A Closer Look at the Government's Financial Plan for B.C. Hydro.
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Occasional Paper No. 67 reviews B.C. Hydro's new three-year financial plan and the F20 to F21 rate request filed with the B.C. Utilities Commission. The government has loosened the constraints on the independence of the regulator, but is it sufficient to satisfy the requirements of the public sector accounting standards?
Observations on ICBC's Financial Forecast and the Fiscal Plan.
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Occasional Paper No. 66 reviews aspects of ICBC's latest 3-year financial forecast, and suggests that the claims costs for 2019/20 are overstated. The absence of the assumptions used to develop the forecasts makes any detailed analysis impossible. Also discussed is the accounting treatment of the net income of ICBC and B.C. Hydro.
New B.C. Hydro Financing Plan and More Authority for the BCUC Announced.
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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.
This commentary discusses two recent changes to how ICBC pays for injury claims, and whether these changes will support a lower deficit forecast for fisal year-end. Whether this will be enough to avoid insolvency by 31 March 2019 is the open question. Also included is Ian Mulgrew's report of 18 February 2019; https://vancouversun.com/opinion/columnists/ian-mulgrew-icbc-trial-strategy-slammed
ICBC Now Insolvent: Is a Taxpayer Bail-out Imminent?
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ICBC's third-quarter report showed an operating loss of $890 million and liabilities exceeding assests by $119 million. ICBC is now insolvent. The question is whether the coverage changes will produce sufficient savings to stablize ICBC's finances?
ICBC Seeks to Reduce Already Minimal Optional Information.
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This paper examines ICBC's request to eliminate information on its Optional program's market share in the context of the lack of information on this aspect of its operation.
Regulator Failed to Warn of ICBC's Financial Crisis.
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The BC Utilities Commission's process for reviewing ICBC's Basic rate requests is not designed to link to the fiscal year, not to multi-year forecasts. This should be reformed to provide an early warning system for the future.
Former Premier Wynne Defends Electricity Rate Manipulation.
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This paper reviews the testimoney of former Ontario Premier Wynne at the legislative committee on transparency, and compares the practice in Ontario to that practiced in B.C.
Manitoba Basic Rates to Rise 1.8 Per Cent--ICBC's Increase Likely Much Higher.
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The Manitoba regulator just approved a 1.8% rate increase for complusory auto insurance. Why are the Basic rate increases in Saskatchewan and Manitoba much less than for ICBC?
Government Requires Money-Losing ICBC to Fund More Traffic Enforcement
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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?
ICBC's Q2 Results: More Red Ink and Even Less Transparency
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On Friday the government released ICBC's second quarter excuse for a quarterly report, and a unsubstantiated forecast of a $890 million loss for the current fiscal year. Occasional Paper 64 reviews the numbers and suggests that the year-end forecast may be optimistic.
Ontario Seeks to Improve Financial Transparency and Accountability.
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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?
Driver-based penalties are increasing by 20% today, with another 20% increase planned for 2019. ICBC calls the penalty a premium, which confuses this penalty with the vehicle premium. Confusion is part of the reason for the low public perception of our auto insurer.
Rate-Regulated Accounting at B.C. Hydro: A Primer.
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The attached paper provides background for two reports on deferral accounts and B.C. Hydro's finances that are expected to be released shortly. The government has promised to fix the finances at our public utilitity, but the details on how this will be accomplished is unclear.
Senior Officials Review of BC Hydro Rate Options: Will New or Old Thinking Prevail?
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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?
Ontario Government Agrees that Hydro Deferral Accounting Inappropriate. September 21, 2018.
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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.
NDP Perpetuates Liberal Practices Regarding ICBC: Keeps Watchdog Confined. September 4, 2018.
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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.
Goverment Begins Restoring Financial Integrity: What's Next for B.C. Hydro's Books? August 31, 2018
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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.
ICBC Suffers Worst Ever Financial Year. August 28, 2018.
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The just released 2017/18 annual report shows a combined Basic and Optional operating loss of $1.3 billion, and the capital reserves are now dangerously below the safety margins. Occasional Paper No. 60 reviews some of the key indicators.
Observations Respecting ICBC's New Premium Model. August 16, 2018.
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The new Basic premium model targets younger drivers, and at-fault drivers to give a financial benefit to older drivers. More comments are included in Occasional Paper No. 59.
Delayed Rate Increase to Cost ICBC up to $150 million. August 12, 2018.
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The government's decision to postpone a general rate increase until April 2019 will reduce ICBC's already low capital reserve by perhaps $150 million in 2018/19.
Positive 2017/18 Financial Results from Public Auto Insurers Contrasts With ICBC Forecast. July 18, 2018.
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This paper reviews the positive 2017/18 annual reports of the public auto insurers in Saskatchewan and Manitoba for both the compulsory Basic and the optional programs. This contrasts with ICBC's forecasted combined loss of $1.4 billion.
Why Does the Government Condone Poor Public Accountability at ICBC? June 25, 2018.
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This paper examins ICBC's main accountability reports in light of the accountability model adopted by government in the early 2000's. The level of public accountability is poor, and the government should require ICBC to make significant improvements.
Commentary on Results of Opinion Survey on ICBC Rates. May 21, 2018.
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This paper reviews the key results of the government's public opinion survey on potential changes to ICBC's driver penalties and the design of Basic rates.
