BC Hydro files interim rate application for year three of 10-Year Rates Plan
Rates remain among lowest in North America
VICTORIA – BC Hydro today filed an interim one-year rate application with the BC Utilities Commission requesting a four per cent rate increase for fiscal 2017, effective April 1. The new rate is consistent with the 10-Year Rates Plan announced by the Province in 2013 which capped increases at four per cent (fiscal 2017), 3.5 per cent (fiscal 2018) and three per cent (fiscal 2019). The BC Utilities Commission will in the future determine the rate increases for the final five years of the 10-Year Plan.
BC Hydro would typically file a full Revenue Requirements Application for the entire three-year period from fiscal 2017 to fiscal 2019. Recent events in the mining and LNG sectors have led to BC Hydro opting to file an interim rate application for fiscal 2017 now and the final Revenue Requirements Application this summer. The extra time will allow BC Hydro to update its Load-Resource Balance study which is used by BC Hydro to forecast long-term changes in electricity demand and the supply options required to meet that demand. BC Hydro anticipates continuing to see an overall long-term increase in electricity demand provincewide. The most recent study from October 2015 shows that demand for power in B.C. will grow by almost 40 per cent over the next 20 years.
"We want to ensure the revenue requirement proceedings with the BC Utilities Commission are conducted on the basis of the best information possible and we will be taking the time to update the Load-Resource Balance to consider how recent economic events impact our forecasts," said Jessica McDonald, President and CEO, BC Hydro. "We are on-track to deliver the 10-Year Plan which provides certainty for British Columbians and ensures rates remain as low as possible while BC Hydro invests in the electricity system."
BC Hydro must invest, on average, $2.4 billion a year in the province's aging electricity system to ensure B.C. continues to benefit from safe, reliable, clean power. Most of BC Hydro's major facilities were built in the 1960s, 70s and 80s and we must maintain and refurbish those assets while investing in new infrastructure to meet the growing demand for power.
For the average residential customer, the interim four per cent – or 0.004 cents per kilowatt hour – rate increase filed with the BC Utilities Commission today will add $4 per month in electricity costs. BC Hydro will continue to provide its customers, including public sector organizations like schools and hospitals, with tools and resources to conserve power.
Other highlights of BC Hydro's plan:
- According to an independent study, BC Hydro's rates are the third lowest in North America for residential customers, fourth lowest in North America for commercial customers, and fifth lowest in North America for industrial customers.
- In its upcoming fiscal 2017 to fiscal 2019 Revenue Requirements Application, BC Hydro will file for increases of four percent (fiscal 2017), 3.5 percent (fiscal 2018) and three percent (fiscal 2019) as announced previously in the 10-Year Plan.
- BC Hydro will invest $375 million in conservation programs and $7.6 billion in capital projects over the next three years.
- Construction will ramp up further this year on the Site C Clean Energy project. The project will help meet growing long-term electricity demand by providing British Columbia with an energy and capacity resource.
- The need for new long-term capacity resources after Site C is also being advanced due to major maintenance requirements at Mica. The planned in-service date for Revelstoke 6 has been advanced to fiscal 2026 and could be in-service as early as fiscal 2022 if required.
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Fact sheet: 10-Year Rates Plan
- BC Hydro is on track to deliver the 10 Year Rates Plan. The plan was introduced by the Province of B.C. and BC Hydro in November 2013 to keep rates as low as possible while BC Hydro makes investments in aging infrastructure and new projects to support a growing population and economy.
- On April 1, 2016, electricity rates will increase by four per cent. This is consistent with the 10 Year Rates Plan.
- year 1 (F15): 9%
- year 2 (F16): 6%
- year 3 (F17): 4%
- year 4 (F18): 3.5%
- year 5 (F19): 3%
- years 6 – 10 (F20-24): rates set by BC Utilities Commission
Fact sheet: Historical look at BC Hydro rates
- Rates are being impacted by the investments BC Hydro has to make in the province's electricity system. However, BC Hydro is continuing to take steps to ensure rates are kept low as possible.
