Electricity Rates
The BC Utilities Commission has approved BC Hydro's Revenue Requirements Application, resulting in a 1% decrease in BC Hydro rates on February 1, 2007. See the full explanation of the new rates.
Included in the new rates will be a 2% rate rider that will be in effect for the period February 1, 2007 to March 31, 2008, and will appear as a separate line item on customer bills. Revenue generated by the rider will be allocated to reduce the balances in BC Hydro’s deferral accounts, which are due to the additional energy costs that resulted from low water inflows and higher-than-forecast market prices in the last two fiscal years. Deferral accounts are used by BC Hydro to offset unexpected costs so that customers do not face sudden rate fluctuations.
BC Hydro filed its Fiscal 2007 and 2008 Revenue Requirements Application with the BCUC on May 25, 2006, and an interim rate increase of 4.65% has been in place since July 1, 2006, pending the BCUC's final ruling. BC Hydro entered into a Negotiated Settlement Process with stakeholder representatives, which concluded with an agreement in November 2006.
As the final approved rate increase for Fiscal 2007 (covering April 2006 to March 2007) is lower than the interim rate increase, BC Hydro customers will receive a one-time refund as a credit, with interest, on their bills during the April/May 2007 billing cycle. The Revenue Requirements Application was only the second made by BC Hydro since 1993. The first application filed in 2004 resulted in a 4.85% rate increase that year.
Since 1993, rates have decreased against inflation, compared with other household items. As demand for electricity grows, BC Hydro will need to upgrade infrastructure and bring on new, additional power supplies to meet that demand. Revenue Requirements Applications will be filed every two years.
Even with the increase, our rates are among the lowest in North America.
How BC Hydro's Rates Are Set
The BCUC sets BC Hydro's residential and business electricity rates. BC Hydro serves all of its customers in accordance with the Electric Tariff, which includes terms, conditions, and rate schedules.
BC Hydro's rates are set assuming "normal" or average water years. As a result, BC Hydro sometimes earns less than the "allowed rate of return" and other times earns considerably more. The BCUC then adjusts rates so that the utility will be able to achieve the targeted rate of return. This rate of return, however, is not guaranteed. In fact, it is unlikely that any utility in any year will achieve its revenue targets precisely.
Cost of Energy
BC Hydro's rates reflect the generation, transmission, distribution and customer service costs of providing electricity to our various customers.
Generation Costs
Generation costs are the direct and allocated costs incurred to generate or procure electricity for use in B.C. These include water rental fees, energy purchases, natural gas fuel (for thermal plants) and other costs required to operate BC Hydro's generation system.
Transmission Costs
Transmission costs are the direct and allocated costs incurred to transmit electricity on the high-voltage transmission system, from the point of generation or purchase, to the electricity delivery point or the low-voltage distribution system. These include metering, transformation costs and other costs related to BC Hydro's transmission system.
Distribution Costs
Distribution costs are the direct and allocated costs incurred to transmit electricity on the low-voltage distribution system to the end user or customer. These include metering, transformation costs and other costs related to BC Hydro's distribution system.
