Nelson Bennett Government Use of ICBC and BC Hydro Funds
Nelson Bennett's 28 December 2022 article in Business in Vancouver.
Nelson Bennett's 28 December 2022 article in Business in Vancouver.
By ordering the Utilities Commission to approve BC Hydro’s new rebate regulatory account the government continues to substitute political imperatives for the economic-based rate setting oversight provided by the once independent regulator.
Finance Minister Selina Robinson mixed fiscal years and conflated taxpayers and ratepayers in explaining the funding of new measures.
Premier Eby announced a credit/rebate but no total cost or funding plan was make public. This paper provides an estimate, and discusses two funding approaches.
National public sector accountig rules require that profits or losses from self-supporting Crown corporations be caunted as government revenue, even if no cash is transferred. The net income from BC Hydro and ICBC is not transferred and distorts the true cash picture of the government's finances.
Three recent media comments or articles concerning the attempt to gain public financial support for a bid to host the 2030 Winter Olympics. See also
June 29: Olympics bid inspection trio revealed
May 7: Vancouver 2030 bid team big on hopes, vague on specifics
March 26: Vancouver mayoral candidate proposes 2030 Olympic bid plebiscite
Dec. 12: Analysis: Vancouver 2030 Olympics bid — Who really wants it?
This Commentary discusses the new Royal BC Museum in light of Dr. Robin Fisher's distinction between history and historical memory. Related see
A commentary of the proposed Anti-Racism Data Act reviews a number of issues, including the presumption of systemic racism in provincial public bodies.
A new cabinet order negates the previous commitment to restore full independence to the BC Utilities Commission to regulate BC Hydro. Will the auditor general again qualify the government's financial statements?
National accounting standards require that the net income of ICBC and BC Hydro be reported as government revenue. As no actual cash is transferred from thes two Crowns this distorts understates the size of the government's planned operating deficits for the current and next three years.
The sponsors of two reports have claimed that the reports justify claims of systemic racism, but is this true?
Occasional Paper No.78 takes a closer look at the growth of provincial GHG emisssions in the context of other larger provinces, population growth and economic growth.
Should the BC Utilities Commission be broadened to address social policy issues? This paper says this would be highly problematic.
The government of Manitoba has decided to increase Manitoba Hydro rates by 2.5% per year for the next three years. This has resulted in less transparency and accountibility.
A recent cabinet order has blocked any attempt by the BC Utilities Commission to lower BC Hydro's excessive profits. This is another example of the government's manipulation of the utility and the BC Utilities Commission.
The Manitoba government has sidelined the province's regulator of Manitoba Hydro, and legislated a 2.9% rate increase for the coming year. This action mirrors that of Quebec, which also "simplified" rate setting by eliminating the regulator for five years. Is there a trend?
In a new twist the BC Utilities Commission is creating and funding an intervener group to represent Residential ratepayers, at a time when its own analysticl staff has greatly ncreased. This paper reviews these developments, and suggests that the BCUC should improve its own accountability.
The government has delayed the release of its second quarter financial report, including the reports for BC Hydro and ICBC. As the reports are for actual revenue and expenditure information the government should allow these public corporations to publicly file their reports.
We lost an important advocate for ethical government. Here is the Times Colonist obit.; https://www.timescolonist.com/news/local/integrity-b-c-executive-director-dies-at-59-he-declined-liver-transplant-1.24144797
Excluding the net income (or loss) from BC Hydro and ICBC from the government's revenue results in a significant difference in the budgeted and planned surpluses for 2020/21 and the next two years.
Finance Minister Carole James suggested that the losses at ICBC have displaced government spending on other programs. This is not correct.
This Commentary reviews the government's assumption that B.C. Hydro ratepayers will subsidize the cost of electrifying the production of oil and gas in the noeth east reagion. It is a sudsidy because the cost is greater than the anticipated revenue. The social benefit of reduced carbon emissions should be paid by the government, not the ratepayers.
Auditor General Carol Bellringer has accepted the government's pledge to fully restore the B.C. Utilities Commission's authority to regulate B.C. Hydro and removed that part of her qualification on the government's 2018/19 financial statements.
