• About the rate
• The rate in action
• Who pays the Conservation Rate?
• The rate and your bill
• The rate and consumption patterns

About the rate

What is the residential two-step Conservation Rate?
The Conservation Rate is a two-step residential rate structure designed to encourage conservation – which is the cleanest, cheapest and simplest way to meet growing electricity demand in British Columbia.

The Conservation Rate, which came into effect on October 1, 2008, replaces the previous flat rate structure, which had a single price for all electricity used.

Under the two-step structure, a lower price is charged for electricity up to a certain consumption threshold during a billing cycle (called Step 1), and a slightly higher price is charged for electricity used above that amount (called Step 2). The Conservation Rate is revenue neutral for BC Hydro – it is designed to encourage conservation. This means that the total amount of money collected from the residential customer base will remain the same.

Why is it called a Conservation Rate?
BC Hydro forecasts that over the next 20 years the demand for electricity in British Columbia is expected to grow by 20 to 35 per cent. The options to meet this growing need include building more generation, buying more electricity, and conserving more. Of these options, conservation is the cleanest, cheapest and simplest way to meet growing demand.

BC Hydro has a comprehensive plan to meet our conservation goals. One component of this plan is restructuring customer rates to provide a price incentive that encourages conservation. BC Hydro's plan also includes:

• Information, incentives and Power Smart programs to encourage customers to take conservation action, plus
• Encouraging changes to codes and standards so that buildings and appliances are as efficient as possible.

Rates similar to the Conservation Rate, also known as a "stepped" rate, are common. About 20 other utilities in North America have stepped rates in place, some with more than two steps. Some Canadian examples are Hydro Quebec, Toronto Hydro, Hydro One and Manitoba Hydro.

How does the Conservation Rate benefit customers?
The Conservation Rate is beneficial in two ways.

First, customers who take action to conserve will save even more.

Second, for all customers who reduce Step 2 consumption, their conservation efforts will be rewarded at the higher price.

How does the Conservation Rate encourage conservation?
Under the Conservation Rate, residential customers pay a lower price for the amount of electricity used up to a threshold level (Step 1) in the billing period, and a higher price for the remaining consumption above the threshold level (Step 2). Because higher consumption is billed at the higher Step 2 price, there is a greater reward for conserving electricity.

The Conservation Rate is expected to yield about 300 gigawatt hours a year of electricity savings province-wide by 2010 – enough to power 30,000 households for a year.

Is BC Hydro collecting more revenue due to the Conservation Rate?
The Conservation Rate will not generate more revenue for BC Hydro. This means that the total amount of money collected from the residential customer base will not increase.

How do BC Hydro residential rates compare with other utilities?
BC Hydro customers will continue to pay among the lowest rates for electricity in all of North America. This is based on the most recent information from a Canadian benchmarking study (Hydro Quebec).

The rate in action

How were the prices of each step determined?
The Step 1 price is set so that the Conservation Rate is revenue neutral for BC Hydro across the entire residential customer base.

The Step 2 price was set by the British Columbia Utilities Commission (BCUC) to better reflect the real cost of new electricity supply.

The current step prices are based on the BCUC-approved interim rate increase that went into effect on April 1, 2008.

What are the prices of electricity in each step?
Effective April 1, 2009:

• Step 1: 5.91 cents/kWh
• Step 2: 8.27 cents/kWh

How was the Step 1 threshold chosen?
The 1,350 kWh Step 1 threshold was set by the British Columbia Utilities Commission (BCUC) based on it being about 90% of the median consumption of BC Hydro's residential customers. The BCUC's full decision is available on their website.

Does the Step 1 threshold change by season?
No.

