Confused about rate design? We can help.
February 22, 2018 by Diane Roy
In light of some questions and comments we’ve heard from customers, we wanted to clarify some key points about proposed changes to how our rates are structured.
Like most utilities, FortisBC reviews its rate structure periodically to make sure the costs to provide the quality electricity service we all depend on are distributed fairly across customer classes. We’ve just completed that process and submitted a Rate Design Application to the BC Utilities Commission (BCUC).
If approved, it could mean a phasing out of the two-tier residential rate over the next five years and re-establishing a time-of-use rate as another option for residential customers to lower their bills.
Revenue neutral for us, but could make a difference for you
It’s important to understand that the proposed changes are revenue neutral for FortisBC — 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.
But, for our customers, a change in rate structure can have a financial impact and we need to consider those impacts on all of our customers.
A large proportion of our residential customers have benefitted from the two-tier rate and may experience bill increases as we return to a flat rate.
Changes reflect the fairest way to bill customers over the long term
In fact, if the change occurred immediately, the majority of our customers would face an increase in bills in excess of 10 per cent. In contrast, by phasing out the two-tiered rate over five years, we reduce the annual bill increase to, at most, 3.5 per cent, with many of our customers seeing a smaller increase or even a decrease.
Simply put, phasing out the two-tiered rate over five years reduces the annual bill impacts for the majority of our customers while still reducing bills for heavy users of electricity.
We are recommending changes to our rate structure to ensure that our rates reflect the costs to serve our customers based on the power they consume. Based on our review of our rates structure, we feel these changes reflect the fairest way to bill all electricity customers.
And, 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. This process includes an opportunity for customers to provide input to the BCUC before it makes a final determination regarding FortisBC’s rate structure and the proposed phase-out approach.
We appreciate collaboration
Lastly, we believe that collaboration is key to finding options that are reasonable and fair for our customers. We appreciate the time and feedback from the many customers who participated in the consultation leading up to our rate design application. While the rate design changes we recommended are designed to better reflect the cost to serve, all the feedback we received provided valuable insight into what matters to our customers and helped inform our proposals.
For further information about the rate design application, and find out what it could mean for your bill, visit Electric Rate Design Consultation or call 1-866-436-7847.