Further Observations on the Hydro Rate Freeze. November 12, 2017.
As a follow-up to Occasional Paper No. 45, this paper looks more deeply at the question of affordability in the pricing of BC Hydro's electricity.
As a follow-up to Occasional Paper No. 45, this paper looks more deeply at the question of affordability in the pricing of BC Hydro's electricity.
Can the BCUC approve BC Hydro's request to withdraw the 3% rate increase for 1 April 2018? I argue that it should not approve the request.
Andrew MacLeod of The Tyee reports that Finance Minister Carole James intends to fix BC Hydro's accounting practices, but it will take time; https://thetyee.ca/News/2017/10/25/Fixing-BC-Hydro-Accounting/?utm_source=daily&utm_medium=email&utm_campaign=251017
This paper discusses some aspects of the new plan to freeze BC Hydro rates for 2018.
Resource economist Robert McCullough's testimonoy before the Site C panel on October 14th http://www.sitecinquiry.com/wp-content/uploads/2017/10/00614_TTP-2_2017_10_14_Vancouver_TP-Transcripts-V14.pdf pg. 1562 to 1581; opinion piece in the Vancouver Sun of October 30th http://vancouversun.com/opinion/op-ed/opinion-site-c-proponents-fall-prey-to-sunk-costs-fallacy
The Auditor General has added a new reason to qualify her opinion of the government's 2016/17 financial statements; the fact that the 'prescribed' accounting standards do not conform to the public sector accounting standards. Read more in Occasional Paper No. 44.
The Tyee published my piece which describes the Ontario Auditor General's special report on a government scheme to subsidize electricity rates, and how electricity rates are subsidized in British Columbia; https://thetyee.ca/Opinion/2017/10/24/Will-NDPEnd-BC-Hydro-Wild-West-Accounting/?utm_source=daily&utm_medium=email&utm_campaign=241017 also Andrew MacLeod's comments from Carole James https://thetyee.ca/News/2017/10/25/Fixing-BC-Hydro-Accounting/?utm_source=daily&utm_medium=email&utm_campaign=251017
In a special report the Ontario Auditor General severely criticised that government's new regulatory deferal scheme; what would she make of the accounting practiced at BC Hydro to surpress the true cost of electricity?
This email informs Auditor General Bellringer of recent developments respecting BC Hydro's accounting for future unbilled and uncollected revenue.
The use of deferral accounting allows debt to be transformed into and asset, a practice that the BC Lberal government abused with respect to BC Hydro's books. There are there lessons for the new NDP government in the Ontario Auditor General's recent report; http://www.auditor.on.ca/en/content/specialreports/specialreports/FairHydroPlan_en.pdf See media reaction; http://ottawacitizen.com/news/local-news/reevely-hiding-billions-in-hydro-debt-unacceptable-ontarios-auditor-general-says and http://nationalpost.com/pmn/news-pmn/canada-news-pmn/auditor-general-set-to-report-on-ontarios-25-per-cent-hydro-bill-cuts.
ICBC does not publish multi-year financial forecasts, but Occasional paper No. 42 procides a scenario of the capital deletion to 31 march 2020. Little wonder that finance minister James is concerned.
ICBC's forecast for 2017/18 shows a continuation in th loss of capital. Occasional Paer No. 41 traces the loss by program from 2010 to 2017/18, and confirms the structural deficit of approximately $400 million per year in the Basic program.
Comparing auto insurance prices across provincial jurisdictions is a difficlut task. Occasional Paper No.40 shows that the methodology used by Mike Milke in a recent Canadian Taxpayer Federation report is flawed.
Dr. Rose Devlin's 25 July 2017 report "A Comparison of Automoble Regimes in Canada" is posted with the permission of the Trial Lawyers Association of British Columbia.
Attorney General David Eby unveiled the 2017 Basic and Optional rate increases, and outlined a multi-year plan to restore ICBC's finances, with regular reports on progress; http://vancouversun.com/news/local-news/attorney-general-to-announce-changes-to-insurance-corp-of-b-c and http://www.cbc.ca/news/canada/british-columbia/icbc-rate-increases-eby-1.4275970 and http://www.timescolonist.com/news/local/icbc-rates-to-rise-6-4-per-cent-typical-motorist-to-pay-57-more-1.22443523
The recently released 2016/17 annual report shows that the financial condition at the public insurer is going from bad to worse, as outlined in Occasional Paper No. 39.
