BRITISH COLUMBIA HYDRO AND POWER AUTHORITY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2016 AND 2015
British Columbia Hydro and Power Authority
Assumed healthcare cost trend rates have a significant effect on the amounts recognized in net income.
A one percentage point change in assumed healthcare cost trend rates would have the following effects:
One percentage
One percentage
point increase
point decrease
(in millions) 2016
2016
Effect on current service costs $ 4
$ (3)
Effect on defined benefit obligation 57 (46)
The impact on the defined benefit obligation for the Pension Benefit Plans of changing certain of the major
assumptions is as follows:
2016
Effect on
Increase/ accrued Effect on
decrease in benefit current
($ in millions)
assumption obligation service costs
Discount rate 1% increase $ -463 $ -24
Discount rate 1% decrease + 531 + 29
Longevity 1 year +/- 134 +/- 3
NOTE 19: FINANCIAL INSTRUMENTS
FINANCIAL RISKS
The Company is exposed to a number of financial risks in the normal course of its business operations,
including market risks resulting from fluctuations in commodity prices, interest rates and foreign currency
exchange rates, as well as credit risks and liquidity risks. The nature of the financial risks and the
Company’s strategy for managing these risks has not changed significantly from the prior period.
The following discussion is limited to the nature and extent of risks arising from financial instruments, as
defined under IFRS 7, Financial Instruments: Disclosures. However, for a complete understanding of the
nature and extent of financial risks the Company is exposed to, this note should be read in conjunction with
the Company’s discussion of Risk Management found in the Management’s Discussion and Analysis
section of the 2016 Annual Service Plan Report.
(a) Credit Risk
Credit risk refers to the risk that one party to a financial instrument will cause a financial loss for a
counterparty by failing to discharge an obligation. The Company is exposed to credit risk related to
cash and cash equivalents, restricted cash, sinking fund investments, and derivative instruments. It is
also exposed to credit risk related to accounts receivable arising from its day-to-day electricity and
natural gas sales in and outside British Columbia. Maximum credit risk with respect to financial assets
is limited to the carrying amount presented on the statement of financial position with the exception of
U.S. dollar sinking funds classified as held-to-maturity and carried on the statement of financial
position at amortized cost of $167 million. The maximum credit risk exposure for these U.S. dollar