Sights set on hike to urban power rates to bolster reserves, combat rising cost of power
A 5.2 per cent hike in urban hydro rates will electrify Nelsonites in the new year as the city-owned utility looks to recharge its capital reserves for the next several years.
Nelson Hydro will be implementing a 5.2 per cent annual general rate increase from the urban service area — approved in third reading by City council on Nov. 7 — brought on, in part, by a corresponding 6.74 per cent general rate increase being sought by FortisBC, Nelson Hydro’s power supplier.
However, the utility’s capital renewal plans add some rate pressure as well, said Nelson Hydro general manager Scott Spencer in his report to council on the matter, with the utility’s controllable costs (operations and maintenance) accounting for a small portion of the rate increase.
“As modeled for council at the Oct. 20 budget presentation, a 5.2 per cent urban rate increase is required to ensure the utility’s capital reserves (which is funded by urban rates only) stays in the target zone ($4-9 million) over the next several years,” he said in his report. “Additionally, with a 5.2 per cent rate increase, urban rates will remain competitive when compared to those of both FortisBC and B.C. Hydro.”
As a City-owned utility, council holds rate-setting authority for Nelson Hydro’s urban service area and does not have to make application for approval from the B.C. Utilities Commission (BCUC). But fees charged by the municipality must be set out in a bylaw.
On Oct. 20 council passed a resolution at the Nelson Hydro budget meeting indicating that it supported a 5.2 per cent urban rate increase.
Forecasting the rise
Nelson Hydro staff presented to council in open meetings with regard to recommended rate increases for both the urban and rural service areas on Sept. 25 and Oct. 20.
Additionally, public presentations on the Nelson Hydro 2024 budget and rates were held on Sept. 28 and Oct. 12 at the Nelson Innovation Centre and Balfour Golf Clubhouse, respectively, to allow customers and residents to engage directly with Nelson Hydro, provide their input and ask questions about the utility’s plans and budget.
On Nov. 23 Nelson Hydro will hold its annual open house at the Nelson Innovation Centre. Nelson Hydro staff will be available to discuss relevant topics, including the annual general rate increase and the reasons for the proposed increase.
Source: City of Nelson Nov. 7 agenda
Nelson Hydro presented its 2024 budget to City council on Nov. 7 at its regular meeting and proposed a bylaw that implemented a 6.2 per cent annual general rate increase for the rural service area, effective Jan. 1.
The bylaw passed the first three readings by council and now awaits adoption. However, on Oct. 31 Nelson Hydro submitted a rate application to the B.C. Utilities Commission (BCUC) requesting approval for the rate increase.
The rate increase has basis in the cost-of-service analysis (COSA) within the 2024 budget, attributed to the 6.74 per cent general rate increase sought by Nelson Hydro’s power supplier, FortisBC.
“Beyond that, the utility’s capital renewal plans add some rate pressure as well,” said Spencer in his report to council. “In an effort to moderate the impact of the 2024 rate increase on ratepayers, staff have carefully scrutinized controllable costs within the 2024 budget to try and reduce rate pressure where possible.”
He added that some cost savings were found under vegetation management after a few years of an aggressive approach — creating a corresponding improvement in service reliability.
“The utility believes this is an appropriate balance for 2024 as the utility is in a good position to maintain the service improvements with the reduced budget, which will in turn alleviate rate pressure,” Spencer said.
Rate setting in Nelson Hydro’s rural area is regulated by the BCUC and, before the rate can be implemented by bylaw, the BCUC must first approve of the requested rate change.