2007 annual report - report on performance - Financial - Regulatory
Regulatory
Fiscal 2007 was a year of significant regulatory activity for BC Hydro with three major applications submitted to the BCUC for review: the fiscal 2007/2008 Revenue Requirements Application (RRA), the 2006 Integrated Electricity Plan / Long Term Acquisition Plan and the Rate Design Application (RDA). Details of these and other noteworthy filings are provided in the chart below.
| Applicational Filing | Details | Outcomes |
|---|---|---|
| Fiscal 2007/2008 Revenue Requirements Application (RRA) | BC Hydro filed its RRA for fiscal years 2007 and 2008 in May 2006 and received an interim rate increase of 4.65 per cent effective July 1, 2006. | BC Hydro successfully reached an agreement with customers and stakeholder representatives through a BCUC-sponsored Negotiated Settlement Process that set final rate increases of 1.54 per cent for July 1, 2006 to January 31, 2007 and a further 2.1 per cent effective February 1, 2007. Included in the 2.1 per cent increase is a two per cent rate rider that will be used to recover the accumulated deferral account balances that resulted largely from higher energy costs due to the low water inflows and higher than forecast market prices in fiscal years 2005 and 2006. Customers saw a net one per cent reduction from the interim rate increase on February 1, 2007 and received a total refund of approximately $50 million in early 2007 to adjust for higher interim rates that were in place from July 1, 2006 to January 31, 2007. Even with a net rate increase of 3.64 per cent, BC Hydro still provides electricity at one of the lowest rates in North America. |
| 2006 Integrated Electricity Plan (IEP)/Long Term Acquisition Plan (LTAP) | This application was filed in March 2006 providing a 20 year plan describing how BC Hydro will meet the anticipated electricity needs of its customers (IEP) and an action plan to acquire resources over the first 10 years (LTAP). The application was subject to a comprehensive regulatory review culminating in an oral public hearing that took place between November 22, 2006 and January 12, 2007. BC Hydro sought requests for certain expenditures to take steps to acquire resources identified in the LTAP and received approval for them from the BCUC on March 15, 2007. The reasons for this decision and the remaining orders and comments sought in the IEP/LTAP application were issued on May 11, 2007. | Approval of the LTAP funding requests was received from the BCUC on March 15, 2007. Approval of the LTAP funding requests allows BC Hydro to proceed with its resource and acquisition plans to meet the growing energy supply shortfall. |
| Rate Design Application (RDA) | Following extensive consultation with customers and stakeholders, BC Hydro filed its first RDA since 1991 on March 15, 2007. The primary purpose of this application is to update BC Hydro's rates and terms and conditions, with the main focus on fairness, simplicity and efficiency. The application includes proposals for rate rebalancing, rate restructuring; updating the terms and conditions in our tariff; simplifying our distribution extension policy; and phasing out the Electric-Plus rate. | The BC Utilities Commission has determined that the Rate Design Application will be reviewed at an oral public hearing to start on July 9, 2007. |
| Fiscal 2006 Open Call for Power | BC Hydro submitted 38 contracts to acquire 6,471 GWh/year of energy from Large Projects and 654 GWh/year of energy from Small Projects in a section 71 filing to the BCUC on August 31, 2006. Accompanying this filing was a Report addressing the evaluation process for the tenders received and the outcome of the F2006 Call, including call award volumes, cost-effectiveness and rate impact. | On September 21, 2006 the BCUC accepted all of the contracts. Acceptance of these contracts by the BCUC enabled the successful IPPs to move forward with developing their projects to meet the in service target date of November 1, 2010. |
| Aberfeldie Redevelopment Project | Information on the Aberfeldie Redevelopment project was submitted to the BCUC in late fall of 2006. The BCUC determined that a Certificate of Public Convenience and Necessity (CPCN) would be required for this project and a written regulatory proceeding was held in December 2006 and January 2007. | The BCUC issued its decision granting a CPCN for Aberfeldie on February 9, 2007. Approval of the CPCN allowed construction work on the Aberfeldie project to proceed in February 2007. |
| Alcan Amended Long Term Electricity Purchase Agreement (LTEPA+) | This electricity purchase agreement was filed with the BCUC for acceptance under section 71 of the Utilities Commission Act on November 1, 2006. An oral hearing took place between December 6 and 11. | The BCUC issued its decision on December 29 rejecting the energy purchase agreement and thus declaring the agreement unenforceable. The BCUC did not consider the contract to be cost effective with respect to the pricing provisions and the value of benefits to ratepayers. BC Hydro is now focused on negotiating a new agreement with Alcan. If negotiations are successful, the new agreement will be submitted to the BCUC for review and acceptance. |
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Last Modified: Jun 4, 2007
