Why the Rate Was Put in Place

In 2007, the Government of British Columbia issued its Energy Plan, which set out the Province’s commitment to reduce greenhouse gas emissions and maximize conservation efforts. One Policy Action of the Energy Plan is to {(explore with B.C. utilities new rate structures that encourage energy efficiency and conservation.”

In 2012, following a public hearing, the Commission approved FortisBC’s application for the Residential Conservation Rate. The Rate is intended to help achieve the Policy Action of the Energy Plan and to create conservation awareness among all users. A copy of the Commission’s decision approving the Rate can be accessed at http://www.bcuc.com/Orderlndex.aspx (Order G-3-12).

FortisBC moved to its new two-step rate structure on July 1, 2012. On the Residential Conservation Rate, customers pay the lower step 1 rate for electricity consumption up to 1,600 kWh (800 kWh for customers billed monthly) and the higher step 2 rate for any additional consumption.

It is important to note that the step 1 threshold is not a target consumption level -it is the point where the cost of electricity changes to the step 2 price. Because you pay a lower price (compared to the previous flat rate) on the first portion of energy used, and a higher price for the energy you use above the step 1 threshold amount, you can consume some electricity above the threshold before your total bill increases.

In regards to customer bill impact, the Commission took this into consideration in its decision. Setting the step 1 threshold at 1,600 kWh results in 95% of customers seeing a bill increase of 10% or less. This is in part because the 1,600 kWh step 1 threshold represents the median residential consumption for FortisBC customers. In other words, 50% of FortisBC residential customers use less than 1,600 kWh bimonthly and 50% use more.

FortisBC’s Rate Increases

FortisBC customers may also be experiencing bill increases because FortisBC was approved for two rate increases which took effect on January 1, 2013. These rate increases were approved following public processes. The first of these two rate increases was a general rate increase of 4.2%. FortisBC was approved for a 4.2% general increase to cover a number of costs that were reviewed and approved in the 2012 -2013 Revenue Requirements application. These costs include increased costs to purchase power and to upgrade infrastructure. The Decision can be accessed at http://www.bcuc.com/Orderlndex.aspx (Order G-IlO-12). For your information FortisBC originally asked for a 6.5% general rate increase which was reduced to 4.2% by the Commission.

The second of these two rate increases was a 2.3% rate rebalancing increase for residential customers. The rebalancing increase was approved to ensure that customer classes pay for the costs they are causing on FortisBC’s system.

It is important to note that each time FortisBC requests a rate increase the costs are reviewed by the Commission through a public process before a decision is made as to whether or not a rate increase is approved.