BC Hydro Reports Six Month Loss of $611 Million; Deferring Loss Results in a Small Surplus
Posted
on
On 29 November 2019, BC Hydro released disappointing results for April to September 2019. Transfers to regulatory accounts converted an initial operating loss of $611 million to a $25 million profit. Losses from hedging future interest rates remain a concern.
This commentary reviews ICBC's April to September 2019 financial report to determine if the forecasted $91 million year-end operating loss is reasonable. Unfortunately, ICBC continues to restrict the information available making a proper review impossible.
ICBC's Losses Do Not Automatically Result in a Reduction in Government Services
Posted
on
Public sector accounting standards require that ICBC's operating losses be deducted from the government's total revenue, but this does not translate into a reduction in funding for government programs. The accounting standard adds to the confusion about the impact of ICBC's operations on the government's finances.
A summary of media reports from October 24th to November 1st respecting ICBC's finances. Includes comments by Todd Stone and hints by David Eby about no-fault.
Manitoba Government Charged with Interfering with Crown Insurer
Posted
on
This paper reviews recent initiatives by the Manitoba government to provide direction to the Crown insurer and the provincial regulator. A comparison is made to British Columbia, where provincial governments have a been interfering with ICBC and the B.C. Utilities Commission for years.
ICBC Provides Details on the Expert Report Savings
Posted
on
On October 18, 2019, Lindsay Matthews provided a response to my questions about the estimated savings resulting from the government's limitation on the number of expert reports.
Minister Responsible for ICBC Says Those Facing Large Premium Increases Should Buy Less Insurance
Posted
on
Yesterday on CFAX radio, Attorney General David Eby suggested that young and inexperienced policyholders facing massive price increases should purchase less insurance. My comments are attached.
B.C. Hydro Loses $560 Million in Fifteen Months on Interest Rate Hedging Gamble.
Posted
on
B.C. Hydro's interest rate hedging program incurred dramatic losses from April 2018 to June 2020. The shareholder was protected by a regulatory account. How did the hedging program begin and why is it failing the ratepayers?
Higher Risk Alberta Drivers Denied Optional Coverage
Posted
on
In the evolving "crisis" in the Alberta auto insurance market it now appears that drivers with moving violation convictions are being denied Optional coverage.
Quebec "Simplifies" Pricing of Electricity by Sidelining the Regulator.
Posted
on
The new Quebec government has significantly dminished the role of the independent body that regulated the operation and the rates of Hydro Quebec. The change is reviewed in the attached paper.
Should Ratepayers Subsidize the Electrification of Oil and Gas Production?
Posted
on
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.
Alberta Government Removes Cap on Auto Insurance Rate Increases.
Posted
on
The new Albetra government has eliminated the 5% limit on auto insurance rate increases imposed by the NDP government in December 2017. The limit, combined with large increases in claims costs, was causing distortions in the market, and large rate increases. The government has yet to address the coverage issues. The B.C. government continues to limit increases in ICBC's Basic insurance.
Insurance Brokers Association Exectutive Director Supports Public Auto Insurance Model
Posted
on
In the August edition of The Broker magazine Chuck Byrne, the exectutive director of the Insurance Brokers Association, wrote an editorial in support of the public model for the provision of compulsory insurance. Exerpts of this editorial are attached.
New Report Shows Auto Insurance Rates Escalating in Alberta and Ontario: Is More Competition Really the Key to Lower Rates?
Posted
on
A new report shows significant increases in the cost of auto insurance in Alberta and Ontario. This seems to contridict the claims that competition results in lower prices.
B.C. Hydro's 2018/19 Annual Report: Flat Sales but Finances Now Reflect GAAP
Posted
on
This paper provides highlights of B.C. Hydro's 2018/19 annual report. The finances are now based on public sector GAAP and reflect the one-time loss caused by the windup of the revenue deferral account.
Auditor General Removes Qualification on B.C. Hydro Accounting.
Posted
on
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.
Manitoba Insurer Plans Minor Rate Increase for 2020: Strengthened Capital Reserve.
Posted
on
The MPI is on solid financial footing and seeks to stregthen the Basic capital reserve. It is seeking a minimal Basic rte increase for 2020. The no-faulth auto insurance model in Manitoba is compared to the scheme in BC.
B.C. Hydro Maintains That The B.C. Utilities Commission is Independent.
Posted
on
Despite the clear opinion of the province's auditor general to the contrary B.C. Hydro asserts that the B.C. Utilities Commission is independent. This paper looks at the issue.
Occasional Paper No. 68 attempts to provide a single source of key service measure data at the program level for the last four or five years. This is to compensate for the dearth of such information provided by ICBC.
Manitoba Plans for Electricity Rate Increases; B.C. Opts to Keep Rates Low.
Posted
on
Both Manitoba and B.C. public power utilities are facing major cost increases as large capital projects near completion. The Manitoba regulator is raising prices to smooth the transition, but the B.C. government has chosen to keep the rate increase below the increase in B.C. Hydro's costs. The NDP approach has many parallels to that of the previous government.
This Commentary attempts to answer the question as to what percentage of BC drivers carry additional third-party liability insurance greater than the $200,000 limit in the compulsory Basic program. ICBC does not make public its Optional sales.
The government is lowering the seniors' discount from 25% to 15%, but still requiring other policyholders to pay more to make-up for the lost revenue. What dos this subsidy cost?
Retreat from Transparency: ICBC Deems Average Claims Data Confidential.
Posted
on
At a time when the concept of a public monopoly providing auto insurance is being questioned, one would expect ICBC to retain the public's support by being transparent and accountable. Unfortunately, the opposite appears to be the philosophy adopted by the management at ICBC as evidenced by witholding the forecast injury severities from public view.
The Newfoundland and Labrador public utilities board recently released its report on auto insurance in that province. In 2017 reports commissioned by the governments of Ontario and British Columbia were released. The three reports are attached.
Quantifying B.C. Hydro's Electricity Surplus, 2014 to 2022.
Posted
on
B.C. Hydro has generated or contracted for power in excess of domestic sales for a number of years, and forecasts surpluses for a number of years to come. This Commentary reviews the acquisition and sales.
Ontario Legislative Committee Report Calls for More Transparency.
Posted
on
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.
Is the Attorney General Getting Poor Advice from ICBC?
Posted
on
This commentary explores three areas where ICBC appears to be providing poor advice, focusing in particular on financial forecasting and an apparent move to reduce transparancey and accountability.
Request that the BCUC Overrule ICBC on Filing Injury Claim Severities.
Posted
on
ICBC has refused to publically file certain historic injury claim severities for settled claims. This request seeks an order from the B.C. Utilities Commission to require ICBC to publicly file the information.
Government Extracts $70 Million from Hard-Pressed ICBC Policyholders.
Posted
on
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.
A Closer Look at the Government's Financial Plan for B.C. Hydro.
Posted
on
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.
Posted
on
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.
Posted
on
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?
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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
Posted
on
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
Posted
on
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.
Posted
on
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.
Posted
on
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?
Posted
on
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.
Posted
on
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.
Posted
on
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
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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.
Posted
on
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.