Political observers who expected BC NDP to live up to electoral promises of 2017 are by now thoroughly disillusioned. Broken promises could pave the grounds of the BC Legislature.
Before the BC NDP took control of government, future cabinet ministers told me of the commitment to remove political interference at BC Hydro and restore accurate financial reporting and independent regulation by the British Columbia Utilities Commission (BCUC).
In March, public finance expert Richard McCandless reported on what really happened:
Government Reneges on Promise to Allow BC Hydro’s Regulator Full Independence
A new cabinet order negates the previous commitment to restore full independence to the BC Utilities Commission to regulate BC Hydro. Will the auditor general again qualify the government’s financial statements?
A new cabinet order (OIC 123/22) to the BC Utilities Commission (BCUC) extends the requirement that the BCUC set BC Hydro rates to generate a pre-determined net income of $712 million.1 In effect, the regulator is forced to continue to set BC Hydro’s annual rates to achieve a profit target (or return on equity) set by cabinet, rather than by the regulator.
McCandless explains that International Financial Reporting Standards (IFRS) require BC Hydro’s rate regulated accounting be regulated by an independent third party. That restricts the use of expense deferrals and phantom revenues when “profits” are reported to the public.
When government directs BCUC to approve rates to achieve a pre-determined level, the requirement for independent regulation is violated.
Former BC Auditor General Carol Bellringer stated that accounting practices at BC Hydro did not conform to generally accepted accounting principles. She qualified her opinion on the fairness of BC’s financial statements for 2016/17 and 2017/18. In private business, that would be a career threatening event for the accountants and managers in charge of financial reporting.
Naively, Bellringer withdrew her qualification for 2019/20 after the government placed BC Hydro on the national accounting standard and promised to restore the BCUC’s independence. Like other NDP pledges, that promise was hollow.
This week, Richard McCandless returned to report again on the provincial government decision not to fulfill its 2018 promise to enhance BCUCs independence when it functions as BC Hydro’s “independent regulator.”
Another example of the government reverting to the prescriptive management approach to the finances of BC Hydro is the recent order (OIC 355/22 of June 27, 2022) which requires the BCUC to approve a new low carbon electrification and load attraction regulatory account.
BC Hydro anticipates that these new programs will result in increased electricity sales, but this remains speculative. By approving the regulatory account BC Hydro can defer the difference between the planned and actual sales to achieve the planned net income and keep rates low.
This latest incursion into the discretionary authority of the BCUC is a further example of how the current government has adopted many of the traits of its predecessor in by-passing the nominally independent third-party regulator.
Recording expected income, instead of actual revenue, might lead to fraud charges if done in the private sector. Certainly, it would result in unwanted words on any auditors’ report. Perhaps neither will happen when the public utility releases future audited financial statements.
Since the removal of John Doyle in 2013, the BC Auditor General tends to pull punches when reporting on public business conducted by the people that fund the auditor’s office.
Bob Mackin reported on one example at theBreaker.news. The Legislative spending scandal was ignored for years by MLAs, bureaucrats, and the Press Gallery. After Speaker Darry Plecas dragged wrongdoing into the open, media criticized him for doing so. As we saw recently, the affair was quietly ended by a mild reprimand of a single convicted perpetrator. Now beneficiaries of unchecked spending can relax.
Richard McCandless circulates his commentary to many individuals and organizations. But seldom will you see his words reported by corporate media. Partly that is because it takes more than 90 seconds to understand what McCandless reveals and traditional media aims to entertain rather than to inform.
Billions of public dollars can be wasted and coverups through fake accounting can be directed by edicts of government. Little of that matters to toothless watchdogs holding lifetime appointments as pundits covering BC politics.
In a 2016 self-evaluation, New York Magazine asked:
Is the media there to excite or to inform? To challenge or to reassure? To be objective or partisan?
Media organizations would not answer those questions with one voice but compared to 50 years ago, objectivity has decreased, and partisanship has increased. The Rupert Murdoch publishing and broadcasting empire gained wealth by seeding America’s poisonous political culture. Now it has taken Fox News across the Atlantic while giving it a new name and UK accents.
Large segments of Postmedia, Canada’s largest newspaper chain, are committed to distorting news and publishing commentary to further the far right agendas of American hedge fund owners. Head of Chatham Asset Management Anthony Melchiorre was formerly the head of Morgan Stanley’s profitable junk-bond trading unit. His current investors have profited handsomely by squeezing Canadian newspaper assets, then demanding subsidies from our compliant federal government.
Chatham is running similar plays after taking over McClatchy newspapers, a once proud and influential chain founded in 1857 California.
Other participants in Canada’s communication oligarchy may be a little more reserved than Postmedia but still push agendas to favour their billionaire owners. For some, balancing the predominance of right-wing commentary is done by introducing far-right commentary and burying progressive points of view.