The good news: residential customers paying more for electricity to heat their homes due to an energy conservation effort by the BC Utilities Commission are finally going to see some rate relief.
The bad news: the return to a single-tiered system won’t be completed for at least five years.
FortisBC announced late last week that its request to return to a single, flat rate for its residential electricity customers was approved by the Utilities Commission.
The two-tiered rate, also known as the residential conservation rate (RCR), was put in place in 2012 at the direction of the BCUC to encourage energy conservation. Customers pay a higher rate when their use exceeds 1,600 kilowatt hours (kWh) over a two-month period.
“We’re satisfied with this result,” said Diane Roy, vice-president of regulatory affairs, FortisBC. “During the rate design process, we heard from many residential customers with concerns about the two-tiered rate, particularly those with high energy needs and limited conservation options.
“A gradual return to a flat rate balances the interests of our residential customers.”
Not so happy with the delayed return to the single-tier system are members of the Anarchist Mountain Community Society (AMCS), which partnered with the Regional District of Okanagan-Similkameen in a lobbying effort to abolish the two-tiered system.
Evidence submitted by AMCS-RDOS estimates that under FortisBC’s phase-out proposal, electric heat customers will cross-subsidize fossil fuel-heated customers by a further $14 million — with significant financial hardships continuing to be imposed on those low- and fixed-income residents who are dependent on electricity for their heating needs.
As part of the BCUC proceedings, AMCS-RDOS submitted expert evidence showing that FBC’s two-tier rate:
- promotes inefficient, rather than efficient, energy consumption;
- discriminates against residents — the majority of whom are rural — who use electricity for space and water heating;
- causes electricity-heated customers to cross-subsidize fossil fuel-heated customers;
- imposes major financial hardship on low- and fixed-income residents dependent on electricity for heating;
- encourages electric heat customers to switch to fossil fuels; thereby increasing greenhouse gas emissions and local air pollution.
“Given two identical households, an urban customer who uses natural gas for space and water heating and a rural customer who uses electricity for that end use, the rural customer is charged an average electricity rate that is 38% higher than that paid by the urban customer,” noted Nick Marty, an Anarchist Mountain resident who prepared evidence of behalf of AMCS-RDOS.
“Many [rural] residents incur winter bimonthly electricity bills in excess of $1,000.”
AMCS-RDOS argued that the negative impact of FBC’s two-tier rate system on rural customers and on the environment necessitated an immediate termination of this system and a return to a flat rate. But Mr. Marty said the BCUC “essentially ignored all of this evidence; neither agreeing with it nor refuting it.”
FortisBC said returning to a flat rate provides annual savings for about 30 per cent of customers who had higher bills under the two-tiered system. But, it adds, it could also mean moderate bill increases for lower-use customers who saved under the two-tiered system.
The phased approach reduces the bill impacts for these customers, which FortisBC forecasts to be less than 3.5 per cent per year, it concluded.
As a regulated utility, FortisBC is required to seek approval for rate design changes.Through this process, FortisBC solicited input from a variety of stakeholders, hosted eight public consultation sessions and responded to approximately 1,800 information requests from 13 interveners.