Electricity rate design
What is rate design?
To better understand the potential impacts of rate design for your bill, it’s important to understand the difference between rates and rate design.
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.
As a regulated, privately owned utility, our rates accurately reflect the cost of providing the safe, reliable service customers depend on.
Rate design structure
On the other hand, 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 class is fairly charged for their share of the cost of providing their service. Rate design also determines how rates are structured for each rate class.
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 BC Utilities Commission (BCUC) recommending changes.
What rate design changes we recommended and why
In our application to the BCUC, we recommended the phasing out of the two-tier rate over five years, with the flat rate fully implemented in 2023.
Over the phase-out period, we will gradually reduce the rate at the higher tier and increase the rate at the lower tier, resulting in a single, flat rate in 2023.
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.
What does this mean for you?
This phased-out approach helps balance the interests of all customers.
The new rate design will help lower electricity costs for customers who paid more while the two-tiered system was in place. And for customers who saved during this period, this may result in moderate increases — less than 3.5 per cent per year.
A transparent, regulated 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.