Encouraging energy efficiency and renewable energy on Vancouver Island

New power rate for homeowners

August 28, 2008

Goal is energy conservation

NANAIMO, BC. Soon if you use more electricity, you will pay a higher rate.

The new Rate Inclining Block will reward electricity conservation and punish higher power users. Conservation is the idea behind BC Utilities Commission’s decision, announced August 28th, to allow BC Hydro to bill essentially all residential customers with a new rate structure, starting October 1.

The new plan will mean that homes using more than 1350 kWh in a two month period will be billed at a higher rate (“tier”) for that extra power. This threshold is lower than the original threshold proposed by BC Hydro, which means that a wider customer base will be charged at the higher rate. This appears to answer some of the concern about unfairness, as some areas of the province use more power than do others.

That higher tier 2 rate from BCUC is calculated at 7.21 cents/kWh on October 1 and 8.27 cents/kWh on April 1, 2009. The tier 1 rate will be about 6 cents, lower than the present “flat” rate of 6.55 cents/kWh for October 1. This will maintain revenue neutrality for Hydro. The tier 1 rate starting April 1, 2009 will rise to about 6.35 cents kWh.

In future years, the tier 2 rate is “capped” at 8.27 cents/kWh, potentially rising as the cost of new electricity increases. This means the “run-away” problem of increasingly higher bills on Vancouver Island, one that Energy Solutions for Vancouver Island originally brought to the public’s attention, is greatly diminished. Calculations of the original BC Hydro proposal for future years had revealed the likelihood of the tier 2 rate being fully double the tier 1 rate.

Figure 1 – Estimates by ESVI of BCUC approved rate (Aug 28, 2008)

So what does this new rate from BCUC mean?

Many homes heated with electricity will see higher increases in bills, especially in the winter, while many others will see lower bills.

Homes featuring higher-power consuming appliances such as plasma TV’s and hot tubs, or heat hot water with electricity, may end up paying a premium for their power.

The average Vancouver Island bill will be pushed even higher than the average Lower Mainland bill, mainly because more island homes are heated electrically – more than half are.

The new rate structure will encourage electricity conservation and efficiency, rewarding those who cut back on power use. Rates for those who mostly stay below the 1350 KWh threshold will actually see lower bills than would otherwise be the case.

“What this will do is increase the reward for people who invest in energy efficiency updates, solar water heating, and the like, or change their wasteful behaviour” said ESVI’s Intervenor Ludo Bertsch.

“While we agree with the principle of using rates to help drive conservation, we did see issues with the original BC Hydro proposal and so did a lot of people on Vancouver Island,” notes Ian Gartshore, President of ESVI. “BCUC has addressed these potential issues in upcoming years and reduced the bill impact on regions such as Vancouver Island.”

“Now the ball is in the court of consumers, who will be rewarded even more for saving electricity, and penalised even more for wasting power”, added Bertsch.


Ian Gartshore, President
Energy Solutions for Vancouver Island (Society)
353 Seventh St., Nanaimo, B.C. V9R 1E3

Ludo Bertsch, BCUC Intervenor

PDF version of press release

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