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BC Hydro rate increases to cost ratepayers almost $1 billion

Crown corporation CEO claims for each per cent of increase, BC Hydro nets about $30 to $35 million



BC Hydro has finally put a price on its projected 27 per cent rate increase, revealing that it could cost ratepayers as much as $945 million.

In a conference call convened Tuesday to talk about BC Hydro's three-year, $6 billion regeneration plan, corporation CEO Dave Cobb said that the proposed rate increase over three years could net it anywhere between $30 million and $35 million for every percentage point that electricity rates go up.

"Domestic revenues will increase by about $1 billion," Cobb said in response to a question from Pique . "A one per cent increase in rates is about $30 million to $35 million a year. Multiply it and you'll get pretty close."

BC Hydro announced on Dec. 2 that the power authority is forecasting an increase of $7 each year on an average monthly bill of $71, which totals about 27 per cent over the next three years. To get this rate increase approved, it has to file an application with the B.C. Utilities Commission (BCUC), an independent regulatory authority that administers rates.

BC Hydro said the money it nets from rate increases will go to funding a long-term regeneration plan that aims to accommodate for a projected 40 per cent growth in electricity demand in the next 20 years.

The regeneration plan includes a separate application to the BCUC for approval of an $800 million upgrade to the Ruskin Dam and Powerhouse near Mission, British Columbia. The facility, which was built 80 years ago, has had no significant upgrades or modification since a generator was added in the 1950's, according to a news release.

Other initiatives in the plan include a $700 to $800 million project to install two generating units at the Mica Generation Station on the Columbia River north of Revelstoke; $177 to $195 million to build a new substation and transmission paths as part of the Vancouver City Centre Transmission Project; and $230 to $250 million to add a fifth generating unit to the Revelstoke Dam and Generating Station.

Also factoring into the rate increases, but less so than the infrastructural upgrades, are contracts with independent power producers (IPP's) that have been reached through various Clean Power Calls.

BC Hydro enters into contracts with companies such as Plutonic Power, Innergex and Regional Power that generate electricity through technology such as run-of-river. Examples of this technology abound throughout the Sea to Sky region including projects on the Ashlu River in Squamish, Fitzsimmons Creek in Whistler and Miller Creek in Pemberton.

These companies enter into agreements to provide their electricity exclusively to BC Hydro, power that is then fed on to the Western Interconnection, a power grid that extends from British Columbia into Alberta, Washington State, Oregon and California. The costs to BC Hydro of buying that electricity from private developers are factored into the power rates charged to consumers.

Cobb said on the conference call that the costs of electricity generated by independent producers are "not that significant."

"As a percentage it's very small," he said. "Most of the IPP energy purchases that are in our system now and actually producing energy for us were pre-2008 power call, so they're relatively inexpensive.

"A lot of the projects where we entered into electricity purchase agreements, many of them will not be in our system until after this three-year forecast period that we're entering into now."