Peak-power jolt for homeowners urged

Scott Simpson
CanWest News Service
Thursday, November 10, 2005

The provincial government should order B.C. Hydro to increase electricity rates for homeowners during peak hours, and to charge more for above-average electricity consumption, says a report released Wednesday by the B.C. Progress Board.

The advisory board to the B.C. Liberal government says British Columbians have a "false sense of security" because existing electricity rates are among the cheapest in North America -- and warns that additions to B.C.'s electricity supply will be significantly more expensive.

Hydro is already moving in the direction of variable rates with B.C.'s major industries. It will introduce a new pricing structure for industrial customers that involves a near-tripling of electricity rates on the last 10 per cent of electricity consumed in peak winter hours.

That would bump the price from 2.3 cents per kilowatt hour to 6.1 cents per kilowatt hour to reflect the higher costs of bringing new sources of electricity onto the Hydro grid. Off-peak rates will fall in the summer, allowing industry the opportunity to recoup some of its winter electricity costs.

The progress board says adopting a system of variable rates would send a signal that there are additional costs associated with consumption during peak times.

"B.C. has had the luxury of a secure supply of energy, which has resulted in complacency about where it will come from in the future and what it will cost," says the report, titled Strategic Imperatives for British Columbia's Energy Future.

The progress board was established by Premier Gordon Campbell in July 2001 to review the province's economic and social performance and to provide policy advice to government.

The report says B.C. has made only nominal additions to electricity supply in the last 20 years despite a 33 per cent increase in population over that time.

"The provincial government, through the B.C. Utilities Commission, should direct BC Hydro to introduce pricing of electricity that sends the correct signals to all consumers for their energy decisions, mindful of the government's pricing policy with respect to heritage assets," says the report.

Hydro residential and industrial customers have traditionally paid a flat rate for their power, reflecting the low-cost production coming from B.C.'s so-called 'heritage' assets -- its network of dams and electricity generating facilities on the Columbia and Peace rivers in eastern British Columbia.

New sources of electricity supply cost more. They include run-of-river hydro projects developed by the private sector, and Hydro is also mulling private wind farms, natural gas-fired generation, and a major new dam at Site C on the Peace River.

Variable pricing isn't entirely punitive -- consumers who use electricity-gobbling appliances such as dishwashers in the late evening hours could end up paying cheaper-than-standard rates as a reward for conservation.

Meanwhile, Hydro president-CEO Bob Elton warned in a speech Tuesday to the Vancouver Board of Trade that filling B.C.'s needs with imported electricity is an "increasingly risky" strategy.

B.C. currently relies on imports for 12 per cent of its electricity needs and Hydro projects that dependence to grow unless the province adds supply.

Elton said B.C. faces increased risk of supply bottlenecks due to a limited number of transmission lines, unforeseeable price-increase risks, and the risk of "severe" consequences for the economy if the present situation continues.

He said British Columbians need to be interested in the situation because "there is a long-term challenge that needs long-term planning to solve."

Later this month, Hydro will present to the B.C. Utilities Commission a plan for addressing B.C.'s long-term electricity needs. It will consist of a mix of projects, possibly including the Site C dam on the Peace River near Fort St. John.

In an interview, Elton acknowledged that Hydro's recommendations may stir up some controversy but said it is imperative for British Columbians to consider all the options and make choices that reflect the interests of the entire province.

© Times Colonist (Victoria) 2005