This Commentary reviews the recent report by the special committee of the Ontario legislature on financial transparency. The committee was struck to examine how the previous Liberal government ignored public sector accounting standards to lower electricity rates while still claiming to balance the 2017/18 budget.
This commentary explores how the government receives $70 million annually in driver license fees while ICBC's Basic policyholders must pay the cost as part of their annual insurance. The provincial fee scheme appears contrary to a 1998 Supreme Court of Canada decision respecting fees versus taxes. The government should correct this double payment.
This commentary reviews the new five-year rates plan for B.C. Hydro, as well as the government's plan to restore the B.C. Utilities Commission's authority to regulate the public utility.
The government has directed ICBC to fund more traffic enforcement, but its more of a restoration. And why is the government not funding more police traffic enforcement instead of asking over-burdened policyholders to do it?
The inclusion of the net income of BC Hydro and the net loss of ICBC complicates the forecast of the surplus.
A committee of the Ontario legislature is holding hearings into how the previous Liberal government attempted to ignore the accounting rules to make the government books appear than was the case. What lessons might the B.C. government learn from this review?
In 2016 BC Studies published my article on how the Liberal government manipulated the finances of BC Hydro to keep the annual profits and dividends high while suppressing the increase in electricity rates: https://ojs.library.ubc.ca/index.php/bcstudies/article/view/187787/186354
This paper explores the options available to the senior official committee appointed to develop recommendations for a new rates plan for B.C. Hydro. Will the committee adopt the new approach of restoring integrity to financial management, or continue with the old practice of abusing the deferral accounts?
The Ontario government has moved to clean-up certain accounting practices, including the financing of the "Fair Hydro" deferrals. The accounting adjustment of the electricity deferrals increased 2018/19 expenditures by $2,4 billion.
This paper discusses the fact that the NDP government is using cabinet orders to control ICBC's finances and keep the B.C. Utilities Commission confined. These were the tactics used by the previous government to avoid public oversight.
This paper provides an overview of why the government set aside $950 million for the 2017/18 fiscal year to begin to fix the financial troubles at B.C. Hydro. the restoration of proper accounting standards at the public power utility presents certain financial problems for the government.
Barrie McKenna in the Globe and Mail political meddling for causing the high price of electricity in Ontario; https://www.theglobeandmail.com/business/commentary/article-blame-political-meddling-not-ceo-pay-for-ontarios-dysfunctional/
The three main politic parties in Ontario are promising to reduce electricity prices, but are being vague as to what this will cost. It's time for the voters to become educated consumers.
McClearn's article in the Globe and Mail provides a useful summary of many of the issues involved in the accounting dispute between the ontario auditor general and the government. Similar issues exist in British Columbia.
The recent announcement of an increase in the fare subsidy for seniors on the BC Ferries prompted me to review an earlier estimate on the cost of the 25% seniors' subsidy at ICBC's Basic insurance. If the government funded the sudsidy it would relieve some of the pressure on Basic rates.
This 'Commentary' paper reviews the Ontario and BC public accounts committee discussion of the oppositin by the two auditors general of the application of reguatory accounting, and the impact to the governments' financial statements.
Auditor General Carol Bellringer issued a report, http://www.bcauditor.com/sites/default/files/publications/reports/FINAL_BCUC.pdf, that reminds the government that five key recommendations of the 2014 independent task force remain outstanding. In August Ms. Bellringer qualified the government's 2016/17 financial statements, in part because BC Hydro's deferral accounts were not overseen by an independent regulator. The Canadian Press provided a limited summary (http://vancouversun.com/pmn/news-pmn/canada-news-pmn/b-c-auditor-offers-advice-on-utilities-commission-after-previous-studies/wcm/c65203d2-1811-4418-ab5b-f55f3002d5d7. DeSmog Canada's report was more comprehensive; https://www.desmog.ca/2018/03/15/auditor-general-nudges-b-c-amend-act-exempted-site-c-dam-independent-review
The national public sector accounting rules require that ICBC's net income or loss be counted in the government's revenue. The increase in the net loss reduces revenue, but there is no change in the actual cash being transferred (which is nil). This accounting anomoly requires further review.
