As Hydro Rates Climb, an Idea to Reduce Bills for Low-income Folks
Advocates pitch affordability program, but minister insists rates are modest.
February 27, 2016 | Andrew MacLeod | TheTyee
With electricity rates continuing to spiral upwards, an advocacy organization is pushing to have BC Hydro adopt measures to make bills more affordable for people surviving on low incomes.
“Most other jurisdictions in North America have bill affordability programs,” said Sarah Khan, a lawyer with the British Columbia Public Interest Advocacy Centre. “We don’t.”
Confirmation of the latest BC Hydro rate hike came Friday when president and CEO Jessica McDonald said the Crown utility is seeking to raise rates by four per cent on April 1, consistent with a 10-year plan set out in 2013.
Most other jurisdictions in North America have bill affordability programs
BC Hydro rates have gone up by 50 per cent over the past 10 years and they are scheduled to go up another 11 per cent over the next three years, Khan said.
They’ll rise even further when the $10-billion Site C dam is completed on the Peace River and customers start paying for it, she said.
Meanwhile, the provincial minimum wage and welfare rates haven’t kept up while the cost of living has become more expensive, leaving many struggling to pay their bills, Khan said.
Rate review an opportunity, says lawyer
The advocacy centre has a proposal to make bills more affordable for some 170,000 families in B.C. who live below the low-income cut-offs set by Statistics Canada, around $32,000 a year for a family of four depending on what size community they live in.
On behalf of seven anti-poverty and seniors’ groups, the centre plans to submit the proposal in April as part of BC Hydro’s ongoing rate design review in front of the B.C. Utilities Commission. Launched by the provincial government, the review’s mandate includes evaluating the current rate structures to ensure they are fair.
A rate design review is done every eight to 10 years, so it will be a long time until there’s another chance to make such a change, Khan said. “We need to take this opportunity because low-income people are having great difficulty paying their BC Hydro bills.”
She added, “This is important because BC Hydro’s rates have been increasing astronomically over the last 10 years and they are projected to rise at potentially even greater levels.”
The Site C dam project should be halted until it’s certain the power is needed and the project has been independently reviewed, Khan said. The money that’s borrowed to build the dam will eventually need to be paid for through rates, she said.
“It is particularly unfair to low-income ratepayers,” she said. ”They can’t afford to pay continuing higher costs for electricity which is an essential service.”
Lower rate, more flexibility
The bill affordability proposal outlines three measures.
First, it would set a “lifeline rate” where low-income customers would have the basic charge of 17.64 cents per day waived and would pay a lower-than-normal rate of five cents per kilowatt hour for the first 250 kilowatt hours of electricity they use each month.
The rate would save low-income customers about $13 a month on their hydro bills, the advocacy centre calculated.
Second, it would provide up to $500 in emergency assistance to low-income households who have overdue BC Hydro payments and are facing disconnection.
Third, it would create new terms and conditions for low-income customers, such as waiving security deposits, making more flexible payment arrangements, eliminating late payment fees, and excusing reconnection fees.
Similar programs already exist in other provinces and are extensive throughout the United States, Khan said.
The B.C. government could create such programs, but it seems more likely it will oppose the proposal at the BCUC hearings, she said.
“We don’t think the government’s going to do anything,” Khan said. “They just keep taking dividends out of BC Hydro and ordering projects we don’t think we need.”
Rates low already, says Hydro head
At a news conference about the progress on Site C, The Tyee asked BC Hydro president and CEO McDonald about the bill affordability proposal.
“B.C., as you may be aware, has relatively very low rates for electricity,” McDonald said. “This is something our customers don’t necessarily know.”
For residential customers, the rates are the third lowest in North America, even after increases in recent years, she said.
BC Hydro offers help with energy efficiency so people can reduce their electricity use and receive lower bills, she said.
The minister responsible for BC Hydro, Bill Bennett, said he hadn’t seen the proposal, but also doesn’t see a pressing need to make hydro rates more affordable.
“Our view is the rates being the third lowest in North America are already affordable,” he said. “How low do they need to be before someone says they’re affordable? If you factor in inflation, people are paying the same thing for electricity in 2016 that they were paying in the 1990s. That sounds affordable to me.”
Rates are going up as fast elsewhere as they are in B.C., Bennett said. “It’s not that we don’t care about affordability. We’re already doing a couple of dozen things within BC Hydro and government to take pressure off rates. But rates are going to go up as long as you have to spend $2.4 billion a year on capital to upgrade your system and keep your system reliable,” he said.
BC Hydro’s cost-cutting measures since 2012 have included cutting some $418 million in operating costs and eliminating 1,140 positions, a ministry spokesperson said.
Horgan ahead on hydro, says Dix
The NDP opposition critic for BC Hydro, Adrian Dix, said he hadn’t seen the bill affordability proposal but that his party supports making electricity more affordable. “We’ll be very interested to see what [the centre] proposes,” he said.
NDP leader John Horgan has previously put forward proposals to help people with low incomes afford their electricity bills, both during his 2011 leadership campaign and in a 2013 private member’s bill in the legislature, Dix said. “Based on California, where this exists, John Horgan was on top of this years ago.”
The provincial government has used dividends from BC Hydro to fund tax cuts for the rich, Dix said. “This government has consistently used BC Hydro as a vehicle to reward its friends.”
He criticized the increase that BC Hydro announced Friday, saying, “This is a rate increase that hurts the economy and hurts people when they can least afford it.” Hydro rate increases amount to a tax increase on working people and businesses, he said.