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New electricty rate working as expected, says FortisBC
FortisBC’s new two-tiered electricity rate is working as expected for most customers, but amending it to help those hardest hit isn’t as easy as people think, the company says in a new report.
“For those customers who are negatively impacted and have publically stated opposition to the rate, it appears that the perception of the impact is greater than that actually experienced,” the report says.
“The group that is negatively affected is far smaller than is reflected by the publicity garnered by the rate.”
As a result of customer complaints, the B.C. Utilities Commission ordered the company to produce a preliminary study on the effects of the new rate, which was implemented in July 2012 in a bid to reduce energy use.
The loudest complaints came from politicians who argued that people with no choice but to heat their homes with electricity were being unfairly impacted by the rate structure.
Under the new system, the cost of electricity in a two-month billing period was reduced for all consumption under 1,600 kWh, but then increased for any power used above that threshold.
While some politicians have since suggested the threshold be raised, “this solution is most often proposed in the absence of an understanding of how the various components of the (rate) are determined and may not yield the results that these parties seem to expect,” the report says.
The problem lies in the BCUC’s requirement that the new rate structure be revenue neutral for FortisBC, that customer impacts fall within an approved range, and that it actually result in less power consumption.
Sso “changing the threshold in isolation cannot be done,” the report says.
As for customer complaints that power costs spiked under the new rate, FortisBC suggests people perhaps haven’t looked closely enough at their bills.
“A customer that receives a $1,400 bill for two months of consumption can miss the fact that the roughly 12,000 kWh required to produce such a bill would result in a bill over $1,200 on the flat rate,” the report states.
The study assessed the bills of 97,000 residential customers and found that 70 per cent of them were paying less under the new rate. Prior to implementation, the company estimated 76 per cent of customers would realize savings.
It also determined that five per cent of customers saw an increase of between 10 and 20 per cent on their bills under the new rate, and 0.2 per cent of customers saw their bills go up by more than 20 per cent, both lower than originally forecast.
All told, the new rate structure is estimated to have saved between 23 million and 52 million kWh, which was “on the low side” of the original estimate, while it resulted in revenue of five per cent greater than forecast.
“Changes to the current (rate) can be made. However, there is no one solution that appears as an obvious option,” the report concludes.
“Any (rate) that is put in place, whether by small adjustments or more dramatic changes will create winners and losers relative to both the flat rate and the existing (structure).”
More to come.