BC Energy and Mines Minister Rich Coleman said his ministry has for several months been concerned about BC Hydro’s use of deferral accounts.
The minister’s comments came in response to auditor general John Doyle’s report last week, which revealed that the Crown corporation has racked up $2.2 billion in public debt in the form of deferred payments and has no plan to pay it off.
“I don’t agree with all of his assumptions but there’s no question we’ve had some concerns about deferred accounts and these particular accounts when we did the hydro review this summer,” Coleman said.
BC Hydro has some 27 deferral accounts it uses to “smooth out” annual fluctuations in power revenue for the ratepayer.
The provincial government and the utility have defended the use of deferral accounts, saying they help avoid year-over-year rate changes that would make business difficult for large industrial customers.
But Doyle’s report pointed out that the use of these accounts has grown dramatically in recent years, and the total amount deferred is expected to climb to $5 billion by 2017.
Doyle told Business in Vancouver the utility is also charging interest on the deferred payments and using that interest, which will not be paid for years to come, to improve its net income today.
“It’s a completely artificial transaction,” said Doyle. “They’ve inflated their performance … out of interest that’s appeared out of nowhere, paid by themselves to themselves.”
Coleman said the utility brings in about $100 million a year to help cover interest accrued.
He added that he and Finance Minister Kevin Falcon will sit down in the coming weeks to discuss the impacts of the deferral accounts.
Joel McKay
@jmckaybiv