A more detailed review of the Ernst Young report raises serious concerns about the costing methodology, and the savings that might be achieved by capping pain and suffering awards on minor injury claims. The are discussed in Occasional Paper No.38.
Ariticle by Geordon Omand of the Canadian Press reviews the declining financial condition of ICBC; https://www.theglobeandmail.com/news/british-columbia/british-columbias-once-feted-public-auto-insurer-in-financial-crisis/article35978986/ The story was published by the Globe and Mail and Postmedia papers.
This paper reviews the Ernst Young report's options to increase the affordability of auto insurance. It questions some of the proposed cost savings and recoomends the adoption of Saskatchewan's dual Basic model.
The Times Colonist editorial correctly blames the Liberal government for allowing ICBC's finances to rapidly deteriorate, and warns of hard choices to come; http://www.timescolonist.com/opinion/editorials/editorial-hard-choices-ahead-for-icbc-1.21569689.
My comments on the financail aspects of the July 10, 2017 Ernst Young report on ICBC are included in Occasional Paper N0. 36, distributed on July 30, 2017.
After being leaked to Postmedia, the government released the July 1o, 2017 Ernst Young report on ICBC; http://www.icbc.com/about-icbc/company-info/Documents/Affordable-and-Effective-AutoInsurance-Report.pdf CKNW interviews with Minister Eby, Liberal MLA Wilkinson and Richard McCandless;http://globalnews.ca/news/3620885/icbc-considering-raising-car-insurance-premiums-by-30-per-cent/ and Vaughn Palmer's comments http://vancouversun.com/opinion/columnists/vaughn-palmer-eby-considers-safer-technology-versus-hiking-icbc-rates. Chuck Byrne's (Insurance Brokers Association) comments; http://www.insurancebusinessmag.com/ca/news/auto/report-is-great-opportunity-for-icbc-to-bring-in-reforms-74363.aspx
My article in The Tyee discusses the possible cost to BC Hydro ratepayers of either proceeding or cancelling the Site C project; https://thetyee.ca/Opinion/2017/07/13/How-Much-Will-Site-C-Gambling-Debt-Cost/?utm_source=daily&utm_medium=email&utm_campaign=130717
This report provides some context about the absolute change in GHG emissions from 2005 to 2015; suggesting that a more in-depth review is required.
Occasional paper No. 34 reviews the likely impact of three major hydroelectric infrastructure projects on electricity rates.
What impact will the Site C project, whether it proceeds or is cancelled, have on BC Hydro's operating budget, and what are the options to pay for it? Occasional Paper No. 33 provides a high-level look at these questions.
Reprint of my article in today's Tyee; https://thetyee.ca/Opinion/2017/06/16/NDP-Faces-Mess/?utm_source=daily&utm_medium=email&utm_campaign=160617
Bill Tieleman, writing in The Tyee, highlights the financial problems facing the new NDP government. At the top of the list are BC Hydro and ICBC; https://thetyee.ca/Opinion/2017/06/13/Clark-Leaves-List-for-Horgan/?utm_source=daily&utm_medium=email&utm_campaign=130617
Given the pending change in government, I recommended that the BC Utilities Commission not approve any of the discreationary items in BC Hydro's F17 to F19 rate request.
In May, Manitoba Hydro requested a rate increase of 7.9% for 2017 and 2018, with an indication of the same increase for the following three years. The publicly owned power utility is facing a major deterioration inits finances due to major capital projects and a flat demand. What lessons may a new government in BC learn from the Manitoba experience?
During the April 11, 2016 Question Period the minister of energy attempts to defend BC Hydro borrowing 100% of the dividend paid to the government; https://www.youtube.com/watch?v=MLNr3RkqPyA, and https://www.youtube.com/watch?v=qs3jntTrgNI
This paper reviews the recent report of the Ontario Financial Accountability Office on that government's plan to use a deferral account to surpress electricity rates. A comparison to the revenue deferral practiced by BC Hydro is also provided.