This paper discusses the auto injury claim models in the states of New South Wales and Victoria, and in New Zealand, with possible lessons for BC.
In this article, published by the Tyee, I advocate the creation of a Financial Accountability Office as an independent officer of the legislture, modelled on the Ontario agency: https://thetyee.ca/Opinion/2018/01/30/One-Step-Plan-Boost-BC-Accountability/?utm_source=daily&utm_medium=email&utm_campaign=300118
Brady Yauch of the Consumer Policy Institute discribes how electricity pricing in Ontario is now determined by politics rather than economics. BC Hydro rates have been set by political decisions since 2012 when the governemt ordered the regulator to approve lower than required rates. https://cpi.probeinternational.org/2017/11/09/its-the-end-of-energy-regulation-in-ontario-as-we-know-it/
BC Auditor General Carol Bellringer is preparing to become BC Hydro's external auditor, which will put more pressure on the government to allow BC Hydro to conform to national public sector accounting standards. See Les Leyne http://www.timescolonist.com/opinion/columnists/les-leyne-watching-b-c-hydro-is-a-growth-industry-1.23137605 and Vaughn Palmer http://vancouversun.com/opinion/columnists/vaughn-palmer-bellringer-anxious-to-plug-into-b-c-hydros-accounts
The Alberta government has limited the 2017/18 increase in the private vehicle insurance rates to 5%. It stated that the previously allowed 10% maximum increase was not inline with its affordability priority. Background and implications are provided.
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
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.
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.
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
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
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
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.
This paper attempts to summarize the election platforms of the three main parties, and what they say or imply about BC Hydro and ICBC.
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.
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/
Minister Stone attempts to defend ICBC's deficit forecasts during Question Period on February 22, 2017.
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.
This paper describes how an obscure 2011 cabinet directive allows BC Hydro to apply regulatory accounting without the fundamental componet -- an independent regulator.
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/
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
Martin Stanley's compendium of issues relating to regulation of public utilities in the UK; http://www.regulation.org.uk/
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
A comparison of how the governments of Ontario and BC subsidize electricity rates.
Justine Hunter of The Globe and Mail interviews Hon. Bill Bennett following release of the Independent Review's report on the BC Utilities Commission; http://www.theglobeandmail.com/news/british-columbia/energy-watchdog-needs-more-independence-bc-government-told/article22791687/
Vaughn Palmer of The Vancouver Sun reviews the history of the BC Utilities Commission and Site C; http://www.vancouversun.com/vaughn+palmer+chance+public+review+site/11714172/story.html
Final report of the Independent Task Force on the BC Utilities Commission, released in early 2015. http://www2.gov.bc.ca/assets/gov/farming-natural-resources-and-industry/electricity-alternative-energy/electricity/bcuc_review_final_report_nov_14_final.pdf
Justine Hunter Globe and Mail reports on the government approval of Site C without reference to the BC Utilities Commission; http://www.theglobeandmail.com/news/british-columbia/bc-ignored-calls-for-oversight-in-site-c-dam-ruling/article22422910/
Article by Marjorie Griffen and John Calvert in BC Studies reviewing government policies and the impact on electricity prices; http://ojs.library.ubc.ca/index.php/bcstudies/issue/view/182282
Rob Shaw reports on the the government's dependence on the net income from BC Hydro and ICBC. http://www.vancouversun.com/business/Government+grabbing+cash+from+ICBC+Hydro+they+raise+rates+charges/9527548/story.html
A summary of how the BC government has stripped the BC Utilities Commission of its authority to set rates for BC Hydro and compulsory auto insurance. Directives last revised 25 March 2022.
How the government relies on ICBC's Optional insurance to generate excess profits. 3 June 2014.
Canadian public sector accounting rules treat the net income of self-supporting Crown corporations provincial revenue, even though the actual cash transferred can be significantly less, or zero. 21 September 2016
A short survey of the financial benefits the goverment receives from ICBC. 30 March 2016.
This article, published by BC Studies in 2013, focuses on the political and financial relationship between the publicly-owned ICBC and the provincial government from 1970 to 2010.