Two trends continue to develop with every day that Michelle Mungall continues as energy minister.
The first is a happy one — she gets more and more pregnant. She was 32 weeks into her term as she defended her ministry’s budget last week, with notes of encouragement all around.
The second is a confusing one. B.C. Hydro miraculously gets better and better looking as a government-owned entity under the NDP, even though they’re carrying on with the expensive Site C dam and blew their plan to freeze electricity rates.
Under questioning from Liberal MLA Tracy Redies, a former B.C. Hydro board member, Mungall enthusiastically volunteered the following points: The corporation’s revenue, growth rate and net income plans are all on track. Domestic revenues are actually increasing, up $224 million over last year. “Our projections, in terms of load, are also all on track.”
“That’s very good news,” Redies purred, perhaps not wanting to wake the baby.
Mungall said further that the government will make $684 million off B.C. Hydro this year, using all the same revenue streams the Liberals used to rely on, to NDP alarm.
And as for the deferral accounts, those magical Liberal-endorsed bookkeeping exercises the NDP used to scream about because billions in costs were just shuffled into the future, she said those are coming down. “We’re expecting it to be actually ahead of the plan. We’re not only on track; we’re doing better than we hoped.”
Based on all that, Redies asked the minister if she was go so far as to say Hydro was performing well and that she had confidence in the executive and the board?
“I am continually impressed,” said Mungall. The chief operating officer, Chris O’Riley, has been doing “a fantastic job.”
Customers could just accept the good news and carry on. But those who remember constant arguments about the utility, its dam, its rates and its accounting practices must be confused about a couple of points.
One is that Mungall only a few months ago was still characterizing Hydro as being in a financial mess, when the same trends and personnel were in place. Asked about that, Mungall again expressed confidence in the leadership team, and said that O’Riley is capable of sweeping up any “mess.”
Her cheery outlook diminished on one point. Despite the encouraging trend, she said the rate-deferral accounts are a problem and the government wants to address them.
That raises another point of confusion. Her original plan to freeze rates would have meant cancelling a scheduled rate hike that would have made Hydro $140 million. That hole would have been covered by using a rate-deferral account. Which is why the B.C. Utilities Commission nixed the idea last winter.
There’s also a confused sense of anticipation about some reviews that are underway. If the corporation is doing very well and headed in the right direction after 11 months of NDP government, why does it need reviewing?
They appear to be fairly deep dives into the corporation’s workings. An internal review started in March and the first phase will be done by fall. Mungall said a second phase will be finished in late 2019. It has a broad scope. “We’re looking at all opportunities for cost savings within B.C. Hydro.”
That $682 million it’s forking over to the government is very much on the table, since it includes dividends ($159 million), water rentals ($360 million) and other costs. Also under review is the structural framework and how the utility is positioned for the 21st century.
Despite the minister’s admiration for all the staff, “cost savings” eventually comes down to layoffs. Seven years ago, the same exercise produced $390 million in savings over three years. So it’s not like there’s a generation of bloat that needs cutting.
If the NDP still want to deliver on the promised rate freeze, the reviews will have to produce $140 million in savings, or the goal of cutting deferral accounts will have to be put off, or the government charges have to be eased.
More to come — on both trends — this summer and fall.
Just So You Know: Saturday’s column erroneously quoted Premier John Horgan as saying there was “a hole in the budget.” In fact, he said there was no hole in the budget. My apologies for the error.
