Mathematics is an exact fact; figures don’t lie, but liars sometimes figure.
Financial statements of governments and crown corporations should be simple and understandable. They should be; but seldom are when the issuers would rather obscure than reveal.
I’ve been examining 25 years of BC Hydro Annual Reports, trying to gain an accurate understanding of the utility’s financial position. I will post a number of small pieces with information that, when taken together, should provide a view of Hydro’s financial performance over time and the challenges that lie ahead.
For knowledgeable people, major concerns are many but cost deferral is one subject that would be on everyone’s list. BC Hydro has spent about five billion dollars and recorded the expenditures as “regulatory assets.” Whether or not these items have tangible worth equivalent to the carried value is uncertain. The view of some, including me, is that massive deferrals have been an irregular accounting device to distort BC Hydro results. One purpose is to allow payment of “dividends” to government of “surplus equity.” To make the payments, as we’ve demonstrated previously, the utility had to borrow the money.
I will write more of this subject in the future but one thing is indisputable: accounting policies of the last few years are materially different than in BC Hydro’s first five decades.
Categories: BC Hydro