- When adjusted for inflation, electricity costs are similar to what they were in 1976.
- Monthly bill in 1976: $104.55 (residential, based on 1,000 kWh/month).
- Monthly bill in 2016: $102.83 (residential, based on 1,000 kWh/month).
- Rates in B.C. are among the lowest in North America. According to a 2015 independent study by Hydro Quebec:
- BC Hydro's residential rates are the 3rd lowest in North America,
- BC Hydro's commercial rates are the 4th lowest in North America, and
- BC Hydro's industrial rates are the 5th lowest in North America.
Fact sheet: Savings and efficiencies
- BC Hydro continues to look for savings and efficiencies to keep rates as low as possible while making critical investments in the system.
- From fiscal 2012 to 2014, BC Hydro reduced operating costs by $391 million, eliminated about 800 positions and re-prioritized capital expenditures. In fiscal 2015 and 2016, BC Hydro eliminated an additional 340 positions.
- BC Hydro continues to find new ways to save money and prioritize spending.
- A recent reorganization of executive and director roles will save $1 million a year.
- A workforce optimization program has been implemented to convert contractors to internal staff in cases where it reduces costs and/or improves outcomes.
- Overall operating cost increases will be limited to an average 1.4 per cent per year over the next three years.
- BC Hydro has identified $28.9 million in annual operating cost savings for fiscal 2017 through:
- operational savings in the transmission, distribution and customer service groups,
- reductions in consultants and sponsorships,
- efficiencies in property leasing,
- the cancellation of BC Hydro's membership in the Canadian Electricity Association,
- the partial decommissioning of the Burrard Thermal Plant, and
- additional budget reviews company-wide.
Fact sheet: Capital projects
- BC Hydro is investing $7.6 billion in capital projects over the next three years.
- Many of BC Hydro's facilities were built in the 1960s, 70s and 80s and BC Hydro must make investments in aging infrastructure and new projects to meet growing demand for power.
- Over the past five years, BC Hydro has delivered more than 550 generation, substation and transmission projects, 1.8 per cent under budget overall.
Examples of completed projects:
- BC Hydro completed the Smart Metering and Infrastructure program on time and under budget. The program modernizes our 1950s-era electricity grid. BC Hydro has already realized $100 million in benefits in the first three years of the program, including reductions in electricity theft ($780 million, more than $150 million under budget).
- BC Hydro has completed the addition of two generating units – units 5 & 6 – at the Mica dam. Mica now accounts for about 22 per cent of BC Hydro's generating capacity and is helping meet increased electricity demand this winter ($714 million).
- The Interior to Lower Mainland transmission line was the first 500 kilovolt transmission line added to the system in decades. It helps bring power from where it is generated – on the Peace and Columbia rivers – to BC Hydro's high load centres on the Lower Mainland and Vancouver Island ($743 million).
- B.C.'s largest power generation facility – GM Shrum generating station – received a major upgrade. BC Hydro refurbished five generating units. The facility can generate enough power for more than a million homes each year ($185 million, about $90 million under budget).
Examples of upcoming projects:
- The Site C project is being built to meet the electricity needs of the province nearly a decade from now. It will produce approximately 5,100 GWh of electricity each year – enough to power 450,000 homes annually. Once completed in 2024, Site C will be a source of clean, reliable and affordable electricity for more than 100 years ($8.335 billion).
- BC Hydro is replacing the John Hart generating station. The generating station has been in operation since 1947 and the new facility and pipelines will meet today's seismic safety expectations. Construction is expected to be completed by 2018 ($1.093 billion).
- The Ruskin Dam and Powerhouse was built in the 1930s and upgrades to the facility will make the facility safer, better to withstand an earthquake and more efficient. Construction is underway and completion is expected in 2017 ($748 million).
- The Big Bend substation will help meet growing electricity demand in Burnaby that is being driven by commercial and light industrial development. Construction is underway and completion is expected in 2017 ($67 million).