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Electricity rate design

We’re looking to change how our rates are structured and this could impact your bill. In our recent rate design application to the BC Utilities Commission (BCUC), we recommended phasing out the current two-tier electricity rate over a period of four years, which would result in a flat rate by the fifth year. If approved, these changes would come into effect beginning in 2019.

What is rate design?

To better understand the potential impacts for your bill, it’s important to understand the difference between rates and rate design.

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​The rate you pay for your electricity covers the cost of providing you with electricity service. That includes everything we do to bring electricity to your home, from buying or generating electricity to sending it along the many power lines, substations and poles in between. Through rates, we collect enough revenue to maintain the safe, reliable grid we all count on every day.

In contrast, the rate design determines how rates are structured; that is, how much revenue is collected from each customer class, such as residential or commercial, so that each customer class is fairly charged for their share of the cost of providing their service.

Like most utilities, FortisBC reviews their rate structure periodically to make sure these costs are distributed fairly. In December 2017, we submitted a Rate Design Application to the BCUC recommending changes.

What we’re recommending and why

In our application to the BCUC, we recommended two primary changes for residential customers: the phasing out of the two-tier rate over four years, with the flat rate coming into effect in the fifth year and offering an optional time-of-use rate to customers. Any changes resulting from our rate design application are revenue neutral for FortisBC. That means we collect the same amount of revenue regardless of a single or two-tiered rate structure, or how quickly we phase out the two-tiered rate.

About phasing out the two-tier rate

​The two-tier rate was put in place to further encourage customers to conserve electricity. Our customers are good at conserving electricity and we offer a number of programs to help. We believe that a rate focused completely on conservation is no longer needed. We had a flat rate before the two-tier and still feel that it’s the fairest way to bill all electricity customers.

If our application is approved, we will increase the lower tier rate and increase the customer charge while decreasing the higher rate until the two rates meet after after a four-year phase-in resulting in a flat rate in year five. This will mean slight bill increases from lower energy-use customers who have benefited from the two-tier rate, while providing savings for higher energy use customers who have experienced higher bills as a result of the two-tier rate.

Why four years and not a one-year phase out?

​We are recommending a four year phase out time period, with a flat rate effective in year five, rather than a one-year period. If we phased out the two-tier rate immediately in the first year, the majority of our customers could face an annual increase in bills in excess of 10 per cent. In contrast, by phasing out over a number of years, we reduce the annual bill increase to, at most, 3.5 per cent, with many customers seeing a smaller increase or even a decrease, assuming consumption remains the same year after year.

About the optional time-of-use rate

​We are recommending an optional time-of-use rate where customers would be charged a different rate depending on whether they use electricity during on-peak or off-peak hours. In addition to our conservation programs, this option could help customers who would like to reduce their bills. By choosing this rate, customers can shift high-energy use activities, like electric vehicle charging or electric clothes drying, to off-peak times when electricity costs are lower.

The time-of-use rate option was suggested by customers who participated in our information sessions last year leading up to our application to the BCUC. It’s revenue neutral for FortisBC.

Proposed time-of-use periods and rates

​Periods ​ ​ ​Rates
Winter
(Dec - Feb)​
Shoulder
(Mar - Jun / Sep - Nov)
Summer
(Jul - Aug)​
Standard*
On-peak ​7 a.m. to 12 p.m.
4 p.m. to 9 p.m. weekdays

                —
12 p.m. to 9 p.m. weekdays​ ​22.435¢
Mid-peak ​12 p.m. to 4 p.m. weekdays ​7 a.m. to 9 p.m. weekdays ​7 a.m. to 12 p.m.
weekdays
​11.869¢
​Off-peak ​9 p.m. to 7 a.m. weekdays and all day weekends and holidays ​9 p.m. to 7 a.m. weekdays and all day weekends and holidays ​9 p.m. to 7 a.m. weekdays and all day weekends and holidays ​9.280¢
*These suggested rates are subject to change pending regulatory review.

Want more information?

See the application timeline and review the presentations from our public information sessions last year, as well as two of the more recent sessions we held in February 2018.

What does this mean for you?

If our application to phase-out the two-tiered rate is approved and customers are once again billed on a flat rate, it will likely result in slight annual bill increases for lower energy use customers who have benefited from the two-tier rate, while providing savings for the higher energy use customers who have experienced higher bills as a result of the two-tier rate. The annual impact on individual bills varies greatly, depending on your electricity use.

To find out the potential impact to you, try our calculator.

 

Get involved with the process

As a regulated utility, customers can be assured that any changes to our rates or how they are structured are all vetted through a transparent and rigorous public process with the BCUC.

To find out more about the proceedings, visit bcuc.com