B.C. Hydro can't sell it a profit, then customers must pay higher rates to cover the losses.
Christy Clark has been quick to signal a new direction in some areas. But the private power companies are keen on the lucrative long-term contracts and would object to any changes. It's hard to know where the deputy ministers will be willing - or have time - to reconsider the policy.
The Clean Energy Act also weakened the role of the B.C. Utilities Commission. The commission is supposed to regulate hydro rates. It reviews the Crown corporation's applications for rate increases and scrutinizes its spending plans to make sure no more money is being spent than is necessary. That included a review of capital projects and plans to buy energy from private suppliers.
It's an important function anytime there is a monopoly supplier.
But the act barred the commission from scrutinizing a wide range of projects, from the proposed multibillion-dollar Site C dam on the Peace River to the northwest transmission line.
And it prevented the utilities commission from reviewing B.C. Hydro's call for high-priced clean or renewable energy from private companies.
Removing that protection put consumers at risk.
Coleman's panel might be a useful start. But a thorough review of the government's energy policy is needed.
Footnote: The government's position on smart meters is puzzling. The meters are controversial; the best argument for them is that they allow different electricity rates at different times of day. Rewarding people for using power at off-peak periods means less capacity is needed and overall rates can be lower. But Coleman has ruled out that kind of pricing.