The Green party has to help restore an ethical approach to government, which will not happen by keeping the Liberals in power. A slightly revised version was printed in The Tyee on May 18, 2017; https://thetyee.ca/Opinion/2017/05/18/End-BC-Hydro-ICBC-Shell-Games/?utm_source=daily&utm_medium=email&utm_campaign=180517
A Fact Check on Hon. Bill Bennett's comments on the Jon McComd (CKNW) show, commenting on rate increases and BC Hydro's debt.
My article in the Tyee reviews the implications of the Liberal Party's four year revenue estimates for BC Hydro and ICBC;https://thetyee.ca/Opinion/2017/05/01/Rate-Increases-BC-Hydro-ICBC/?utm_source=daily&utm_medium=email&utm_campaign=020517
A report by David Marshall recommends an over-haul of the Ontario system to focus on the management of injury claims to improve the efficieny and effectiveness of the auto insurance system. Useful, but the cross Canada premium comparisons are questionable. http://www.fin.gov.on.ca/en/autoinsurance/fair-benefits.pdf and https://news.ontario.ca/mof/en/2017/04/ontario-releases-report-on-auto-insurance.html
On April 19th finance minister de Jong stated that the coming four-year rate increase requirement for BC Hydro is 28%, and close to 70% for ICBC's Basic program. The government's rate suppression policy has postponed the financial reckoning.
Marvin Shaffer criticizes the Liberal government's politicization of BC Hydro; http://vancouversun.com/opinion/op-ed/opinion-politics-versus-good-governance-for-b-c-hydro
This paper attempts to summarize the election platforms of the three main parties, and what they say or imply about BC Hydro and ICBC.
This paper reviews the last four years capital depletion and the growth in the claims backlog at ICBC.
ICBC announced a toughing of its Basic insurance discounts for 2018, which will result in higher insurance for at-fault drivers; good drivers will be big losers.
A generally negative survey of the no-fault auto insurance business in Ontario, by the Globe and Mail; http://www.theglobeandmail.com/report-on-business/rob-magazine/the-real-reason-ontarios-auto-insurance-rates-are-so-high/article34560827/
A detailed review of ICBC's three-year forecast shows alarming loss of capital; immediate and longer-term initiatives are suggested to restore ICBC's finances to a healthy condition.
The new provincial government must make the restoration of ICBC's financial health a priority, as capital reserves are now below the regulatory minimums,and rake shock looms.
A review of the financial impacts of the cold and snowy winter on the finances of BC Hydro and ICBC.
Big banks have been pursuing questionable tactics to enhance revenue and profits, but BC Hydro has a unique way to achieve its revenue targets.
This paper suggests that BC Hydro's annual target rate increase of 2.6% is optimistic, as is the 10-year financial plan.
This Fact Check concludes that ICBC's claim that fraud is costing $600 million annually is significantly exggerated.
In 2011, the government's Internal Audit and Advisory Services group conducted a review of ICBC's operations, and published its report in August; http://www.fin.gov.bc.ca/iaas/pdf_docs/ICBC_Review_2012.pdf
This paper reviews Mr. Crombie's comments in a recent interview as reported by Keith Baldrey in the Burnaby News of March 6, 2017.
AMPC submissions of 2013 and 2017 call for BC Hydro to moderate cost and rate increaes; http://www2.gov.bc.ca/assets/gov/farming-natural-resources-and-industry/electricity-alternative-energy/electricity/iepr/iepr_submission-association_of_major_power_consumers_round_1.pdf and http://www.bcuc.com/Documents/Proceedings/2017/DOC_48816_C9-7_AMPC-Evidence.pdf
The Globe and Mail is not impressed by the Ontario government's move to reduce the cost of electricity; http://www.theglobeandmail.com/opinion/editorials/lower-electricity-rates-dont-fall-for-premier-wynnes-power-move/article34195391/ and http://www.theglobeandmail.com/news/national/will-kathleen-wynnes-last-ditch-hydro-fix-just-add-to-the-mess/article34182155/ also an editorial by The National Post; http://news.nationalpost.com/full-comment/national-post-view-kathleen-wynnes-liberals-bail-themselves-out-with-public-money-again
On 2 March 2017 the Ontario government announced new measures, including a greater taxpayer-funded subsidy, to moderate the rise of electricity prices; http://www.theglobeandmail.com/news/national/ontario-wynne-slashes-hydro-rates-residents/article34183180/
On March 3, 2017, Policy Options published my article comparing how the governments of Ontario and BC are subsidizing electricity prices: http://policyoptions.irpp.org/magazines/march-2017/how-bc-politicized-electricity-rates/
This paper explores BC Hydro's flat domestic sales and its high profits during the last five years, and suggests that the recording of future ubapproved and unbilled revenue helps explain the healthy bottom line.
