Rates would rise one per cent next year, 64 cents a month for average home
Michael Kane
Sun
Homeowners will pay more while most businesses will get a break under BC Hydro proposals to rebalance electricity rates and promote conservation.
Residential electricity rates will rise one per cent next year — about 64 cents per month for the average homeowner — while dropping 5.2 per cent for small business customers.
Up-front rates for large commercial customers will also fall. These clients currently pay less per unit of electricity as they use more, a system deemed to encourage consumption. Their rates will be flattened to be consistent at any volume.
“We’re proposing a rate rebalancing of zero for large commercial customers, but how much each pays will depend on how much they use,” Hydro media relations manager Elisha Moreno said Friday.
“About 60 per cent of large commercial customers will be paying less as the result of a flat rate and we hope it will send the right messages in terms of saving energy.”
However, irrigation rate customers — mostly municipalities, golf courses and agricultural operations — face a 10-per-cent increase with additional increases over the following four years as their rate is moved into alignment with other rate classes.
BC Hydro says the restructuring is the first since 1991 and is designed to more closely match the costs of supplying each rate class and to encourage conservation. It will not result in an overall increase in the Crown corporation’s revenues.
The size of increases will vary from customer to customer, Moreno said.
“We are looking at revenue-to-cost ratios and right now the revenue-to-cost ratio for irrigation customers is about 64 per cent, and that means other rate classes are subsidizing them by paying more,” she said.
“Ideally we want those ratios to fall between 90 and 100 per cent. The residential rate is about 94 per cent and we’d like that to be just a little bit higher while the small [business] rate is higher than we would like it to be at 114 per cent.”
The restructuring will come into effect on April 1, 2008, subject to approval by the BC Utilities Commission after public hearings.
It is separate from any revenue increase Hydro may seek next year.
Recent provincial budget documents project a 5.86 per cent rate increase in 2008-2009, although Hydro cautions that future electricity rates are not yet determined and will be influenced by factors such as water inflows and market prices.
Hydro is also proposing to phase out the E-Plus program –created in 1987 — which gives customers a roughly 50-per-cent discount on heating loads. The program was closed to new customers in 1990 and still has about 13,000 accounts on the lower rates.
Hydro is proposing a 10-year notice period which, if approved, means the rate will come to an end on April 1, 2018.
In the meantime, there will be a gradual reduction in the E-Plus discount from 50 per cent to one-third over the next five years, and when a home with an E-Plus account changes hands, the rate will no longer be transferred.
Lawyers at the B.C. Public Interest Advocacy Centre were studying Hydro’s proposals Friday and unable to offer comment.
© The Vancouver Sun 2007
