BC Hydro executive bonuses questioned as deficits grow
The NDP is demanding BC Hydro stop paying lavish executive bonuses, following an auditor general's report that revealed that the Crown corporation actually ran a $249 million deficit last year.
NDP leader Adrian Dix says at a time when Hydro is looking at ramping up rates for customers, the current bonus system for executives doesn't make sense
"I think they are just out of touch. There is no understanding of the public's ability to pay especially at a time when things at Hydro are in such disarray," said Dix.
Last week, the auditor general said Hydro was only able to report a profit in the 2009-2011 fiscal year by deferring $696 million in expenses, adding to a total of $2.2 billion in deferred expenses in recent years.
The bookkeeping manoeuvre enabled the Crown corporation to claim a profit of $447 million last year, rather than a deficit of $249 million.
Doyle called it "the appearance of profitability where none exists," saying while the deferrals may be an accepted accounting practice, they are creating a burden on ratepayers in the future.
Rather than making a profit, BC Hydro’s debt has increased from $7.5 billion in 2006 to $11.6 billion as at March 31, 2011, the Auditor General noted.
But the corporation rewarded its executives last year with bonuses of up to $100,000 dollars.
Energy minister defends executives' pay
Dix says it's time for the government to stop paying those big bonuses.
"The government appears to have a no-executive-left-behind program here."
But Energy Minister Rich Coleman fired back that Dix was pushing a socialist agenda.
"It's the old class warrior coming out in the leader of the opposition here today," he said on Tuesday.
Coleman says Hydro bonuses are based on more than turning a profit. They reward everything from safety to reliable service to customer satisfaction.
"These guys have a complicated job and they are a Crown corporation and they deserve to be compensated at a fair level," he said.
But the government will review the bonuses and BC Hydro's accounting practices – a move the auditor general said last week is long overdue, he said.
"At the same time the bonus system deserves a look because obviously the auditor general made mention of it," he said.
Despite getting a $73,000 bonus last year, earlier this month BC Hydro CEO Dave Cobb announced he was resigning just a year and half after taking the job, which earned him a total of $467,000 last year.
The move came shortly after the province launched a review aimed at cutting BC Hydro spending by $800 million, forcing Hydro to cut hundreds of jobs. The government panel also halted Hydro's plan to hike rates by 50 per cent.
BC Hydro debt and deficits growing unchecked
Last week Doyle said BC Hydro's deferral accounts will reach $5 billion in 2017, and the Crown Corporation has no plan to halt that growth.
"I am concerned that there does not appear to be a plans to reduce the balance of these accounts, let alone halt their growth," Doyle said in his report.
But Energy Minister Rich Coleman says Doyle is mistaken. "That's actually not true," Coleman told reporters last week.
The minister said investments now in upgrades such as the $1 billion smart meter program will result in savings later that will be used to pay down that debt.
In his report Doyle was also critical of B.C. government for allowing Hydro to continue using accounting practices that he does not consider transparent.
"In July of this year, Treasury Board issued the Government Organization Accounting Standards Regulation, which requires BC Hydro to adopt one part of an American accounting standard that allows rate regulation, thereby avoiding the transparency required under Canadian accounting standards – transparency that is essential to understanding BC Hydro’s financial condition as a standalone enterprise," wrote Doyle.
"The purpose of public reporting is to serve the interests of transparency and public accountability by describing objectively the results of financial management using an agreed-upon reporting framework. In our view, rate-regulated accounting as it is being practiced is not consistent with this objective."