Rate Design

Print This Page

Proposed rate change for Large General Service customers

The Large General Service (LGS) Rate Design Project focuses on designing and implementing a new conservation rate structure for BC Hydro's LGS customers. Maureen Black, Customer Relationship Manager, Rates & Pricing, and Shannon Shackerley-Bennett, Program Manager, Customer Satisfaction & Experience, discuss how customers and stakeholders have influenced the process.

What is the LGS Rate Design project?

Maureen: We are restructuring the rates for the LGS class of customers in order to more accurately reflect the cost of new supply to encourage conservation and to provide an incentive for efficient use of electricity.

Shannon: It's an opportunity for BC Hydro to use commercial rates to encourage customers to use less energy. When I see an increase in the price of everyday goods, I start to think about how I might cut back – this project follows that same idea.

Who does the LGS Rate apply to?

Maureen: The rate applies to BC Hydro's commercial and industrial customers on distribution service who have demand levels greater than 35 kW for at least one billing month in the year. The LGS Class includes about 13,000 customers, or approximately 25,000 individual accounts, and covers a wide variety of businesses – everything from corner gas stations to sawmills and large hospitals.

Why is a new rate structure required?

Shannon: It's time for all people and businesses in British Columbia to learn how to become efficient in their use of energy, and a new rate structure will help bring awareness to the possibilities that might not be considered otherwise. Conservation rates have recently been put in place for residential and large industry customers and now we are turning our attention to the large commercial customers, who have accounts that make up the next largest consumption group.

What is your role in this project?

Maureen: As part of the overall project team, my role is to ensure that customers and stakeholders have the opportunity to be involved and provide input into the redesign, and that BC Hydro is fully aware of their perspectives and concerns as we are designing the new rates.

Shannon: I work within Customer Satisfaction and Experience – a relatively new area of the organization that is committed to understanding our customers and working with others to plan, improve and measure the experience BC Hydro delivers. My primary responsibility is the Customer Experience Plan which guides all the different ways customers will interact with BC Hydro and identifies how we will support them through the change and after the new rate is implemented.

How have you included customers and stakeholders in the process?

Maureen: We have engaged our customers and stakeholders in a number of ways, but we've had two major engagement initiatives as part of this project. Phase One took place in November and December of 2008 with a series of six town hall sessions across the province, as well as one in Toronto for national accounts. In total, over 370 customers attended these sessions. We talked to our customers about the reasons for the redesign and discussed some general rate design options. We also asked them for some high-level direction on the rate options and identified their key concerns regarding the change to the rate structure. The results from these sessions heavily influenced the design work that took place between November 2008 and June of this year.

Phase Two of the engagement took place last month. All customers in the LGS class were invited to attend information and feedback sessions throughout the province where we presented the proposed rates and asked for their input on these designs before they are finalized. We wanted to know what aspects of the proposed designs they liked and where they would suggest further changes.

Through the entire process, we have continued to present project updates to the Rates Working Group, one of BC Hydro's ongoing initiatives under the Electricity Conservation & Efficiency Advisory Committee, and asked them for their feedback and guidance on both the rate design and our engagement plans.

Shannon: Customer requirements continue to be identified through external stakeholder and customer engagement efforts. An internal cross functional team called the LGS Insight Group was formed to brainstorm solutions that could be included in the Customer Experience Plan and lead initiatives that will support planned activities.

What did you learn through your engagement with stakeholders and customers?

Maureen: In Phase One, we received some really great directional feedback from a broad cross-section of customers in the Class. For example, we were investigating the idea of dividing this class into two or three smaller classes and the majority of customers at the engagement sessions supported this approach. We also received some input on rate design preferences. Smaller LGS customers told us that they preferred a flat rate design that was easy to understand and straightforward for budgeting purposes; while larger LGS customers preferred some version of an inclining block structure that was customized to their energy use. Taking this feedback into account, we are proposing to segment the current LGS class into two separate classes with separate rate structures for each new class that align with the customer input from Phase One.

In Phase One we also heard from many customers that they were concerned about the impacts to their bill as a result of the new structure and how the new structure would affect them when they return to normal operations after the recession. We have spent considerable time trying to address these concerns in the rates that are being proposed.

We've also learned that for a topic as complex as rate design, a town hall meeting or small group information session is a really good format to receive customer input as it allows us to have a dialogue and a good exchange of ideas.

Shannon: People really care about this subject. Not only are customers willing to spend their time sharing their thoughts with us but some even wrote letters to us that included drawing of possible rate structures, while others made an effort to connect with BC Hydro employees directly. This was really useful in understanding what their journey with our company looked like from their point of view.

How will you use the feedback that you have received?

Maureen: The rate proposal has not been finalized, so we have the opportunity to consider changes based on customer feedback we have received in the Phase Two consultation.

Shannon: Although the customer and stakeholder engagement process was primarily designed to collect feedback about the rate designs, there were lots of comments and suggestions that have already helped shape the Customer Experience planning process. The objective is to deliver a plan that will maintain our strong customer satisfaction levels, encourage conservation behaviours and enhance relationships with customers.

When will the application for the new rate structure be filed with the British Columbia Utilities Commission (BCUC)?

Maureen: Our deadline for filing an application is October 16, 2009.

Shannon: While the Rates & Pricing team focus on filing an application, others across the organization will be gearing up for the Implementation Phase. This is where my group starts to transition the work over to other areas that will incorporate the planned activities into general operations.