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Fortis plans to phase-out two tier system

Regional District of Okanagan-Similkameen hears Fortis BC plan to scrap two-tier system

Getting rid of the two-tier hydro rate system means 70 per cent of Fortis B.C. customers are going to see a slight increase on their bills, directors of the Regional District Okanagan-Similkameen heard Thursday.

Corey Sinclair, manager regulatory affairs for Fortis B.C. explained the utility company’s newest Rate Design Application calls for the two-tier system to be phased out over five years to make way for a flat rate system with option for customers to move to time-of-use billing.

“I want to reiterate the impacts on your constituents. We know that there are those that are adversely impacted (by the two-tier system) that are quite vocal, but you do have another group that are not as vocal that are going to see an impact in the other direction,” he said.

Information provided by Fortis B.C. shows more than a third of residential consumers use between 5,000 to 10,000 kWh per year.

Using current rate structures of 11.749 cents per KwH those homes will see an increase of just under $11 a month ($131 per year) on their average annual hydro bill when the flat rate system is fully implemented. In contrast, those that use between 20,000 to 25,000 kWh per year will save about $25 per month ($301 a year) on their average annual bill when the flat rate is fully implemented. On the high end, those using in excess of 35,000 kWh per year could see their bill reduced by $134 a month ($1,616 per year).

Customers using in excess of 20,000 kWh or more represent about 10 per cent of Fortis’ customers.

Using current rates, the move to a flat rate would mean all residential customers are charged 11.749 cents per kWh. Under the current system once a customer exceeds the first tier they pay 15.617 cents per kWh.

Sinclair said current per kWh rates were used for the purpose of the presentation, but are subject to change.

Michael Brydon, director for Area F (Rural Summerland, Red Wing, West Bench), applauded the move to get rid of the two-tier system.

“Heavy users are still going to pay more,” he said.

He acknowledged that 70 per cent of users were going to see a slight increase, but noted those without access to natural gas or those living rurally with no other energy option would see a “huge decrease.”

“It’s what we’ve been fighting for. It’s a fairness issue.”

Several directors questioned the phase-in approach to move back to a two-tier system.

“I can’t buy that five year shutdown time … when you implemented this it only took you less than a year to do it so the customer didn’t get used to it either,” Elef Christensen, director for Area G (Hedley, rural Keremeos) said.

Tom Siddon, director for Area D (Kaleden, Okanagan Falls) echoed those comments adding those most affected by the two-tier system were not capable of retrofitting their homes significantly to reduce electricity consumption because of financial reasons or rural location that does not have access to natural gas.

He noted the situation of a resident in Okanagan Falls.

“(They have) an electric furnace, and wood burning fire place and it’s costing $1,200 to $1,800 a month,” he said.

“We should get rid of that two-tier provision quickly … not over five years.”

Sinclair said the phase-in approach is to “smooth the impact of the increase.”

He said during open houses over the last year, Fortis heard there were low income and senior customers on fixed incomes in all categories of use that had the potential to be negatively impacted by the rate change.

The board voted to participate in the Fortis BC 2017 Rate Design Application by supporting the Anarchist Mountain Community Society intervention. Support includes using the RDOS name and providing about 240 stories the regional district collected from residents who were negatively impacted by the two-tier system.

The stories were collected to provide to the Ministry of Social Development and Poverty Reduction to advocate on behalf on residents negatively impacted by the two-tier rate. Releasing the stories to the Anarchist group brought discussion from the board because of privacy issues.

The directors agreed to provide the stories after redacting all personal information. Chair Karla Kozakevich voted against providing the stories as it was not told to those who provided them that they would be given to the Anarchist group.

The British Columbia Utilities Commission regulatory process of the rate design changes is expected to start within the next month.

The process is still to be determined so timelines are not available.

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