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FortisBC applies to the BCUC for a return to a single residential rate

January 5, 2018
FortisBC applies to the BCUC for a return to a single residential rate

​On December 22, FortisBC submitted its Cost of Service Analysis and Rate Design Application to the BC Utilities Commission (BCUC) and in it, recommended returning to a single, flat residential rate and re-establishing a time-of-use rate as an option for residential customers.

“We’re committed to ensuring all our customers are billed fairly for the energy they consume and in a way that meets their needs while providing opportunities to encourage conservation,” said Diane Roy, vice-president of regulatory affairs, “These recommendations reflect a comprehensive review of FortisBC’s current rate structure and make sure rates paid fairly reflect the cost of providing service.”

All utilities review cost of service allocation and rate design periodically to make sure that rates reflect the fair and equitable allocation of costs. Through the rate design process over the last year, FortisBC looked at the cost of providing service to each rate class and reviewed several options for rate design. During this review process, FortisBC also encouraged input and feedback from the public.

“FortisBC understands that electricity rates and bills matter to our customers and consulting with our customers and various stakeholders was an important part of this rate design process,” said Roy. “We heard from many participants with concerns about the two-tiered rate, particularly those with high energy needs and limited conservation options.”

If approved, the return to a single, flat rate for residential customers will be phased in over five years by reducing the difference between the two tiers of the residential rate and increasing the customer charge that was frozen for a period of time under the residential conservation structure. This phased-in approach is intended to mitigate annual rate impacts for lower consumption customers.

By re-establishing time-of-use rates, residential customers still have an option to reduce their energy costs by shifting their high consumption activities to off-peak hours. This time-of-use option is one of the benefits made possible by advanced meters which now provide accurate hourly consumption data. FortisBC’s application recommends a redesign of this rate option for all other customer classes as well.

Overall, changes from a rate design review are revenue-neutral for FortisBC. FortisBC’s last rate design application was submitted in 2009. For more information, view our rate design consultation process and the options that were considered.

As a regulated utility, FortisBC sets its rate structure through a rigorous and transparent process with the BCUC. FortisBC expects a decision on its electric rate design by the end of 2018 with the new structure coming into effect in 2019. Customers are encouraged to follow the proceedings at bcuc.com.

 

Background

  • A cost of service analysis (COSA) determines the cost of providing electrical service by customer class. FortisBC contracted EES Consulting, a third-party management consulting firm, to conduct its COSA. 
  • Rate design uses the results of the COSA to ensure that customer rates reflect certain principles, such as ensuring that each customer rate class pays a fair portion of the cost to serve, includes price signals that encourage efficient use, are easy to understand, and recover the utility’s revenue requirement. 
  • Any changes that result from the COSA and rate design are revenue neutral to the utility.
  • The rate design consultation period started in June 2017 with a total of six public sessions held in Kelowna, Osoyoos and Castlegar. At these sessions and through our online form, customers had until September 30 to provide feedback on the current electricity rate structure and make recommendations for changes. 
  • The January 2018 interim residential conservation rate (RCR) is 10.117¢ for the first 800 kilowatt hours (kWh) of monthly use and 15.617¢ for additional use. Under this structure, customers save when their consumption is below 1,250 kWh per month.
  • About 30 per cent of residential customers currently receive higher annual billings than would be the case under a flat rate. 
  • By phasing in a flat rate, the annual bill increase of returning to a flat rate will be 3.5 per cent or less in any one year of the phase-in period.
  • FortisBC has applied for three time-of-use periods, on-peak, mid-peak and off-peak and the times vary through winter, summer and the shoulder season, with rates highest during on-peak and lowest during off-peak. This will be an optional rate for customers who want to reduce energy costs by shifting their energy use to lower-cost periods.

​MEDIA CONTACT:

Nicole Bogdanovic
Communications Advisor, FortisBC
250-469-6078
nicole.bogdanovic@fortisbc.com
fortisbc.com

24-hour media line: 1-855-322-6397

​FortisBC Inc. is a regulated utility focused on providing safe and reliable electricity at the lowest reasonable cost. FortisBC Inc. employs over 500 British Columbians and serves approximately 169,000 direct and indirect customers in B.C.’s South Interior. FortisBC Inc. is indirectly, wholly owned by Fortis Inc., the largest investor-owned distribution utility in Canada. FortisBC Inc. owns and operates four regulated hydroelectric generating plants, as well as approximately 7,200 kilometres of transmission and distribution power lines. Additional information can be accessed at fortisinc.com or sedar.com.