The B.C. government is considering a payment deferral program for mines’ electrical bills, to help keep mines running during an extended slump in metal and coal prices.
Energy and Mines Minister Bill Bennett is taking a proposal to cabinet that would allow mines to defer a portion of the BC Hydro bills, with repayment to begin when prices of copper and other mineral commodities reach a certain stage.
Imperial Metals announced this week that Huckleberry Mine. a copper mine south of Smithers, is suspending pit operations and laying off 120 of 260 employees. Bennett told Black Press the continued slump in world commodity prices means more job losses are on the way.
Electricity deferrals were used by the NDP government in the 1990s and Social Credit in the 1980s. Bennett said unlike the NDP program that varied rates with commodity prices, he is proposing that mining companies repay deferred funds with commercial interest, with no net burden to taxpayers or BC Hydro ratepayers.
“If we can’t figure out something to help reduce operating costs, there’s going to be not just layoffs, there’s going to be mines shutting down,” Bennett said. “I don’t expect bankruptcies and I don’t expect shutdowns forever, but you definitely would see temporary shutdowns until commodity prices come back. And you may see that anyway, even with the program.”
The province loses income tax revenue and BC Hydro loses power sales when industries scale back or shut down, which would put pressure on government services and BC Hydro rates. That gives the province incentive to use a deferral program, he said.
Bennett vowed that the rate deferral would not be approved if BC Hydro price caps in the current rate plan were affected.
Hydro rates jumped nine per cent in 2014, followed by annual increases of six, four, 3.5 and three per cent in the 10-year rate plan. Starting with the proposed four per cent increase in 2016, the independent B.C. Utilities Commission (BCUC) is reviewing if rate increases can be lower than what is capped in the rate plan.