Keith Baldrey, in the North Shore News, writes about the looming financial crisis at ICBC;http://www.nsnews.com/opinion/columnists/baldrey-get-ready-for-massive-icbc-rate-hikes-1.10685159
A report in Bloomberg Businessweek describes how rising claims costs are forcing auto insurance price increases, providing opportunity for new entrants to the market; https://www.bloomberg.com/news/articles/2017-02-16/insurance-bills-rise-as-texters-crash-cars
Minister Stone attempts to defend ICBC's deficit forecasts during Question Period on February 22, 2017.
Gary Mason, of The Globe and Mail, reports on the new financial forecast for ICBC; http://www.theglobeandmail.com/news/british-columbia/provinces-file-bungling-has-driven-insurance-corp-of-bc-into-trouble/article34136030/, with a backgrounder.
ICBC's 3rd Quarter 2016/17 forecast, and the 2017/18 forecast show a worsening financial picture. No relief in the government's 2017/18 budget.
In the last five years, the government has taken some $1.95 billion in dividends from BC Hydro, or "excess' capital from ICBC, to reduce its direct operating debt requirement. Occasional Paper No. 22 explains how this happened.
Norman Farrell's post shows that domestic demand for BC Hydro's power has been flat while costs are rising;https://in-sights.ca/2017/02/09/awash-in-power-at-premium-prices/
The senior officials' 2011 review of BC Hydro; http://www.ceaa.gc.ca/050/documents/p63919/97006E.pdf
Auditor General John Doyle and Charles Reid of BC Hydro review the Auditor's recent report on regulated accounting; https://www.leg.bc.ca/Pages/BCLASS-Legacy.aspx#%2Fcontent%2Flegacy%2Fweb%2Fcmt%2F39thparl%2Fsession-4%2Fpac%2Fhansard%2Fp11125x.htm starting at 1257 hrs.
This paper describes how an obscure 2011 cabinet directive allows BC Hydro to apply regulatory accounting without the fundamental componet -- an independent regulator.
My submission recommends that the BC Utilities Commission set expectations for ICBC's 2017 rate request, and includes data on forecasted rate requirements and comparisons of Basic rate increases with Saskatchewan and Manitoba.
Vaughn Palmer in the Vancouver Sun comments on the timing of the review of ICBC costs and rates; http://vancouversun.com/opinion/columnists/vaughn-palmer-liberals-in-no-rush-dealing-with-icbc-matters
The latest Moody's report again warns that BC Hydro's growing debt is a concern as it may require a taxpayer bail-out; http://vancouversun.com/news/politics/b-c-s-credit-rating-at-risk-as-hydros-debt-grows
Richard McCandless wonders why BC Hydro has a large and growing pension liability; deferral accounting may provide a reason.
In Ontario, political decisions have driven the cost of electricity higher; http://www.theglobeandmail.com/report-on-business/economy/economic-insight/buying-quebec-hydro-power-a-dim-prospect-for-ontarians/article33603621/
Rob Shaw (Vancouver Sun) reports on jinterviewhis with Hon. Bill Bennett, who says Site C is political; http://vancouversun.com/news/politics/cabinet-political-staff-control-b-c-hydros-public-relations-on-site-c-dam
A Globe and Mail summary of the supply and pricing system in Ontario; http://www.theglobeandmail.com/news/national/why-does-electricity-cost-so-much-in-ontario/article33453270/
Richard McCandless posts Occasional Paper No. 19 on some 2016 stories about BC Hydro's finances that were either under-reported, or recieved no media coverage.
