BC Hydro customers will see their bills jump by about 28 per cent over the next five years to help the utility pay for capital upgrades.
The increases, which are front loaded in the next two years, work out to about $8 a month this coming year for residential customers. Over the course of five years, average bills are expected to increase from about $89 a month to $111.
The provincial government said the rate increases are needed because aging infrastructure constructed during the "big build era" from the early 1960s to the mid-1980s needs work. The utility has budgeted nearly $2 billion a year in capital spending to pay for the upgrades.
Rates will go up nine per cent beginning on April 1, 2014 and jump an additional six per cent the following year. The B.C. Utilities Commission will set the rates beyond that, but the government has set caps of four per cent, 3.5 per cent and three per cent over the following three years respectively.
No annual rate caps were announced for the following five years, but Energy and Mines Minister Bill Bennett estimated the increases during that period will be in the neighbourhood of 2.5 per cent to 2.6 per cent per year.
NDP provincial council member Sherry Ogasawara disputed the premise that the rate increases are required solely for infrastructure upgrades, which she called a distraction to turn the attention away from Liberal mismanagement. She believes there's a structural issue with contracts BC Hydro has signed with independent power producers, which is costing the utility millions of dollars a year.
Meanwhile, Bennett also announced over the next decade that the government will reduce its dependency on dividends and other revenue from BC Hydro.
"We needed to acknowledge that government has been an important cost driver in this whole scenario," Bennett said.
Over the next decade, Bennett said it will take $2 billion less than it would have from the utility, but many of those savings won't occur until the final five years, after the next provincial election.
BC Hydro also plans to reduce its operating expenses beginning with the elimination of 120 positions in the coming months.
