B.C. acts to keep Hydro rates among lowest on continent
December 2nd, 2010
VANCOUVER, B.C. – The Province is taking steps to ensure that B.C. continues to have among the lowest electricity rates in North America as BC Hydro moves forward with significant investments in B.C.'s electricity system.
Two rate reduction strategies were announced Thursday, and the Province and BC Hydro remain committed to finding additional ways to keep rates low in the future.
"BC Hydro customers benefit from some of the lowest electricity rates in North America and we are committed to taking action to ensure they stay low," said energy minister Steve Thomson. "We're currently undertaking the largest expansion of electrical infrastructure in B.C.'s history to meet the growing demand for power in our province.
"That investment will have an effect on electricity rates, but the steps we're taking today will help ensure rates stay affordable for B.C. families."
The need for increased rates has been previously outlined in public rate submissions. An average residential electricity bill is about $71 per month. BC Hydro is currently forecasting an average monthly bill increase of about $7 each year for each of the next three years. However, these rate increases are only estimates and are subject to further BC Hydro review and approval by the BCUC.
"We are committed to meeting B.C.'s growing demand for electricity by modernizing and investing in the province's electricity system to safely keep the lights on for British Columbians, " said BC Hydro President and CEO Dave Cobb. "We are also taking steps to keep rates affordable by making our operations more efficient and introducing new conservation programs that will help offset rate increases."
Actions announced today by the Province and BC Hydro to keep rates low are:
Also, in order to help low-income households save energy and money, BC Hydro has implemented an Energy Conservation Assistance Program which provides eligible low-income BC Hydro customers with free home energy evaluations and retrofits. BC Hydro has also distributed free of charge more than 30,000 energy saving kits which include energy-efficient light bulbs, low-flow showerheads and weatherization products.
BC Hydro is investing $6 billion over the next three years to build new systems to meet growing demand and renew or replace aging facilities. It is also installing smart meters in every household to help customers manage their electricity consumption and save money.
The building phase will also provide a number of economic benefits for the Province. These include job creation, opening new areas of the province to resource development, and attracting new industrial activity. Specifically, communities around the capital projects such as Terrace, Smithers, Nanaimo, Golden, Dawson Creek, Merritt, Saanich, Chilliwack, Burnaby and Vancouver will benefit directly from job creation and increased use of local infrastructure and facilities due to the sustained work in the region.
As a result of the capital investments, the province of British Columbia will be powered with clean, reliable electricity, at affordable rates, for generations.
For more information, contact:
Province of B.C.
1. Rate reduction details
BC Hydro currently accounts for approximately 95 per cent of all water rentals collected for power generation. Currently, water rental rates for hydroelectric producers are indexed to changes in BC Hydro electricity rates, leading to a compound effect for BC Hydro customers.
When rates increase, so do water rental costs, which in turn put upward pressure on rates. Effective January 2011, British Columbia intends to index water rental rates for power generation to inflation (CPI).
Return on Equity:
Previously, BC Hydro had a "deemed" equity structure that resulted in using 30 per cent of all debt and equity to calculate the return on equity (ROE) to the Province. It meant that customers would pay an ROE for capital projects that are not yet in service.
With BC Hydro's significant capital plan over the next several years, this could have a significant impact on costs that must be collected from customers – each $1 billion in debt incurred for projects not yet in service would result in a 1.4 per cent rate increase.
2. Recent rate approval for 2011
A negotiated settlement agreement reached between BC Hydro and its customer groups has been approved and confirmed by the BC Utilities Commission (BCUC). It confirms a 7.29 per cent electricity rate increase for April 2010 through to April 2011, down from 9.3 per cent interim increase that has been in place since April 2010.
As a result, BC Hydro customers will see a small credit on their January to March 2011 bills. BC Hydro plans to file its next rate application to the BCUC for review and approval no later than March 2011.
3. 10 largest BC Hydro capital investment projects
BC Hydro is investing more than $6 billion dollars over the next three years to build, upgrade and expand capital infrastructure across the province. The10 largest projects that are being planned, underway or near completion include:
Please install the Flash Plugin
Minister Rich Coleman, conservation, Dave Cobb, Power Smart, Northwest Transmission Line, Interior to Lower Mainland, economic development, Mica Expansion Project , Greg Reimer, infrastructure, Mica, First Nations, Site C, impact benefit agreement, generation, clean energy, environmental review, BC Hydro, transmission lines, safety