In a January 8, 2017 editorial the Times Colonist says that the government has to reduce the projected increase in Basic rates; http://www.timescolonist.com/opinion/editorials/editorial-find-ways-to-cut-insurance-rates-1.6542717
Gwyn Morgan, writing in the Globe and Mail, cautions about erronous assertions displacing objective facts about energy and climate change;http://www.theglobeandmail.com/report-on-business/economy/economic-insight/three-post-truths-about-global-energy-and-climate-change/article33465520/
My summary of BC Hydro's 2016 Q2 rseults, and a forecast to year-end.
"A foolish consistency is the hobgoblin of little minds...."; Richard McCandless submits comments and recommendations to the BC Utilities Commission respecting ICBC's 4.9% Basic rate increase for 2016.
This 2011 document was adopted as government policy. It contains useful detail on the principles governing the operation of public utility regulators in the UK.https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31623/11-795-principles-for-economic-regulation.pdf
This Occasional Paper (No. 18) reviews ICBC claims data from 2012 to 2015 to attempt to identify cost drivers. The outlook for the medium term is as discussed.
Rowland Harrison's 2014 article on regulatory tribunal independence in Canada from the Energy Regulation Quarterly outlines the key attributes of independnce; http://www.energyregulationquarterly.ca/articles/tribunal-independence-in-quest-of-a-new-model#sthash.NZZpf46M.NvntTDP4.dpbs
Stephen Hume of The Vancouver Sun says lower speed limits and photo radar would reduce the frequency and severity of crashes: http://vancouversun.com/opinion/columnists/stephen-hume-want-lower-icbc-rates-drop-speed-limits-get-tough-on-lead-foot-drivers
Pete McMartin of the Vancouver Sun writes about the growing cost of medical reports for soft tissue injuries; http://vancouversun.com/opinion/columnists/pete-mcmartin-medical-reports-make-up-major-chunk-of-icbc-expenditure-insiders-reveal
Pete McMartin of The Vancouver Sun write about how BC is the ony province without some limit on minor pain and suffering claim awards; http://vancouversun.com/opinion/columnists/pete-mcmartin-icbcs-death-by-a-thousand-fender-benders
Recently, the BC Utilities Commission asked BC Hydro whether its recording of future unapproved revenue conformed to accepted accounting principles. I forwarded BC Hydro's answer, together with my comments, to Auditor General Carol Bellringer.
Ian Mulgrew in The Vancouver Sun reports on the rise in injury claims; http://vancouversun.com/storyline/ian-mulgrew-icbcs-claims-costs-balloon-fuelled-by-antagonistic-litigious-strategy
Ian Mulgrew of The Vancouver Sun reports on rift between the judiciary and government over rejected increase in civil tariff:http://vancouversun.com/opinion/columnists/ian-mulgrew-anton-plays-artful-dodger-over-court-fees-debacle
Ian Mulgrew of The Vancouver Sun reports on failed attempt to change civil rules tariff; http://vancouversun.com/opinion/columnists/ian-mulgrew-attorney-general-under-fire-for-bowing-to-icbc-concerns
News 1130 story says Premier Clark fighting for affordable auto insurance rates.
Richard McCandless commentary in the Times Colonist about the high capital reserves at ICBC; http://www.timescolonist.com/opinion/letters/why-we-pay-too-much-for-auto-insurance-1.1497
Stephen Hume of The Vancouver Sun provides a fact-based review of how speed increases the chances of serious injury or death; http://vancouversun.com/opinion/columnists/stephen-hume-readers-wont-trade-away-speed-for-lower-insurance-rates
Pete McMartin's (the Vancouver Sun) srticle on the growing cost of the 25% senior discount on Basic insurance; http://vancouversun.com/opinion/columnists/pete-mcmartin-driving-is-getting-old-the-growing-burden-of-seniors-insurance
BC Hydro data on domestic sales 2006/07 to 2015/16 and three year forecast.
Adrian Dix asks Auditor General Bellringer to review ICBC finances in light of projected $1.5 billion capital requirement to continue the Basic rate subsidization; http://vancouversun.com/news/local-news/ndp-wants-auditor-general-to-review-icbc-finances
Times Colonist editorial syas politicians should stop using ICBC rates for political advantage; http://www.timescolonist.com/opinion/editorials/editorial-unshackle-icbc-from-politics-1.3341544
My thoughts and comments on recent events concerning ICBC's rates and financial condition.
My preliminary impressions of ICBC's Basic forecast filed on 23 November 2016.