Update to Rate Design Increases Demand for Energy Efficiency at Large Industrial Sites
Did you know that large industrial sites in BC now have an even greater reason for your energy efficiency services? As of April 1st, 2008 the price signal for large industrial sites to conserve electricity increased by more than 35 percent.
Transmission Service Rates Overview
BC Hydro provides electricity service to transmission service (large industrial) customers at transmission voltage (>60,000 volts). The transmission service customer class is dominated by forestry, mining, electrochemical and oil/gas processing facilities and represents approximately 30% (15,000 GWh/yr) of BC Hydro’s domestic electricity load. The customer electricity supply relationship is managed by an Industrial Key Account Manager. As of April 2008, there were 70 transmission service customers representing 128 unique sites.
Transmission Rate Schedule
Prior to April 2006, transmission service customers were served at a flat rate for all electricity purchases. Effective April 01, 2006, and pursuant to direction from the Provincial Government and the British Columbia Utilities Commission (BCUC), new transmission service rates were introduced, including RS1823, the Stepped Rate design. The Stepped Rate is now the primary (default) rate for transmission customers.
Stepped Rate Design (RS 1823)
The Stepped Rate design is a two-step (inclining block) conservation rate, which separates the pricing of the customer’s annual energy consumption relative to the customer’s baseline of historic load (CBL). The CBL is split into a 90% pricing block (Tier 1) and a 10% pricing block (Tier 2). Electrical energy consumption up to 90% of the CBL (Tier 1 energy) is priced lower. Electrical energy consumption above 90% of the CBL (Tier 2 energy) is priced higher.
How the Rate Encourages Conservation
Industrial customers have the potential for significant conservation. The intent of the higher-priced (Tier 2) energy block is to encourage electrical energy conservation, efficiency and incremental self-generation. The Tier 2 Rate is updated periodically to complement the most recent benchmark for the long-term cost of new energy supply. Effective April 1st 2008, the Tier 2 Rate was updated to $73.60/MWh to reflect the average electricity purchase price from BC Hydro’s 2006 Call for Tenders (formerly $54.00/MWh). This gives customers two important benefits: (1) a transparent window to BC Hydro’s marginal cost of new energy supply; and (2) an efficient price signal to drive demand side management (DSM) investment.
The Tier 2 price signal works in combination with Power Smart programs to drive customer conservation action.
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