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VANCOUVER -- British Columbia is preparing to lift a decade-long freeze on electricity rates in the province and permit British Columbia Hydro and Power Authority's transmission division to operate independently from its Crown-owned parent.

However, B.C. Energy Minister Richard Neufeld strongly denied that the provincial utility will be broken up into several different companies before being sold off to the private sector.

Mr. Neufeld was reacting to published reports, which indicate that B.C. Hydro could be split into several separate stand-alone businesses operating in an open-access market place as early as 2004.

Speculation was fuelled by reports about the contents of a presentation to Hydro directors in early October as well as the recommendations of a provincial energy task force that were released to the public almost a year ago.

Details from the presentation indicated that energy consumers in B.C. could soon be receiving different bills for distribution and generation.

But Mr. Neufeld said such reports are incorrect. When the province issues its new energy policy in the next three weeks, the core assets of B.C. Hydro, such as dams, transmission and generation will remain as a Crown corporation.

"Transmission will be moved out on its own but still remain within B.C. Hydro," he said. Mr. Neufeld said the move is designed to appease independent power producers who want to generate their own power and sell it on the open market. The new policy aims to satisfy the U.S. Federal Energy Regulatory Commission which has been pressing utilities in North America to separate the transmission from the generation components of their businesses.

As part of its new energy policy, the provincial government is set to ask the B.C. Utilities Commission to review electricity rates in the province, which have been frozen for almost a decade.

But that doesn't mean Hydro is moving to a market-based pricing system. "We have been saying that for a long time," Mr. Neufeld said.

Details of the new energy policy are set to be released almost one year after a provincial task force recommended splitting B.C. Hydro into separate generating, transmission and distribution divisions and moving to market pricing.

In releasing its report, the task force predicted that market pricing could lead to increases of 30 per cent for residential consumers and up to 60 per cent for industrial consumers.

Industry watchers say B.C.'s governing Liberal Party is anxious to raise rates which were frozen by the former NDP government in order to replace its aging equipment systems.

"They have to put over $1.2-billion into the transmission system over the next 10 years just to tread water," said David Austin, a Vancouver-based lawyer and lobbyist for independent power companies in B.C. the province. According to its Web site, B.C. Hydro is proposing projects that could cost anywhere from $50-million to $500-million in order to improve the capability of its transmission facilities.

However, observers have previously been divided in their opinions as to how far the provincial government will go in order to achieve its goals.

Mr. Austin had predicted that the province would raise electricity rates and run the transmission business independently.

"That is a must in order to maintain access to the United States market," he said. "It is a fallacy to believe that you can maintain electricity rates the way they are forever just because you have a hydroelectric system."

However, other observers believed the province would go much further.

"It seems pretty clear that they are intent on breaking B.C. Hydro into several different companies," said Mark Veerkamp, a co-ordinator for B.C. Citizens for Public Power.