Why the electricity rates are so high

Why the Rate Was Put in Place

In 2007, the Government of British Columbia issued its Energy Plan, which set out the Province’s commitment to reduce greenhouse gas emissions and maximize conservation efforts. One Policy Action of the Energy Plan is to {(explore with B.C. utilities new rate structures that encourage energy efficiency and conservation.”

In 2012, following a public hearing, the Commission approved FortisBC’s application for the Residential Conservation Rate. The Rate is intended to help achieve the Policy Action of the Energy Plan and to create conservation awareness among all users. A copy of the Commission’s decision approving the Rate can be accessed at http://www.bcuc.com/Orderlndex.aspx (Order G-3-12).

FortisBC moved to its new two-step rate structure on July 1, 2012. On the Residential Conservation Rate, customers pay the lower step 1 rate for electricity consumption up to 1,600 kWh (800 kWh for customers billed monthly) and the higher step 2 rate for any additional consumption.

It is important to note that the step 1 threshold is not a target consumption level -it is the point where the cost of electricity changes to the step 2 price. Because you pay a lower price (compared to the previous flat rate) on the first portion of energy used, and a higher price for the energy you use above the step 1 threshold amount, you can consume some electricity above the threshold before your total bill increases.

In regards to customer bill impact, the Commission took this into consideration in its decision. Setting the step 1 threshold at 1,600 kWh results in 95% of customers seeing a bill increase of 10% or less. This is in part because the 1,600 kWh step 1 threshold represents the median residential consumption for FortisBC customers. In other words, 50% of FortisBC residential customers use less than 1,600 kWh bimonthly and 50% use more.

FortisBC’s Rate Increases

FortisBC customers may also be experiencing bill increases because FortisBC was approved for two rate increases which took effect on January 1, 2013. These rate increases were approved following public processes. The first of these two rate increases was a general rate increase of 4.2%. FortisBC was approved for a 4.2% general increase to cover a number of costs that were reviewed and approved in the 2012 -2013 Revenue Requirements application. These costs include increased costs to purchase power and to upgrade infrastructure. The Decision can be accessed at http://www.bcuc.com/Orderlndex.aspx (Order G-IlO-12). For your information FortisBC originally asked for a 6.5% general rate increase which was reduced to 4.2% by the Commission.

The second of these two rate increases was a 2.3% rate rebalancing increase for residential customers. The rebalancing increase was approved to ensure that customer classes pay for the costs they are causing on FortisBC’s system.

It is important to note that each time FortisBC requests a rate increase the costs are reviewed by the Commission through a public process before a decision is made as to whether or not a rate increase is approved.

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5 Responses to Why the electricity rates are so high

  1. Dave whalley says:

    After a huge increase on our winter power bill, our recent bill was back on track. I really cannot understand why the winter bill was so off the charts as we actually use very little extra power in winter. Our log burning fire heats our entire home and we do not use our furnace at all, in fact visitors find it amusing that we live all winter in shorts and tee shirts. The only extra power we use is longer hours of using lighting, due to darker weather.

    The huge hikes that many people experienced created a lot of hardship, especially for seniors, and next year we are probably going to hear of more house fires caused by people using wood stoves, kerosene heaters or other methods to keep warm.

    If one of the reasons for this price hike is to reduce pollution, it is going to have the opposite effect as people use more and more fossil fuels to heat their homes.
    Pat Whalley

  2. Buryl Slack says:

    Last two paragraphs of explanation…..I told you so.
    No one pays any attention to the public process when available until something pinches them personally.
    They say,” well I do not know enough about it,to take part,….and their time is too valuable to waste…..that should be left up to elected officials….” until they become experts at what they do not like. Jim and I, then Eric and I spent many hours intervening and contributing to change where we could, and I still do….how many of you paid any attention?
    May I be so bold as to say, BE Very Careful who you elect and entrust with any and all important decisions……so far the record does not speak well for those elected AND for we who elect them…..a good many born with no common sense whatsoever!
    It is all on your head, like computers, ‘garbage in, garbage out’.

  3. Carolyn Tipler says:

    I certainly feel for anyone who has had these huge increases but personally my bill only increased by $37 over the same period from the previous year. Over the past five years I have sought information from Fortis regarding usage and found them very helpful in suggestions on how to use power more efficiently. Has anyone done comparision with power rates elsewhere in Canada?

  4. Kelly Wheeler says:

    Our Fortis bills make no sense whatsoever. We’ve talked to hundreds of people over the past couple of months and there is absolutely no logic to billings that have literally doubled or more in two months. I don’t care how you slice it – it’s wrong! People are forgoing food for heat and electricity. They are borrowing from their children to pay for their electric bills.

    It doesn’t seem to matter what type of home you have – geothermal with all the latest high efficiency appliances and windows or a tiny apartment – the billings have skyrocketed out of control! Explain how bills can go from $600 to $1600 in the course of 2 months when the owners were actually away for a period of that time.

    As many ODN readers are aware there are petitions circulating in the south Okanagan about this issue – availability is at SuperValu Customer service desk, Almerio’s Pizza, Pharmasave, Copy Cat printers. We have petitions in OK Falls at Falls Garage and store in front. Telephone calls have come in fast and furious from Kelowna, Osoyoos, Pentiction, Ollalla and Cawston requesting copies of the petition. They are being signed and sent back to me. We can not pay anymore. The time has come that we make our voices heard and have these hikes eradicated and reviewed. Please sign the petitions. Fortis and the BCUC can ignore a few of us – but not the majority of us! If you want a copy of this petition to circulate in your area or with your club or organization please contact me at tinkerchance@skysurfer.ca

  5. Donna Morgan says:

    Thanks for this explanation, Jack…much appreciated…

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