BC Hydro is proposing a 10% electricity rate hike in each of the next three years in order to fund what it says is the largest expansion of electrical infrastructure in B.C.’s history.
The first hike, which will add about $7 to the average residential electricity bill, is expected to occur in April, pending further review by BC Hydro and approval by the BC Utilities Commission.
The average residential bill is currently $71.
BC Hydro’s rate hikes will help fund the utility’s new infrastructure projects and upgrades, which will cost $6 billion over the next three years.
The utility said it is taking steps to cut costs and keep rate hikes at reasonable levels. It said it is reducing costs by $78 million between 2010 and 2012.
Beginning January, water rental rates, which are collected from hydroelectric power producers, will be indexed to inflation rather than to BC Hydro rates, which is the current practice.
BC Hydro said the change will alleviate upward pressure on consumer rates.
As of next April, the utility’s return on equity payments to the province will be based solely on BC Hydro’s existing and functioning assets. As a result, consumers’ bills will no longer include costs related to future projects not yet in service.
Among BC Hydro’s largest projects is a new $600 million, 255-kilometre transmission line between the Nicola substation near Merritt and the Meridian substation in Coquitlam.
Vancouver’s electrical system is getting a $200 million upgrade, including a new substation in Mount Pleasant and approximately 8 km of new underground transmission circuits.
The WAC Bennett Dam near Hudson’s Hope is getting a $500 million upgrade.
BC Hydro CEO Dave Cobb said in an open letter to customers that B.C. has some of the lowest electricity rates in North America.
“Our province’s population is growing, technologies are advancing everyday,” said Cobb.
“We need to build new systems to meet increasing demands and renew or replace aging generating, transmission and distribution facilities that were primarily built between 1950 and 1980.”
Richard Stout, executive director of the Joint Industry Electric Steering Committee, a coalition of large industrial electricity users, said B.C.’s low rates have made up for disadvantages the province’s resource sector has compared to other jurisdictions, such as Chile and China.
“We have depended on low rates to keep industries economically viable here,” he said.
He said the adjustments to water rental rates are a step in the right direction, but that BC Hydro should do more to maintain low rates.
“We see this as not just three years – the forecasted increases we’ve seen from BC Hydro are 10% a year for the foreseeable future,” said Stout. “Something more in line with inflation would be easier to digest.”
JIESC is re-branding to become the Association of Major Power Customers of B.C. (AMP BC).