Prudent actions mean 10 Year Rates Plan on track
B.C. has among the lowest rates in North America
VANCOUVER – BC Hydro today confirmed its revenue requirements with the BC Utilities Commission, applying for electricity rates for the 2017, 2018 and 2019 fiscal years, consistent with the 10 Year Rates Plan announced in November 2013.
"A lot has changed since the 2013 10 Year Rates Plan was introduced. Many of our industrial customers are facing declining prices for the commodities they produce, which means $3.5 billion less revenue for BC Hydro over that period," said Jessica McDonald, President and CEO, BC Hydro. "In preparing this application, we had a choice: instead of passing those issues onto our customers, we gave careful thought to new measures to reduce our costs even further so we could stick to our plan to ensure low and predictable rates."
BC Hydro has taken several actions to reduce costs, including:
- developing a debt management strategy to lock-in low interest rates;
- limiting base operating cost increases to an average of 1.2 per cent per year;
- implementing a workforce optimization program to replace contractors with internal staff to save $20 million in overall costs over the next three years;
- re-prioritizing capital projects to reduce expenditures by about $380 million over the next three years;
- reducing the cost of conservation programs to an average of $22 per megawatt hour;
- reviewing the Standing Offer Program to reflect the declining costs of new power technology; and
- renewing contracts with independent power producers at prices less than what they are currently paid, recognizing that those producers have typically recovered most of their capital costs over their original contract terms.
In February, BC Hydro delayed filing a three-year revenue requirements application and instead asked the Commission for an interim rate increase for fiscal 2017 of four per cent, which came into effect April 1. The extra time allowed BC Hydro to update its load forecast to reflect developments in the mining and liquefied natural gas sectors. The application contains a fully updated load forecast which shows that while growth has slowed in the near-term, BC Hydro is expecting significant long-term load growth across all customer classes.
"We have a growing population and a growing economy. Our updated long-term projections indicate that demand for power will increase by 39 per cent over the next 20 years," added McDonald.
Under the 2013 10 Year Rates Plan, rate increases are capped at four per cent, 3.5 per cent and three per cent for the current application. In the final five years of the plan, the Commission will set rate increases. BC Hydro confirmed today that it is targeting rate increases of 2.6 per cent per year for those years, consistent with the projections in the 2013 10 Year Rates Plan.
BC Hydro is investing, on average, $2 billion a year, to upgrade aging assets and build new infrastructure so that British Columbia's electricity system remains affordable, reliable and clean for the long-term. This includes building the Site C Clean Energy Project and installing a new unit at the Revelstoke generating station – two projects that are critical to providing the firm capacity required to meet growing demand for power. Without these two projects, British Columbia would face a capacity deficit of almost 10 per cent within the next 10 years.
Even with the current rate increases, BC Hydro's rates remain among the lowest in North America. In fact, the average family pays about twice as much for their TV, internet and phone services than they do for electricity. The four per cent rate increase for fiscal 2017 means an additional:
- $4.65 per month for a family of four living in a single-family detached home,
- $1.37 per month for a single person living in an apartment, or
- $2.88 per month for a couple living in a townhouse.
BC Hydro Media Relations
p. 604 928 6468