BCUC Denies BC Hydro’s Proposed Residential Service Pricing Principles for Fiscal 2024
VANCOUVER, British Columbia, June 13, 2023 (GLOBE NEWSWIRE) — Today, the British Columbia Utilities Commission (BCUC) issued its decision on BC Hydro’s pricing principles application for residential service customers, which proposed applying fiscal 2024 rate changes equally to the daily basic charge, step 1 energy charge, and step 2 energy charge in Rate Schedules 1101 and 1121.
Following an open and transparent public review process, the BCUC denied BC Hydro’s proposal, per Order G-140-23, because it did not send the appropriate price signals to encourage residential customers to use electricity efficiently nor did it reflect the most appropriate distribution of costs to serve residential customers.
This decision takes into consideration that low-income customers have varying energy usage and are distributed in almost all of BC Hydro usage segments. After reviewing the evidence in the proceeding, the BCUC found that the modest affordability benefits for those residential customers in the lowest usage segments under BC Hydro’s proposed pricing principles would not outweigh the potentially significantly higher bill impact for the remaining residential customers not in those usage segments.
Under BC Hydro’s proposed pricing principals, customers, including low-income customers, in the three highest energy usage segments are impacted by annual bill increases ranging from $60 to $244, while customers in the three lowest segments face annual increases of a much more modest $6 to $22.
However, under the approved pricing principles, customers in the three highest usage segments face annual bill increases of $46 to $140, while customers in the three lowest energy usage segments would face annual bill increases ranging from $8 to $26.
Therefore, for high usage customers, the bill increase under the approved pricing principles is $14 to $104 less than the annual increase under BC Hydro’s proposal. While customers in the three lowest usage segments do pay more, it is approximately only $2 to $5 more per year.
The BCUC directed BC Hydro to apply any fiscal 2024 rate changes to the daily basic charge and step 1 energy charge and make no change to the step 2 energy charge, effective April 1, 2023. This will reduce the difference between step 1 and step 2 energy charges, consistent with BC Hydro’s proposal and the BCUC’s decision on pricing principles for fiscal 2023.
BC Hydro was also directed to file a rate design application for Rate Schedule 1101 with the BCUC, which would evaluate changing or eliminating the tiered rates for residential customers. This application must consider how a revised rate design supports the BC government’s electrification and decarbonization policy, and whether it provides greater flexibility to modify rates over time or add optional rates to reflect changes to the policy and economic environment within which BC Hydro operates, among other items.
For more information about the BCUC decision or BC Hydro’s application, please visit the proceeding page.
On March 21, 2023, the BCUC approved BC Hydro’s residential service pricing principles for fiscal 2024 on an interim basis, effective April 1, 2023. Now that the BCUC has issued its final decision, the difference between the interim and permanent pricing principles will be refundable to/recoverable from customers.
BC Hydro’s Rate Schedules 1101 and 1121 are commonly referred to as the residential inclining block (RIB) since it applies to most of BC Hydro’s residential customers in Rate Zone I. It consists of three components: a daily basic charge, a step 1 energy charge, and a higher step 2 energy charge. BC Hydro applies to the BCUC each fiscal year to determine how to apply general rate changes from its revenue requirements application to the three components of the RIB rate.
On April 21, 2023, the BCUC approved a general rate increase of 0.97% and a Deferral Account Rate Rider of -1.0% for fiscal 2024, on an interim basis, per Order G-91-23. The final rate changes for fiscal 2024 will be determined by the BCUC once it issues its final decision on BC Hydro’s Fiscal 2023 to Fiscal 2025 Revenue Requirements (Rates) Application currently under review.
About the BCUC
The BCUC is a regulatory agency responsible for the oversight of energy utilities and compulsory auto insurance in British Columbia. It is the BCUC’s role to balance the interests of customers with the interests of the businesses it regulates. The BCUC carries out fair and transparent reviews of matters within its jurisdiction and considers public input where public interest is impacted.
Krissy Van Loon
Email: [email protected]
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