BC Hydro rates expected to increase 8% over 5 years

British Columbia residents can expect to pay over eight per cent more on their BC Hydro bills over the next five years.

The government says the first increase of 1.8 per cent will be implemented April 1, if the B.C. Utilities Commission approves the added expense.

The announcement comes after a report commissioned by the NDP government says BC Hydro customers will pay $16 billion over the next two decades because the Crown utility was pressured by the former Liberal government to sign contracts with independent power producers.

The report says the Liberals manufactured an urgent need for electricity but restricted BC Hydro from producing it, forcing the utility to turn to private producers and sign long-term contracts at inflated prices.

Former B.C. Treasury Board director Ken Davidson authored the study, which estimates the cost to the average residential BC Hydro customer will amount to about $4,000 over the next 20 years or about $200 per year.

Davidson's report recommends all future energy purchases be made at market rates and finds BC Hydro must be allowed to meet supply obligations through a reasonable level of market trading, rather than by generating all electricity within the province.

The government launched a two-phase review of BC Hydro last June in an effort to identify cost savings at the utility.

Energy Minister Michelle Mungall says Davidson's report also concludes the agreements forced upon BC Hydro were mainly with run-of-river producers, whose power is primarily available during spring run-off, when B.C. doesn't require it.

"B.C. didn't benefit. BC Hydro customers didn't benefit. A small number of well-placed independent power producers benefited, and customers were stuck with a 40-year payment plan," Mungall says in a news release.

Government and BC Hydro staff warned the former Liberal administration against requiring lengthy contracts with independent producers, but the advice was rejected, the minister says.

"As a result, these contracts have already cost customers $3.2 billion and are set to cost billions more over the next two decades," she says.

The NDP government is also crying foul over $3 million in campaign donations from the independent power industry to B.C. Liberal campaign coffers over 12 years.