An internal BC Hydro Rates Working Group document
leaked to the press suggests that residential, small business and
industrial electricity users may face a 26.4% increase in their
rates from 2014-2016. The document, dated August 23, 2013,
attributes the required rate increase to a rise in BC Hydro's
revenue requirement from an estimated $3.8 billion in 2014 to $4.8
billion in 2016. According to the
document, this increased revenue requirement is driven by the
capital additions – $515 million, accounting for 13.4% or
roughly half of the 26.4% rate increase
rate smoothing – $160 million (4.2%)
contracts with independent power producers – $135 million
cost of amortizing accumulated deferrals – $130 million
interest rates – $40 million (1.1%)
costs – $15 million (0.5%)
other items – $10 million (0.3%)
After the initial 26.4% increase from 2014-2016, the Rates
Working Group forecasts an additional 8.4 percent increase in 2017.
According to the document, rate increases stabilize from 2018
until 2022 but then increase by 7.7 percent in 2023. In
total, the Rates Working Group forecasts rates to increase
41.5 percent from 2014 levels by 2020 and 57.3 percent by
The Rates Working Group document suggests that the options to
mitigate against the forecasted rate increases in 2014-2016 are
limited by the large amounts of capital required for the projects
already underway, IPP contracts BC Hydro has already committed to,
recovery of 2012-2014 rate smoothing and government commitments in
its fiscal plan.
The document does not outline how rate increases should be
allocated amongst customer classes (residential, small commercial,
and industrial) but does estimate the impact of a 10% rate increase
on each class of customer's average annual bill as follows:
residential by $105/year, small commercial by $240/year, and top 5
industrial users by $30 million/year.
Facing questions from media regarding the
leaked document, B.C. Premier Christy Clark stated that rate
increases of 26% over the next two years would not be approved but
warned that some rate increase would be required in view of the
need to renew the province's power infrastructure.
Formed in 2007, the Rates Working Group is composed of
representatives of First Nations, non-governmental organizations,
utilities, businesses and academics, as well BC Hydro staff
members, and provides recommendations regarding electricity rates
and rate structures to BC Hydro through its Electricity
Conservation & Efficiency Advisory Committee.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).