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With rural rate hike pending council approves urban rate rise for Nelson Hydro customers

Timothy Schafer
By Timothy Schafer
March 15th, 2021

Although a provincial decision on a sizable general rate increase for rural Nelson Hydro customers is still pending a rate hike for urban Nelsonites has been approved.

A bump of 2.3 per cent in the annual general rate increase for the urban service area of Nelson Hydro was approved by city council recently since council holds rate-setting authority for Nelson Hydro’s urban service area and can use the standard bylaw adoption process.

However, the bigger increase — up to 18 per cent over the next three years — for rural customers in Taghum, Blewett and the North Shore has not been ruled upon by the B.C. Utilities Commission (BCUC).

The BCUC must first approve a requested rate change before it can be implemented and formalized by adopting a bylaw amendment. Nelson Hydro had requested approval of a 2.3 per cent increase for rural customers in the interim until the BCUC decision is delivered.

As expected, a sizable contingent of people speaking and writing letters in against the increase has occurred, with nearly 70 letters of comment having been filed in the proceeding, largely in opposition of the rate increase.

Such a response from the rural ratepayers was not surprising, noted Nelson Hydro general manager Scott Spencer.

“Rural rates at this time are not adequate to fund their share of the revenue requirement for the utility and this matter is being addressed through the COSA and RD application,” he said in his update report to council on the rate increases.

Spencer said many of the letters received concerned the proposals from the cost of service analysis (COSA) and rate design application (RD) “which is the subject of a separate proceeding” currently underway with the BCUC.

“This indicates that there is some confusion amongst the public with regard to which application they are commenting on,” he said in his report. “Such confusion is, despite Nelson Hydro’s best efforts to clearly communicate the subject of both applications to the public.”

The timing of the two applications was unavoidable, Spencer explained, given the two applications needed to be filed. As a result, the BCUC directed Nelson Hydro to address the issues raised by ratepayers in their letters of comment and staff have prepared a submission.

In early February BCUC issued a set of information requests (IRs) to Nelson Hydro which contained approximately 75 questions. The deadline to respond to the IRs was Feb. 23.

That deadline was met, but the proceeding has also been open for members of the public to submit letters of comment.

Behind the numbers

The urban rate increase is proposed to become effective on April 1, possibly allowing the BCUC to consider the rate increase for the rural service area.

“It also benefits ratepayers as the rate increase begins following the colder months of the year where many customers are utilizing more electricity,” noted Nelson Hydro general manager Scott Spencer in his report to council.

However, a later implementation date means the 2.3 per cent increase is actually a 3.32 per cent rate increase — compressed into nine months — from April through the year end.

Spender explained that the rate increase is “largely attributable to the 4.36 per cent general rate increase sought by Nelson Hydro’s power supplier, FortisBC, which seeks an effective date of January 1, 2021.”

Inflationary increases in Nelson Hydro’s operating budget account for part of the rate increase as well.

“The rate increase will allow Nelson Hydro to recover its operating costs and earn a fair return on its assets (from the urban ratepayers),” Spencer said.

It should also be noted that urban commercial ratepayers are over contributing to capital reserves and urban residential ratepayers are under contributing. Staff anticipates bring this matter (urban rate rebalancing) to the city council table in the near term, Spencer said.

Source: City of Nelson agenda

The no-lookie lookie

There was little in the way of stakeholder engagement prior to setting the rate hikes this year as the COVID-19 pandemic limited in-person gatherings.

The recommended rate increase and the 2021 budget were presented to council on Nov. 12, and on Nov. 27 Nelson Hydro staff again presented with a broader overview of the utility’s operations over the course of the year.

“Both of these meetings were open to the public and notice was provided through the online posting and publication of the city council agendas,” Spencer said in his report.

On Dec. 10 Nelson Hydro held its annual open house through a virtual platform, presenting items such as the annual general rate increase and the reasons for the increase. Those in attendance were given the opportunity to ask questions of staff on this topic, Spencer said.

The 2020 general rate increase application for the rural service area was advertised Jan. 14, providing notice of the proceeding and instructions on how stakeholders could become involved as intervenors and interested parties.

Source: City of Nelson agenda

Categories: General

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