BC Auditor General John Doyle released his latest report yesterday, and it’s more bad news for BC Hydro. For a great walkthrough of what Doyle’s concerns are, watch the embedded video, or visit the report website here.

Essentially, Doyle is worried that BC Hydro is using American-style accounting practices to defer billions of dollars of debt to future years. He also notes that neither the BC Government nor BC Hydro seems to have a plan to pay down those deferred costs. This is money already spent, but without a plan to pay off. Doyle says the government, in its push to get dividends from BC Hydro to pay down their own deficit, is forcing BC Hydro further and further into red ink, and it will come back to haunt future rate payers.

He’s too much of a number cruncher to say it, but we will: BC Hydro is using smoke and mirrors to appear profitable, while actually pushing off costs into the future. This is extremely troubling.

Deferrals were initially allowed with good intentions. In good years or bad years, push extra profit or debt to a future year to smooth out the annual rate fluctuations for BC Hydro ratepayers. Otherwise, a dry year may see Hydro ratepayers on the hook for a huge increase as the company imports power. Or a wet year would see a huge, unsustainable cut for ratepayers as the company sold extra power. Better to smooth those highs and lows out in order to maintain a reasonable rate.

The problem is that it seems to only be costs that get pushed to the future. Since 2005, deferrals have jumped from $182 million to $2.2 billion. The Auditor General thinks that could hit $5 billion by 2017. Not good.

Worse yet, the BC Government demands a $463 million dividend from BC Hydro every year to put into its own general revenue. Hydro had to cover its 2005, 2006, 2008, 2010, and 2011 dividends through deferrals.

We can’t keep putting costs off into the future, on to our children and grandchildren. The BC Government needs to push through with the August BC Hydro Review recommendations on how to streamline the utility, pare down its bloated payroll, and put the utility back on solid financial footing. These deferrals need to be a part of BC Hydro’s strategic plan going forward, with a clear strategy on how to pay them down.