There’s still some doubt about how much the increase is going to be, but there is no doubt electricity rates are going up next year.
For residential customers, the proposed increases could see charges rise from an average of $102 monthly to $106.50. Commercial customers could see an average $30 monthly increase, and industrial users could see their rates jump by almost $950 a month.
City staff presented Penticton council with a report this week detailing possible rate increases of up to 4.78 per cent for consideration in 2014. That’s considerably less than the 7.03 per cent hike for 2013, which included a 1.28 per cent “revenue adjustment” from the city itself.
Last year, director of operations Mitch Moroziuk explained, the model they were using to forecast revenues had increasingly grown out of adjustment.
“It hadn’t been looked at for some time. We had to do an adjustment and recover more revenue,” said Moroziuk. “This year we are quite happy to find it is only out by about 0.2 per cent. So we’re suggesting a 0.2 per cent decrease to account for that. That tells us our model is tracking very close to what our actual revenues are coming in at now.”
But for 2014, that 0.2 per cent decrease combines with a 3.3 per cent increase from FortisBC and an expected 1.6 per cent flow through from B.C. Hydro.
“Right now we have heard that rate is going to be 1.6 per cent, but we don’t know exactly when it will be implemented, said Moroziuk. “We assume that will be April 2014 so that means we have to increase by 1.2 per cent to recover that money.”
As in previous years, city council is faced with a choice of where to apply these increases: either FortisBC’s wholesale rate; the retail rate at which Penticton sells electricity to customers; or an average of the two.
The first alternative was the lowest cost to the customer, applying the two increases at the wholesale purchase level and the revenue difference at the retail level, for a total increase of 3.28 per cent. The second option is to apply everything at the retail power sale level, adding up to an overall 4.78 per cent increase. The final model averages the other two, for a total 4.03 per cent increase.
The public will have a chance to comment on the increases on Dec. 2 and council will makes its decision on Dec. 16 with final adoption on Jan. 6, in time for the new rates to be implemented on Feb. 1.
In his annual review of rates charged by other municipal electric utilities and the two big power companies, Moroziuk found Penticton to be holding comparatively the same position as last year.
For residential customers, the highest charges were found in Grand Forks and with FortisBC, the lowest in Nelson and with B.C. Hydro. Results were similar for commercial rates but industrial electrical rates topped out with the Nelson utility and hit their low point with B.C. Hydro. In comparison, Moroziuk said Penticton remains in the middle to top third of the curve.
Looking at the figures, community member Bob Nicholson asked if the city couldn’t buy its power from B.C. Hydro, rather than FortisBC.
Moroziuk said not only would that require a high level of regulatory approval, but he didn’t expect Hydro rates to remain low.
“At some point, we feel there is going to be an increase on the B.C. Hydro side. If you look at their rates, they are low in every category and they are significantly low,” he said. “You might find a saving today, but that might not be realized in the future.”