BC Hydro confirmed last week that independent power producers (IPP) are playing a role in the Crown corporation's application to the B.C. Utilities Commission for rate increases.
In the fifth paragraph of a Dec. 2 news release, the power authority states that it is forecasting an increase of $7 each year for the next three years, on an average monthly bill of $71 - a total of 27 per cent over three years. The rate increases are subject to approval by the BCUC.
BC Hydro President and CEO Dave Cobb said he's looking to implement the increases so that the Crown corporation can take on a $6 billion effort to renew and expand the province's electricity infrastructure.
"We are committed to meeting B.C.'s growing demand for electricity by modernizing and investing in the province's electricity system to safely keep the lights on for British Columbians," Cobb said in a news release. "We are also taking steps to keep rates affordable by making our operations more efficient and introducing new conservation programs that will help offset rate increase."
BC Hydro has a long list of capital projects it hopes to pay for through the rate increases. The projects include adding a fifth unit to the Revelstoke Generating Station; a seismic upgrade at the Coquitlam Dam; and increases in generating capacity at the Fort Nelson Generating Station.
But also factoring into the rate increases are independent power producers, projects proposed through BC Hydro's Clean Power Call process that include wind power and run-of-river generators, such as we find on Sea to Sky waterways including the Ashlu River, Rutherford Creek and Fitzsimmons Creek, and that are planned for streams such as the Upper Lillooet and the Ryan River near Pemberton.
BC Hydro purchases electricity from the operators of these projects and feeds it into the power grid. It is largely unknown how much that electricity gets sold for. The Clean Power Call commits successful applicants to non-disclosure or confidentiality agreements during the process and for two to three years afterward. Those obligations apply to both the developer and BC Hydro.
Speaking on background, a BC Hydro spokesman said in an e-mail that the capital projects account for half of the rate increase, while energy costs from sources such as independent power producers account for less than one fifth of the increases.
BC Hydro charges for electricity use through a two-step system based on average daily consumption, measured in kilowatt hours (kWh). If your daily average doesn't go above 22.1918 kWh, you currently pay $0.06270 per kilowatt hour for Step 1. If it goes above that, you pay $0.08780 per kilowatt hour for Step 2.
So for every daily kilowatt hour you consume above 22.1918 kWh, you pay the higher rate.
These rates are the result of a 9.3 per cent interim increase that has been in place since April 2010, an increase that will be reduced to 7.29 per cent starting in January. When the latest "increase" comes into effect in January, Step 1 rates will go down to $0.0607144/kWh and Step 2 rates will drop to $0.08543996/kWh.
If BC Hydro gets approval for a 27 per cent rate increase, Step 1 rates will rise to $0.07710729/kWh and Step 2 rates will rise to $0.10850875/kWh in 2014.
For a Whistler home these increases could be steeper than they are in the Lower Mainland. BC Hydro pegs an average monthly bill in the province at $71 but communities like Whistler have colder climates, with hydro bills ranging closer to $85 in cold months.
So in 2014, you could be paying $106 per month in electricity costs if the B.C. Utilities Commission approves these rate increases.
Tom Hackney, vice-president of policy with the B.C. Sustainable Energy Association, believes the rate increases are reasonable because BC Hydro infrastructure is "due for an upgrade."
"We are certainly concerned about the potential that low income people will be hit by the rate increases," he said. "However, we believe the proper way to deal with that is to really work and frankly have a province-wide initiative to upgrade the efficiency of the B.C. building stock.
"In our view that's a better way to control energy costs to all British Columbians, including low income, rather than artificially trying to hold down the electricity rates."
Speaking about the impact of IPPs on electricity rates, Hackney said they have less to do with private generation than with an increasing demand for electricity from less cost-effective forms of generation. He added his organization is supportive of clean energy - which initiatives such as IPPs claim to provide to customers.
"BCSEA is supportive of the development of environmentally-appropriate clean energy," he said.
"We are supportive of looking at ways to increase electricity versus our very high consumption of fossil fuels because it's vitally necessary to reduce our fossil fuel consumption. We believe we can shift some of that requirement over to the electricity sector, bearing in mind we also have to become way more efficient in our use of energy altogether."