Six months after John Doyle lambasted BC Hydro’s accounting practices, B.C.’s auditor general (AG) is again chastising the Crown corporation for failing to right its accounting practices.
“I am not satisfied with the government’s resistance to, and lack of action to, the two recommendations made in [the October report] BC Hydro: The Effects of Rate-Regulated Accounting,” Doyle wrote in a March update on the situation from the AG’s office.
Last October, an AG report skewered BC Hydro for deferring $2.2 billion in costs to be expensed in future years. (See “$5 billion by 2017”– issue 1149; November 1-7, 2011.)
Following the report’s release, BC Hydro defended the practice as a way to buffer its customers from wild rate swings. (See “BC Hydro defends its use of multibillion-dollar deferrals” – issue 1151; November 15-21.)
Most recently, the AG’s office released the government’s self-assessment, which the Ministry of Energy and Mines conducted on BC Hydro’s behalf, on efforts made to comply with two AG recommendations to address the practice of rate-regulated accounting.
The AG’s October report had recommended that BC Hydro:
•determine, at the earliest opportunity, how BC Hydro will recover the net deferred costs in its regulatory accounts; and
•prescribe that the annual financial statements for BC Hydro be prepared in accordance with Canadian generally accepted accounting principles (GAAP).
The self-assessment claimed that the first recommendation has been “partially implemented” and stated that a plan for the recovery of regulatory accounts is before the BC Utilities Commission.
However, the self- assessment determined that no action has been taken on the AG’s recommendation that BC Hydro comply with Canadian GAAP. It stated that the Ministry of Finance has no plans to repeal a piece of legislation that requires BC Hydro to adopt one part of an American accounting standard that allows rate regulation.
Responding to the self-assessment, Doyle said he was dissatisfied with government’s action on the recommendations and promised to follow up on the situation.
“I am particularly concerned about the impact of this practice [of rate regulation] on BC Hydro’s rates over time,” he wrote. “All other options to correct this situation should be considered before resorting to rate increases.”
BC Hydro and the Ministry of Energy and Mines did not grant Business in Vancouver’s interview requests by press deadline.
BC Hydro’s next self-assessment is scheduled to be filed with the AG’s office in October. •
