Hydro cost analysis no simple matter

Accountant sets the record straight on Hydro comments

Re: Hydro complaints off the mark (Letters, Dec. 13)

As for Joe Sawchuk’s letter on Ms. McFadyen’s “shooting from the hip” with her comments on B.C. Hydro’s rate increase, I would suggest this might be a case of the pot calling the kettle black.

To get a meaningful understanding of the validity of rate increases, one would need to do an in-depth financial analysis of costs over a number of years, compare this with other jurisdictions and see what corrective action could be taken.

It’s not enough to simply state that we have the third-lowest costs in the country and should therefore be thankful.

As a cost and management accountant, if I established that costs in my corporation were 41 per cent and 23 per cent higher than two seemingly comparable companies, as he states is the case with B.C. Hydro over Quebec and Manitoba, and that a nine-per-cent price increase was being planned when inflation is running at 2.4 per cent, I would want meaningful answers from management.

I would also inquire as to the practice of reserve accumulation for funding development to avoid or minimize this being met by price hikes, which should be limited to covering inflation and minimized by aggressive cost-reduction programs.

James McMillan

Victoria

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