VICTORIA – Costly upgrades to old dams are not enough to prepare BC Hydro for a major earthquake, and electricity rates will continue to rise as upgrades and expansion continue.
Energy Minister Bill Bennett acknowledged Thursday that further rate increases will be needed to finance improvements to the vast hydroelectric network and pay debt on works already completed or underway.
"My job will be to restrain the increases, but there's no way we can continue to sell power to customers, whether they're commercial or industrial or residential, at the rates that we're selling it right now," Bennett told reporters at the legislature.
NDP critics focused Thursday on a disaster preparedness audit commissioned by BC Hydro last year. The PricewaterhouseCoopers audit reported in December that BC Hydro is at high risk of a prolonged power outage after a major earthquake because of a lack of coordinated emergency plans.
"BC Hydro is not adequately prepared to react, respond and recover from a widespread catastrophic event such as an earthquake as there is not a mature or integrated preparedness program," the audit states.
Bennett said BC Hydro has enough staff to improve disaster planning, so that shouldn't represent a big cost. On that point at least, NDP energy critic John Horgan agreed.
"What the report says is that BC Hydro is not prepared," Horgan said. "They don't have any continuity plan for their business to continue. It's not about money, it's about being ready."
BC Hydro spokesperson Simi Heer said the corporation is responding to the audit by accelerating its province-wide emergency response strategy, improving staff training and participating in emergency exercises. Regional emergency operations centres are planned in locations including Port Alberni, Campbell River, Nanaimo, Victoria, Burnaby, Maple Ridge, Prince George and Vernon.
BC Hydro is spending about $2 billion on seismic refits of two of its oldest dams, the John Hart dam at Campbell River and the Ruskin dam on the Mission-Maple Ridge border. Its current expansion project, the Northwest Transmission Line from Terrace to Iskut, was revealed last week to be $140 million over budget.
In April 2012, the B.C. Utilities Commission imposed an extra 2.5 per cent rate increase, bringing the rate increase for the year to seven per cent. That followed a cost-cutting review of BC Hydro that eliminated 700 jobs in an effort to keep the rate increase below four per cent.
The BCUC intervened after former auditor general John Doyle found $2.2 billion of deferred debt, and forecast that would grow to $5 billion by 2017.
Doyle said one reason the utility was piling up debt was to pay an annual dividend to the B.C. government. In 2011 that dividend was $463 million.