DANGEROUS DEBT LEVELS AND CREDIT RATING CONCERNS
BC Hydro loses money every year. They are now close to $28 billion in debt—not counting the $5.9 billion they have in deferral accounts or hidden elsewhere in accounting. This debt masks the hemorrhaging of BC taxpayers’ money while costs are deferred to future generations.
This is worrying to both BC taxpayers and international credit rating agencies, who have warned that BC Hydro and by extension the province of BC are at risk of having their credit rating downgraded unless the debt stops growing. As Moody’s stated, “The anticipated increase in debt continues to pressure the province’s rating.” BC Hydro’s finances, they said, are “among the weakest of Canadian provincial utilities.”
And as The Vancouver Sun explained, it’s not just ratepayers but all taxpayers who are impacted. “BC Hydro’s debt is ultimately backstopped by taxpayers if the situation worsens.”
SITE C… AND YOUR HYDRO BILL DOUBLING
The Site C dam would be 100% financed by debt. If the dam is approved, another $9 billion—perhaps as much as $12.5 billion with further overruns—will be added to the taxpayers’ burden.
With this additional debt, BC taxpayers will be on the hook for well over $37 billion. That’s $7680.87 that every British Columbian would owe for BC Hydro’s debts.
BC Hydro rates would have to double to deal with this crippling debt, says Eoin Finn, a former KPMG senior partner with a speciality in energy utility finances, and Harry Swain, former Chair of the 2014 Joint Federal-Provincial Review Panel on Site C.
See the calculations here (upload Eion Finn “Site C Build/Terminate Calculations and hyperlink.)
The summary? BC Hydro must reduce its debt to avoid losing its Triple-A credit rating. The only way to do this? By raising rates. When rates rise, energy-intensive industries—like our once-thriving lumber industry—will be forced to move their production, and their jobs, out of province. BC Hydro will then have to increase rates to make up for this shortfall in demand, thus furthering the problem.
This cycle, Finn calculates, will continue until every ratepayer’s hydro bill is doubled. That’s $2,309 more every year: $4,618 coming from every pocket, on average every year.
“Our model, which includes historical economic and population growth rates, price elasticity and conservation factors, predicts that rates will not stabilize until they have doubled from present levels,” Finn explained.
LOSE/LOSE FOR BRITISH COLUMBIANS
The irony is that—Site C or no Site C—BC Hydro will need to raise ratepayers’ rates. But this increase will be far steeper if an additional $9+ billion for the dam is heaped onto the debt pile.
Could an increase in energy demand—especially in light of electric vehicles—help to reduce debt more organically? The simple answer is no, because there will be less demand for hydro electricity, not more. Without this unproven, unlikely miracle, BCers are on the hook for thousands, for energy we don’t need.
EVERY BC FAMILY
Think of it this way:
A family in your community is $280,000 in debt, with a steep mortgage they can’t afford.
They risk losing their credit rating, and having every family member pay thousands in debt repayments each year.
The family are considering adding an additional $90,000 in debt to their load, in the hope that doing so will give them more income in the future.
You know that—over the past decade—they have consistently overestimated demand for their product by more than 30 percent.
You know, too, that demand for their product continues to decrease in the marketplace, year after year.
Would you tell them to spend the additional $90,000? Would you?
It’s BC families who will pay for the Site C Dam.
It’s BC families who will be hit by doubled Hydro rates.
Do you want that for yours?
FIND OUT MORE ABOUT THE SITE C DAM:
Why we don’t need the electricity
Jobs—what jobs and how much?
BC Hydro financial mismanagement