news

March 31, 2009

Hot Topic: BC Hydro rates and the Revenue Requirements Application

The decision on rates

On March 27, BC Hydro issued a compliance filing with the British Columbia Utilities Commission (BCUC) in response to the commission’s March 13 decision on BC Hydro’s two-year Revenue Requirements Application [PDF, 2.5 Mb] for fiscal 2009 and 2010.

The Revenue Requirements Application reflects the expenditures BC Hydro requires to operate in fiscal years 2009 and 2010. The application was originally filed with the commission in February of 2008.

Based on the BCUC decision, BC Hydro has calculated that rates will increase by 2.34 per cent in fiscal 2009 (ending March 31, 2009) and by 8.74 per cent in fiscal 2010 (starting April 1, 2009).
As a result, and given the interim rate increase of 6.56 per cent that has been in effect since April 1, 2008, residential customers with an average consumption of 11,000 kilowatt hours (kWh) per year, for example, can expect a credit refund of approximately $30 for fiscal 2009. Customers can expect to receive their refund in the form of a credit to their bill during the June billing cycle.
For the average residential customer, BC Hydro estimates the bill impact to be $2-4 more per month, effective April 1, 2009. This bill impact takes into account an increase in the rate rider from 0.5 per cent to 1.0 per cent, also effective 1 April, 2009.

Residential Conservation Rate

As a result of the BCUC decision, the residential two-step Conservation Rate will be adjusted as follows, effective April 1, 2009:

	1 Apr 09	Old
Step 1 (cents/kWh):	5.91	5.98
Step 2 (cents/kWh):	8.27	7.21

Bill impact on April 1, 2009

The following provides an example of the monthly bill impact to various residential customers based on their annual consumption:

5,000 kWh/year:	$0.10 less per month
8,100 kWh/year:	$0.70 more per month
11,000 kWh/year:	$2.50 more per month (average consumption in B.C.)
22,000 kWh/year:	$13 more per month

Background

BC Hydro customers continue to enjoy among the lowest electricity rates in North America.

Electricity remains a great value compared with the costs of other consumer goods.

Why BC Hydro needs revenue from rates

BC Hydro requires the additional revenue to ensure it can provide reliable electricity to British Columbians.

BC Hydro’s revenue requirements include a $3.4 billion capital program over a two-year period to renew and upgrade BC Hydro’s generation facilities, invest in the transmission and distribution network, acquire new electricity sources and implement conservation initiatives.

Many of our large generation facilities were built in the late 1960s, 70s and early 80s. Our infrastructure is aging while demand for electricity is growing, so maintaining and upgrading our facilities is essential.

How rates change

BC Hydro’s rates are based on the cost of providing electricity to British Columbians.

With aging infrastructure and growing demand for electricity in B.C. costs have increased, so BC Hydro requires more revenue to cover those costs, and that revenue comes from rates.

To increase rates, BC Hydro must file a Revenue Requirements Application with the British Columbia Utilities Commission (BCUC) – an independent regulator.

In this case the application was made in February of 2008 and involved an extensive public oral hearing, during which BC Hydro produced evidence to justify the need for a rate increase and various interested parties responded with their arguments.

Five ways customers can save money:

Replacing the five most-used incandescent light bulbs with compact fluorescent light bulbs saves about 250 kWh/year or $17 every year.
Using a dishwasher without the dry cycle saves about 100-200 kWh/year or $15 every year.
Sealing air leaks in outside walls, doors and windows saves about100 kWh/yr or $8 every year.
Washing clothes in cold water saves about 900 kWh/yr or $65 every year.
Hanging clothes to dry 50 per cent of the time saves about 450-500 kWh/yr or $35 every year.

If households did these five things, they could save about $140 off their annual bill. For more cost-saving ideas, see bchydro.com's Green Your Home section.

How BC Hydro helps customers manage their bill

BC Hydro offers product rebates and other financial incentives to promote energy efficiency through its Power Smart programs.

BC Hydro has measures specifically for low-income customers:

Customer service: flexible payment options, credit extensions, security deposit alternatives and disconnection moratoriums.
Free Energy Saving Kits: compact fluorescent light bulbs, shower heads, outlet gaskets and tips – saving a household an estimated 185 kWh/year.