Rate Design Application
BC Hydro filed its first general Rate Design Application (RDA) since 1991 with the BC Utilities Commission (BCUC) on March 15, 2007 to seek approval on changes to our tariff. As a regulated utility, we are required to do a periodic review and update of rates. The goal of this application is to ensure that our rates promote energy conservation, are fair to all customer classes and are as simple as possible.
The RDA also includes a review of our existing Electric Plus rate.
Purpose of the RDA
A rate design application is a proposal to update rate structures, rates charged to customer classes, and terms and conditions of service. Overall, BC Hydro will not be generating more revenue as a result of the changes in the RDA, which are aimed at rebalancing and restructuring the rates paid by different customer classes. We aim to ensure that the rates paid by a given customer reflect the costs of providing service to that customer, so that classes of customers are not unduly subsidizing one another.
There is a gap between electricity supply and demand in B.C., and that gap is growing. The first and best way of meeting our province's growing electricity needs is to conserve more, and we must make sure BC Hydro's rates are designed to meet that goal. This application is a step in the development of a long-term rate strategy that will align rate design with our overall strategic direction, including the promotion of energy conservation.
We are also reviewing, planning or implementing a variety of other measures, such as the Conservation Research Initiative Time-of-Use residential pilot program, the residential Conservation Rate, advanced metering technologies and commercial time-of-use studies.
Regardless of the rate you are on, the best way for all customers to keep electricity costs down and minimize the effect of the rate change is by adopting conservation and energy efficiency.
The process
In January and February 2007, we sought input from the public, which we used to inform the RDA filed on March 15. We were interested in hearing from our customers to strike an acceptable balance among the goals of promoting fairness, simplifying rates and encouraging conservation.
We also held workshops during January and February to provide information and obtain feedback from customer groups to help shape the application.
After BC Hydro filed the RDA with the BCUC in March 2007, there was a three-and-a-half month regulatory review process directed by the BCUC, which resulted in over 1,100 BCUC and intervenor requests for information being issued. BC Hydro responded to all these requests within a period of six weeks.
We also consulted with stakeholders through workshops, letters, web feedback, focus groups, surveys and one-on-one meetings.
For more information on the review process for this application, visit the BCUC website.
The decision
On October 26, 2007, the BCUC issued its decision [PDF, 1.2 Mb] on BC Hydro’s 2007 RDA.
On February 20, 2008, BC Hydro filed an application for reconsideration on the rebalancing component of the RDA, in effect suspending the rate rebalancing orders pending legislation from the provincial government. All other components from the RDA not relating to the rate rebalancing that are approved by the BCUC came into effect on April 1, 2008. Restructuring and changes to the Terms and Conditions, outlined in the RDA, are going ahead as proposed and approved by the BCUC.
On March 7, 2008, the BCUC approved BC Hydro's request to suspend the implementation of the rate rebalancing portion of the RDA decision.
Questions & answers
Rate Design Application – general
What is a Rate Design Application?
A Rate Design Application (RDA) is a proposal to update rate structures, rates charged to customer classes, and terms and conditions of service.
The RDA is based on the principles of fairness, simplicity and conservation. BC Hydro's goal is to:
- Provide rates that are fair, efficient and simple.
- Begin the development of a long-term rate strategy to align rate design with BC Hydro's overall direction, including the promotion of conservation and energy efficiency.
- Reduce cross-subsidies between rate classes.
What was the purpose of BC Hydro's 2007 RDA?
One of the primary purposes of the RDA was to review the rates charged to our customers—residential, commercial and industrial—and to rebalance these rates to ensure that classes of customers are not unduly subsidizing one another.
Why did rates need rebalancing?
BC Hydro's rate design had not been comprehensively reviewed by the BCUC since 1991. Over this period of time, the cost of servicing each customer rate class had changed and required realignment. In 2006, the BCUC mandated BC Hydro to file an RDA.
What does the BCUC have to do with our rates?
By law, BC Hydro rates must be established on a cost-of-service basis, and under the Utilities Commission Act, the BCUC has the authority to require BC Hydro to apply certain methods and formulas to determine the cost of providing service to each rate class, and to set rates on that basis.
Did BC Hydro consult with customers and stakeholders about these rate changes?
After BC Hydro filed the RDA with the BCUC in March, there was a three-and-a-half month regulatory review process directed by the BCUC, which resulted in over 1,100 BCUC and intervenor information requests being issued. BC Hydro responded to all of these requests within a period of six weeks.
We also consulted with stakeholders through workshops, letters, web feedback, focus groups, surveys and one-on-one meetings.
What did the BCUC decide on rebalancing the rates?
The BCUC ordered BC Hydro to review the cost of providing service to each rate class and the revenue being collected from that rate class.
The result was a formula leading to a 3.6% rate increase for residential customers in each of the next three years, beginning April 1, 2008. Over the same three-year period, small commercial customers would see a yearly decrease of 6.7%, large commercial customer rates would decrease 2.2%, industrial customers' rates would decrease 0.9%, street light rates would decrease 7.2% and irrigation rates would increase 6.4%.
However, BC Hydro filed an application for reconsideration on the rebalancing component of the RDA, in effect suspending the rate rebalancing orders pending legislation from the provincial government. On March 7, 2008 the BCUC approved BC Hydro's request to suspend the implementation of the rate rebalancing portion of the RDA decision.
What was the BCUC decision regarding E-Plus customers?
The BCUC rejected the proposal to phase out the E-plus rate over the next 10 years. Instead, effective April 1, 2008, the rate is to be phased out through attrition, i.e., the E-Plus rate will be discontinued when there is a change of customer at an E-Plus premise (the premise could be a rental property).
How many E-Plus customers does this affect?
There are approximately 13,000 customers on E-Plus (96% are residential). Two-thirds are on Vancouver Island, 10% on the North Shore or Sunshine Coast, 8% in the Okanagan/Kootenays, 7% in the Thompson/Shuswap and 5% in the North.
Last Modified: Nov 16, 2007
