A rates update from BC Hydro CEO Dave Cobb
BC Hydro President and Chief Executive Officer David Cobb.
Posted by Dave Cobb
As we get ready to close out an exciting year for our province, I wanted to take this opportunity to update you about what you can expect in the coming year as we celebrate BC Hydro's 50th anniversary and embark on an important period for our company and the future of electricity in B.C.
As you may know, in British Columbia we have some of the lowest electricity rates in North America. In order to continue to provide reliable and clean electricity, BC Hydro is heading into a significant building phase. Our province's population is growing, technologies are advancing everyday.
We need to build new systems to meet increasing demands and renew or replace aging generating, transmission and distribution facilities that were primarily built between 1950 and 1980. This work is essential to keeping the BC Hydro system safe, reliable, and able to meet your needs and those of generations to come.
Take the Vancouver City Central Transmission Project as an example. It's a $200 million project right in the heart of downtown Vancouver – a project that is critical to meeting the electricity needs of the growing population in that part of the city and improving overall reliability in Vancouver. And there are similar projects that both generate and transmit electricity throughout the province. You can learn more about these major capital projects that we are undertaking in the projects section of bchydro.com.
To pay for these much needed projects, we need to increase rates, while still looking at every way to keep them among the lowest in North America.
Earlier today (December 2), we announced, together with the Province of British Columbia, two changes to ease future rate increases. The first change is that B.C.'s water rental rates will be indexed to inflation, instead of to BC Hydro rates. The second change is that when calculating BC Hydro's return on equity, the Province will only include in-service assets, rather than including capital projects that are not yet completed. Together, these two changes reduce your rate increases both now and in the future.
We will file our next rate application by March 2011 for the three fiscal years of 2012 through 2014. That three-year application will show we are continuing to balance investment in our vitally important capital investment projects costs with the need to keep our rates affordable. Given the measures taken by the Province, we estimate that the projected rate adjustments will result in an average monthly bill increase of about $7 each year for each of the next three years.
Also today, the British Columbia Utilities Commission (BCUC) confirmed our negotiated settlement on our rates for the fiscal year of 2010 through 2011.
Our rate increase will be 7.29 per cent – down from the original 9.3 per cent interim rate that has been in place since April 2010. As a result, you will see a small credit on your BC Hydro bills from January to March 2011.
BC Hydro has also taken some steps to control our own costs as we modernize the province's electricity system. So far, we have made $78 million in cost reductions over the past three years, including $25 million in savings beginning in 2011/12 from the integration of the BC Transmission Corporation.
We want to ensure you understand the necessity of rate increases to pay for the significant investments we are making to provide a safe, clean and reliable electricity system today and for generations to come.
And we will continue to work with you to provide information, conservation education and incentives through Power Smart and tools to help you manage your own energy use.
Thank you for your continued support and understanding as we embark on this exciting and necessary investment for the future of British Columbia.
President and CEO