I am writing in response to the Jan. 21, column “Rate increase a shock to the system”, in order to clarify several points.
At FortisBC, we are committed to providing customers with safe, reliable electricity service at the lowest reasonable cost. We share our customers’ concern about the rising cost of providing electrical service and would like to assure your readers that we mitigate rate increases by carefully managing our costs as well as increasing productivity within the company, and we will continue to do so. Some recent measures include renegotiating credit facilities at a more favourable rate, capital project cost savings, recovering revenue from third parties that use our poles and infrastructure sharing. In addition, FortisBC has achieved a 10 per cent productivity improvement since 2007.
These measures have all helped minimize the amount of rate increase needed; however, some increases are still necessary to ensure we can continue to safely and reliably meet our customers’ future electricity needs. Our electricity rates are set — based on the cost of running the utility — by the British Columbia Utilities Commission, an independent agency of the B.C. provincial government. The annual revenue requirements review by the BCUC is an extensive and transparent public process that looks at the generation, transmission, distribution and customer service costs of providing electricity to customers, and includes public input from stakeholders and customer groups.
The BCUC oversees electricity generation and distribution operations, electricity plans, services and revenues, including the electricity rates charged to electric customers — making sure the rates charged are fair and reflect the cost of providing service to customers. For 2011, there are three components to FortisBC rates, including revenue requirements, cost of service analysis/rate design and BC Hydro flow-through costs. The 2011 revenue requirements rate increase of 6.6 per cent became effective Jan. 1, 2011 and the other required increases are expected to become effective in the spring. The cumulative rate increase for 2011 could be approximately 11 per cent but a lower amount is possible. However, until BC Hydro files its 2011/12 rate application and receives approval from the BCUC, the final number is not known.
Over the long-term, energy needs in the province will continue to grow. Investment in infrastructure, energy efficiency programs and new energy sources are all critical to ensuring we can meet our customers’ future electricity needs. Since 2005, FortisBC has invested more than $500 million in new and upgraded infrastructure to meet customers’ electrical needs. In six years, we’ve grown by more than 12,000 new customers. In 2010, FortisBC energized two new substations, and construction is still underway on the $110 million Okanagan Transmission Reinforcement project, which includes upgrading existing transmission lines, constructing an additional line, a new substation and upgrading of existing substations.
We have also invested more than $42 million since 1989 in our PowerSense program, helping manage electricity load, reduce environmental impacts, lessen the need for costly power purchases and extend the life of our power generation facilities in B.C. PowerSense programs help customers conserve energy and get the most out of their energy dollar by providing both financial incentives and advice on energy-efficient technologies and practices. Since inception in 1989, our PowerSense programs have helped customers save nearly 360 million kilowatt hours, enough energy to power some 28,000 homes each year.
Again, we are sensitive to the challenges customers face with rising energy costs and work hard to minimize rate increases as much as possible through careful cost management and increasing productivity within the company. We operate under an intensive regulatory review process. Rate increases are set based upon the prudently incurred costs of running the utility and an approved return on equity. The costs and their appropriateness are reviewed and approved by the BCUC after receiving input from stakeholders.
FortisBC is proud of its role as a safe and reliable energy provider in B.C., and remains committed to serving customers well while providing service at the lowest reasonable cost.
Doug Stout, vice-president, energy solutions and external relations
FortisBC and Terasen Gas
