B.C. Hydro tiered rate plan a jolt for Islanders

Watchdogs say Vancouver Island faces steep leap in electricity costs by 2010

Scott Simpson
Canwest News Service
Victoria Times Colonist
August 09, 2008

B.C. Hydro's proposal for two-tier electricity rates is so uneven that
it fails to meet a basic test of fairness for the utility's
residential customers, according to several watchdog groups.

Final arguments on the proposed rates, on file at the B.C. Utilities
Commission, indicate that the electricity pricing scheme is drawing
everything from praise to skepticism to outright condemnation.

A Vancouver Island group calculates by 2015, electricity will be
priced 36 per cent higher for an average Island resident, compared
with a resident of the Lower Mainland.

Meanwhile, the group representing Hydro's large industrial customers
says the pricing scheme "targets a few people with extreme bill
impacts for no good reason."

"Under B.C. Hydro's proposal some customers could experience
three-year bill impacts of up to 60 per cent or more," says the Joint
Industry Electricity Steering Committee.

"Hydro is wilfully blind to the extent of the harm it may inflict on
some of its customers," the steering committee says in its final
submission to the BCUC.

Other documents on file for the two-tier or Residential Inclining
Block (RIB) hearing confirm that, on average, people living in single
family homes and duplexes on Vancouver Island will be taking on a
disproportionately large share of the cost increases associated with
the scheme.

Island residents in single family homes and duplexes face an average
$190 increase in electricity rates by 2010, compared to a provincial
average of $111, and $89 in the Lower Mainland -- even though the
Island has the most moderate climate in the province.

That's because the Island has a preponderance of residents who rely on
electricity for home heating and hot water, and are more dependent on
power than Lower Mainland residents who have better access to natural
gas for heat energy.

Based on data gleaned from two separate hearings now underway, an
average Island resident in a single family home or duplex will pay
more each year for tier-two electricity than he or she does for a
larger amount at the base price, by 2010.

Moreover, intervenors in Hydro hearings have noted that the rates are
being kept artificially low due to a Hydro decision to defer about
one-third of its actual cash requirements for payback at some
unspecified future date.

The two-tier system establishes a baseline amount of electricity for
residential customers at a lower "tier-one" rate -- with all power
consumption above that amount priced significantly higher.

Hydro's proposal calls for the tier-one rate to remain relatively
stable, whereas the tier-two price jumps 33 per cent by 2010.

Hydro has about 1.5 million residential customers across B.C. and
900,000 of them -- or 60 per cent -- live in single family homes or
duplexes.

"People using electricity for heat are trusting B.C. Hydro and the
government to protect them from higher rates, and they don't really
know what's going on -- and some of them are going to get whacked,"
JIESC executive director Dan Potts said.

"If it's totally impossible to be fair and non-discriminatory in the
rate, why do we have to go ahead with it?"

Ludo Bertsch, a spokesman for the Energy Solutions for Vancouver
Island watchdog group, said Island residents on average use 45 per
cent more electricity than their mainland counterparts. "We expect to
pay more. We are consuming more," he said in a interview. "Hydro is
trying to encourage conservation. We understand that. The big skill
behind a proper rate design is that you do it in a fair manner."

According to Hydro, 75 per cent of its customers will be better off
under a two-tier system than if Hydro had opted for an
across-the-board increase in its existing, single-rate system.

Dag Sharman, B.C. Hydro senior media relations adviser, said Hydro has
been instructed by the province to make B.C. self-sufficient in
electricity production by 2016, and to meet half of all new demand
growth through conservation by 2020.

"That's our goal here and we think this is the best way to do it,"
Sharman said.

He said Hydro's Power Smart program and LiveSmart B.C. offer lots of
energy saving tips, inspection programs and rebates for customers who
want to cut their power consumption. "We are asking a lot of people to
conserve, and we are trying to help them out.''