Why does the Step 1 threshold on my bill not show up as 1,350 kWh?
Customer meters are read on different days so billing periods can vary from bill to bill. As a result, the Step 1 threshold is prorated based on the number of days in each of your billing periods. The threshold that customers will see on their bills is calculated by multiplying the number of days in their billing period by 22.1918 kWh per day. The 22.1918 kWh per day is the daily equivalent of 1,350 kWh for the average two month billing period. That daily amount is calculated the following way: 1,350 kWh multiplied by 6 bi-monthly billing periods per year divided by 365 days in the year = 22.1918 kWh/day.

I am billed monthly – what will the Step 1 threshold be for me?
The threshold is based on 1,350 kWh in an average two-month billing period. The daily equivalent is 22.1918 kWh.

All customers-whether on monthly or bi-monthly billing-can calculate their Step 1 threshold for a given billing period by multiplying 22.1918 kWh by the number of days in the billing period.

For example: for a 28 day billing period, the threshold is 622 kWh (28 x 22.1918 = 622). That means you will pay the Step 1 price for all electricity consumed up to and including 622 kWh and the Step 2 price for any remaining consumption above that level.

Who pays the Conservation Rate?

Who does this rate structure apply to?
The Conservation Rate applies to most of BC Hydro's residential customers.

There are about 25,000 exempt customer accounts, including:

• Customers in Rate Zone 2 (areas not connected to BC Hydro's main grid)
• Customers in Bella Bella (Rate Zone 1B)
• Residential customers designated as farms

I am an ePlus customer – does the Conservation Rate apply to me?
The Conservation Rate does not apply to your ePlus meter for the electric heat portion of your bill. The Conservation Rate does apply to the non-electric heat portion of your bill.

I am an Equal Pay customer – how does the Conservation Rate affect me?
The Equal Payment Plan (EPP) continues to be provided as an option for customers. Payment amounts previously were reviewed annually, but they will now be reviewed more often to ensure the averaged payments are at the right level.

The rate and your bill

How does this rate structure impact me?
The impact will depend on how much electricity you use. If you use less than 2,260 kWh on a bi-monthly basis you will pay less on the Conservation Rate than you would have paid on the previous flat rate structure. Even if you consume more than 2,260 kWh every two months, you can eliminate or reduce bill increases through conservation.

How much energy do I have to conserve to save money?
Every kWh you are able to conserve, saves you money. The exact impact on your bill depends on your consumption. If customers reduce their consumption by just 1,000 kWh over the course of a year-or about 10% of the average user's annual consumption-they will save up to $82 per year.

Do I need to lower my consumption to 1,350 kWh?
The 1,350 kWh Step 1 threshold is not a target-it is the point where the price of electricity changes from the Step 1 price to the Step 2 price.

Any time that you can save electricity, you can save money on your bill. And remember, because you are paying a lower price (compared to the previous flat rate) on the first portion of electricity used, and a higher price on the remainder, you can consume some electricity above the 1,350 threshold before your total bill rises.

If I use less than 1,350 kWh in one billing period, do I get a credit for future billing periods?
No.

My consumption is lower in some billing periods and goes into Step 2 in others. How will I be impacted?
Remember that the 1,350 kWh is merely the threshold between Step 1 and Step 2 prices, and does not represent a target consumption level.

Because you are paying a lower price (compared to the previous flat rate) on the first portion of energy used, and a higher price for remaining consumption, you can consume some electricity above the Step 1 threshold before your total bill rises.

On average, a customer can see the Step 2 price in a billing period (or several billing periods for that matter) and still be better off annually, if they consume less than 2,260 kWh per bi-monthly billing period. For example, a customer who sees the Step 2 price in the winter months but uses below the Step 1 threshold in the summer may still be better off under the Conservation Rate structure annually.

The rate and consumption patterns

Many people make assumptions about their power consumption based on the type of home they have, the type of heat they use, or the part of B.C. they live in.

While all of those factors can have an impact, consumption is driven by a wide variety of factors-such as the energy efficiency of household appliances and lifestyle choices such as the number of electronic devices in one's home. The best way to determine how you will be affected by the Conservation Rate is to look at your actual recent consumption.