Commentary: Populist Promises and the Cost of Electrictiy. May 18, 2018
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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.
Commentary on Matthew McClearn Article on Hydro Accounting in Ontario. April 22, 2018.
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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.
Should the Government Return the $1.2 Billion Appropriated from ICBC Poilcyholders? April 20, 2018.
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Between 2010 and 2015 the provincial government appropriated almost $1.2 billion of Optional policyholders' capital. Now -- with the province's finances healthy and the ICBC capital reserves almost eliminated -- would seem an appropriat time to return the funds. Occasional Paper No. 56 estimates the Basic and Optional capital shortfalls to 2021/22.
Subsidizing Seniors: ICBC and BC Ferries. April 9, 2018.
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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.
Inappropriate Regulatory Accounting: Ontario and BC Discussion of Auditors' Opposition. March 30, 2018
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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.
Commentary on ICBC Rate Design Proposals. March 8, 2018.
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My comments on certain aspects for the latest proposals to make Basic insurance rates "fairer." It seems that most of the proposals will result in less generous discounts and greter revenue for ICBC.
ICBC's Three-Year Forecast Raises Many Questions. February 27, 2018.
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ICBC's 2017/18 to 2020/21 financial forecast shows the combined capital reserve falling to dangerously low levels. However many inconsistencies make the forecast suspect. Also included is Acting CEO Nicolas Jimenez's email of March 15th, my reply of March 19th and his reply of March 28th.
Accounting Treatment of ICBC's Net Loss Complicates Provincial Budget. February 17, 2018.
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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.
Comment: Changes Coming to ICBC's Injury Model. February 8, 2018.
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On 6 February 2018, minister responsible David Eby announced major changes to injury claims process and coverage, with expanded no-fault accident benefits and monetary limits, and a $5,500 cap on pain and suffering claims for "minor" injuries. The government expects that these changes will reduce annual claims costs by approximately $1.0 billion.
The 'Transaction' Cost of the Tort Model. February 5, 2018.
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This paper suggests that injury claimants received only 57% of the $2.0 billion paid by ICBC in 2015 for no-fault accident benefits and injury claims. The balance was absorbed in 'transaction' costs.
ICBC's Second Quarter Report: More Bad News and Less Information. December 29. 2017.
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ICBC recently posted its second quarter 'Statement of Operations,' which is highly deficient as a quarterly report from such an important Crown corporation. Occasiona Paer No. 50 compares the results with Saskatchewan's compulsory insurance program in an attempt to understand the reasons for the continuing losses.
ICBC's Capital Reserve Minimums Are Too High. December 21, 2017.
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The government should lower the minimum capital targets to reduce the current and forecasted capital deficiency, Given the nature of the Basic monopoly, and the near monopoly enjoyed by the Optional program, the targets should be lower, thereby reducing the pressure on future rates.
Alberta Caps Auto Insurance Increase at 5 Percent. December 19, 2017.
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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.
ICBC's Financial Crisis: How Did It Happen? December 17, 2017.
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This paper provides a high-level review of how ICBC's costs out-stripped revenues from 2012 to 2016/17, and focusses in bodily injury claims costs.
The paper suggests that capping pain and suffering claims for minor soft tissue injury claims will not generate sufficient savings to treturn ICBC's finances and capital reerves to a satidfactory condition.
Rate Increases for Basic Auto Insurance in BC, Saskatchewan and Manitoba. December 8, 2017.
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The Manitoba regulator recently approved a 2.6% increase in Basic vehicle rates for the coming year. This paper looks at how BC rate increases compare to the publicly-owned no-fault systems in Saskatchewan and Manitoba.
Fixing ICBC's Finances: Four Changes the Government Should Make. December 4, 2017.
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The government is planning changes to ICBC's insurance model to reduce costs. Occasional Paper No. 47 discusses areas where the government should re-imburse ICBC policyholders for current programs or policies that benefit the taxpayer.
Have the NDP Succumbed to the Siren's Call of Deferral Accounting? November 27, 2017.
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The current government's plan to freeze BC Hydro rates is the latest example of how governments have succumbed to the alure of short-term gain by manipulating BC Hydro's finances. Occasional Paper No. 46 traces the key events since 2011.
Submission to the BCUC Opposing the BC Hydro Rate Freeze. November 20, 2017
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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; includes final submission of 11 January 2018.
BC Auditor General Finds BC Hydro's 'Prescribed' Accounting Unacceptable. October 26, 2017.
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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.
What Would Ontario's Auditor General Make Of BC Hydro's 'Prescribed' Accounting Standard? October 22, 2017.
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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?
ICBC's Capital Forecast: Finance Minister James Concerned. October 11, 2017.
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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.
Capital Destuction at ICBC Continues September 29, 2017.
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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.
Taxpayers Federation Wrong; BC Auto Rates Fourth Lowest, Not Second Highest. September 8, 2017.
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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.
Devlin Report on Insurance Regimes in Canada, July 2017. September 8, 2017.
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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.
Observations on ICBC's 2016/17 Annual Report. September 1, 2017.
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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.
Further Questions About the Ernst Young Report on ICBC. August 20, 2017.
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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.
Ernst Young Options to Increase Auto Insurance Affordability. August 6, 2017.
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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.
Comments on the Financial Aspects of the Ernst Young Report. July 31, 2017.
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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.