City sights set on rate rise as BCUC ponders process for Nelson Hydro
A power play to move the onus for rising power rates down the line is being generated by the city’s utility.
Nelson Hydro is proposing to move forward with a 2.5 per cent general rate increase to its residential urban rates, and is applying to the B.C. Utilities Commission (BCUC) for a similar increase to rural rates, with an effective date of implementation of Jan. 1.
The rate increase will help the city-owned utility to recover its operating costs and “earn a fair return on its assets” from urban ratepayers, said Scott Spencer, Nelson Hydro’s general manager.
“This increase is in reaction to a 3.46 per cent rate increase from FortisBC which is our primary wholesale power supplier,” he told council at its regular business meeting earlier this month.
The FortisBC forfeiture represent 50 per cent of Nelson Hydro’s operations budget, Spencer added.
The rate hike will also cover inflationary increases in general operational expenses, he noted, as well as increases in the vegetation management budget — as directed by the BCUC — and the storm response budget to improve service reliability.
The city maintains the rate-setting authority for Nelson Hydro’s urban service area and can adjust rates using a standard bylaw adoption process.
However, for the rural service area, the BCUC must first approve the requested rate change before it can be implemented and formalized by adopting the bylaw amendment. Earlier this month (Nov. 1) Nelson Hydro filed an application with BCUC and the provincial authority has confirmed receipt of the application.
But a decision will not likely be handed down by Jan. 1, meaning Nelson Hydro has asked for an interim rate approval to allow the requested rates to be implemented on Jan. 1.
Despite the bylaw amendment to raise the rates passing third reading in council, the entire bylaw adoption process will be on hold until interim approval is received from the BCUC, said Spencer.
The Jan. 1 implementation date should increase ratepayer understanding “as it does not require the compounding” of the annual rate increase into a nine-month period as did the April 1 implementation.
It comes at a cost
Several pieces are still in play that will determine the course of future cost increases, Spencer explained to council.
The cost of service analysis (COSA) and rate design (RD) application that was filed with the BCUC on Nov. 27, 2020 is still awaiting a decision from the provincial body.
Spencer anticipated a decision would be issued by March 2022.
“Until the COSA and RD application is resolved, the BCUC has directed the utility to continue submitting rate applications for the utility costs as a whole (rather than only for the rural portion of the utility),” he said.
As a result, the 2022 general rate increase application follows the requested format.
It is anticipated that beginning with the 2023 rate application, Nelson Hydro could begin submission of a rate application to the BCUC based on the costs of only the rural portion of the utility, Spencer said.
“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.
He said urban commercial ratepayers are over contributing to capital reserves and urban residential ratepayers are under contributing, with the matter (rate rebalancing) expected to come to council soon.
Source: Nelson Hydro
Open for the third time
On Nov. 25 (7 p.m.) Nelson Hydro will hold its annual open house through a virtual platform, said Coun. Janice Morrison.
“So if you miss any of the iterations beforehand here is your third time, the trifecta, of getting to hear everything you ever wanted to know about hydro but were afraid to ask,” she said.
Nelson Hydro staff will present with regard to a number of topics including the annual general rate increase and the reasons for the increase that is being proposed.
Those in attendance will have the opportunity to ask questions of staff.