When it comes to consumption, approximately 9% of customers use more than 22,000 kWh a year-which is twice the average consumption of residential customers in B.C. Even with this above-average consumption, most of these customers can reduce annual bill impacts by taking steps to conserve.

The examples below provide average data about residential consumption:

What is the average annual residential consumption by region?
Lower Mainland: ~8,900 kWh
Vancouver Island: ~13,400 kWh
Southern Interior: ~10,700 kWh
North: ~10,600 kWh
All BC: ~11,000 kWh

I have a large family – how does the Conservation Rate affect me?
Having a large family doesn't necessarily mean you are negatively impacted by the Conservation Rate. In fact, of the customers that have higher bills under this rate structure, only about a third have four or more residents.

That's why it's so important that large families and households look at their actual consumption to see how they are impacted . They will only see their annual costs rise if their consumption is more than 2,260 kWh every billing period.

Large households also can have large opportunities to save energy and money. For example, simply doing more laundry in cold water could save up to 480 kWh of electricity per year, or up to $40. Dropping the thermostat a single degree can reduce consumption by up to 800 kWh and save $65 a year.

I live in a colder part of the province – how will the Conservation Rate affect me?
Living in a colder part of the province doesn't necessarily mean you are negatively impacted by the Conservation Rate. Only by looking at your actual consumption history can you see how you will be impacted.

For example, the average consumption for a residential customer in B.C. is approximately 11,000 kWh per year. However, the average consumption for a residential customer living in the North is less – approximately 10,600 kWh per year. Customers consuming at those averages will see their bills drop under the Conservation Rate.

I have more than one property on my bill – is consumption measured separately for each property?
For each property that is individually metered the Conservation Rate will apply separately from other metered properties.

How does the rate affect low income customers?
The rate structure benefits most low income customers. About 80% of low income customers pay less than they would have paid on the previous flat rate structure.

BC Hydro is also taking a number of steps to reach low income customers and increase awareness of conservation steps to help save money.

Low income customers have access to free energy savings kits which include compact fluorescent light bulbs, showerheads, outlet gaskets and tips. The savings can amount to over 700 kWh (or about $58) a year for a household.

I have electric heat – how does the Conservation Rate affect me?
It's important you look at your actual consumption to determine the impact. About 60% of electric heat customers will pay less on the Conservation Rate compared to the previous flat rate structure. You would be in this category if your consumption is 2,260 kWh or less per bi-monthly billing period.

Heating is just one part of overall energy use. Electricity consumption is also driven by other factors such as size of the home, energy efficiency of appliances, number of electronic devices, as well as lifestyle choices such as owning a hot tub or heated swimming pool.

The average annual consumption for electric heat customers is about 12,400 kWh-or 2,060 kWh per billing period.

What can customers with electric heat do to mitigate potential impacts to their bill?
Because they use electricity for their heat, conservation efforts targeting home heating can have a large impact for these customers. Basic conservation steps such as sealing exterior walls, doors and windows against cold drafts, or installing a programmable thermostat to automatically turn down the heat by four to five degrees Celsius at night and when not at home, can reduce or completely offset the rate increase.

Dropping the thermostat a single degree can reduce consumption by up to 800 kWh and save $65 a year. There are many other conservation actions, not related to electric heat, that can also help lower consumption.

I am already conserving and I do not believe I can save any more – what else can I do to save electricity?
BC Hydro appreciates the efforts you have already made to conserve electricity. It's important to look at your actual recent consumption to determine how the Conservation Rate affects you. If your consumption is 2,260 kWh or less per bi-monthly billing period, you will pay less.

There are many ways to conserve electricity and lower your bill-and there may be some that you weren't aware of. BC Hydro's Power Smart initiative is always developing new programs and incentives to help customers conserve.

For more information on more ways you can conserve, please contact a BC Hydro energy conservation advisor at 1 800 224 9376.