Increase less than originally proposed, can be offset by Power Smart

VANCOUVER – BC Hydro today filed a revenue requirements application with the BC Utilities Commission (BCUC) that includes a proposal for a rate increase of nine percent spread over two years. Seven percent of that would be in the first year and a further two percent in the second. The first year rate would take effect on April 1, 2004, on an interim basis.

"BC Hydro is proposing this rate increase to make sure we can continue to provide the reliable supply of electricity our customers have come to enjoy," said BC Hydro Senior Vice President, Distribution, Bev Van Ruyven. "BC Hydro rates have been the same for over 10 years and compared to the cost of inflation they have actually gone down over that period compared to other household items. We need to invest in our aging public infrastructure and pay for new, more expensive electricity supply to meet our customers' growing demand for electricity."

In its most recent Service Plan, BC Hydro had proposed rate increases in the order of 3 to 6.5 percent per year for three years to cover costs. However, a number of internal and external factors have resulted in a proposal for lower than expected increases.

"The increase BC Hydro has determined is required is significantly lower than the 3% to 6.5% increase each year for three years projected in our 2003 service plan, which was carefully and conservatively developed to deliver the reliability and service levels required and expected by our customers," added Van Ruyven. "Our revenue requirements application filed today uses more up-to-date forecasts for reservoir conditions, interest rates and trade income, which are much more current than those used for service plan projections."

Even with the rate increase, BC Hydro customers would still have the third lowest electricity rates in North America. The proposed nine percent rate increase would translate into an additional monthly cost of about $5.51 for the average two bedroom detached home heated by gas and $3.25 for the average apartment. BC Hydro's Power Smart program will offer customers ways to mitigate and perhaps even completely offset the increase in their bills.

"Through Power Smart, customers can save as much as 25 percent on their monthly electricity bill," concluded Van Ruyven. "Installing just five compact fluorescent light bulbs in high traffic areas will cut bills by 5 percent. Getting rid of an old refrigerator through our "buy back" program can save people another 10 percent annually. And there are other Power Smart opportunities that can save customers even more."

Early in the new year, the BCUC is expected to rule on implementation of the first year rate increase on an interim basis. It will then hold a full public hearing process in spring 2004 and a final decision on the actual percentage increases is expected by the fall of 2004. The second year rate would take effect on April 1, 2005.

Contact:

BC Hydro Media Relations

Media Relations manager

Phone: 604 623-4022

BC Hydro Revenue Requirement background

• A revenue requirement is the forecast cost of doing business for a period of time. It must be approved by the BC Utilities Commission. BC Hydro can collect it through tariffs (the rate it charges its customers). The last revenue requirements review was in 1994 and it did not result in any rate changes. Rates have been the same since 1993.
• While BC Hydro has not had a revenue requirement review in a decade; like all businesses, costs have been rising. Compared to inflation, BC Hydro rates have actually gone down over that time relative to other household items. To ensure we can continue to provide a reliable supply of electricity for our customers, we need to invest in aging public infrastructure. We also need to bring new, more expensive supply on line to meet growing demand.
• BC Hydro filed an application with the BCUC on December 15 proposing a 9% rate increase spread over two years, a 7 % increase in the first year, (effective April 1, 2004 on an interim basis) and a 2% increase in the second - significantly lower than earlier projections from our Service Plan that estimated a 3% to 6.5% increase each year for three years could be needed.
• The BCUC will conduct preliminary consultations and decide on an interim rate in January 2004 that would take effect on April 1, 2004. A full public hearing will take place in the spring and a final decision is expected by fall 2004. The 2% rate increase would take effect on April 1, 2005.

Average BC Hydro customer bill

Current rate	Post 9% rate increase
Detached house* $ 58.75	$64.26
Apartment+ $ 34.71	$37.96

*Based on non-electrically heated house using 11,500 kilowatt hours (kwh) per year

+Based on non-electrically heated apartment using 6,500 kwh per year

• Power Smart could help customers offset any increase in their bills. Customers can participate in Power Smart initiatives such as energy efficient compact fluorescent light bulbs, by installing 5 in high use areas, customers can save up to 5% on their energy bill. The refrigerator "buy back" program can save another 10 % annually by getting rid of a second operating fridge. BC Hydro's Power Smart Renovation Rebate program offers customers with electric heat information about heat loss and rebates for taking specific actions to reduce heat loss through windows, crawlspaces, basements and attics. BC Hydro is also working with large customers to help displace electrical load and increase factory and mill efficiencies. More Power Smart tips are online at www.bchydro.com/powersmart.
• Despite an increase, rates would remain among the very lowest in North America.

Even with the proposed increase of 9%, British Columbians will continue to enjoy the third lowest electricity rates on the continent.

$ per 1000 kW/h

BC	$61.16
BC (proposed)	$66.89
Calgary	$100.14
Toronto	$96.47
Regina	$92.66
Montreal*	$60.33
Winnipeg	$58.94
Halifax	$96.93
Seattle**	$90.37

Based on residential rates and consumption per month of October 2003 in Canadian dollars. Does not include GST, PST or other taxes. *BC has the third lowest electricity rates in North America after Manitoba and Quebec. Rate increase application currently pending in Quebec.

**Based on USD/CAD exchange rate of 0.76.