Two-tier rate system not fair, residents hear

The BCUC dropped the ball when they approved the Residential Conservation Rate in 2012 says a retired expert in the field.

“If your prices are screwed up

“If your prices are screwed up

The two-tiered rate structure implemented by FortisBC in 2012 is discriminating against those who do not have access to the cheaper natural gas to heat their homes. That was the message brought to about 30 West Boundary residents who turned out for a meeting at Midway Community Hall last week.

The Anarchist Mountain Community Association (AMCA) and the West Boundary Sustainable Food and Resources Committee (FAR) sponsored the meeting.

AMCA president Mark McKenney came with Nick Marty to deliver the case against the current two-tiered billing system applied in the province.

Marty is an Anarchist Mountain resident who retired from a career as a senior energy advisor to the government of Canada. He spent the last 18 years before retiring working to develop policy and programs aimed at energy conservation.

But when he looks at what was put in place in B.C. he says the BC Utilities Commission dropped the ball when they approved the plan. About a year and a half ago he started writing letters to the BCUC and the provincial government. The responses he got were disappointing so he, under the umbrella of the AMCA, took his argument to MLA Linda Larson last December. Through her efforts the minister of energy has now been in communication and Marty has had a meeting with ministry staff.

Marty said a follow up conference call with the minister is scheduled for April 14.

The two-tiered rate system is formally called the Residential Conservation Rate (RCR). It is supposed to encourage conservation by charging a lower rate for the first 1,600 kWh of power used in each two month billing cycle. Any power used above that threshold is charged at a higher rate. The system was meant to be revenue neutral—meaning that FortisBC would not bring in more revenue than under the old flat-rate billing system.

Marty said that, properly designed, the threshold would be set at a level that would put about 10 per cent of your consumption into the second tier about block two should only be applied to about ten percent of your electricity consumption.

That should encourage everyone to reduce their consumption by this 10 per cent target.

“The problem is that there are two fundamentally different types of customers in the province,” explained Marty. He said that 77 per cent of the homes in B.C. have access to natural gas to heat their homes and hot water. So the average urban customer, using only 1,400 kWh, saw their bills go down, while rural customers are paying the higher block two rates for as much as 75 per cent of their power.

Marty cited a FortisBC report filed with the BCUC that showed 68.5 per cent of their customers were billed less than they would have been under the flat rate.

He said it is a simple law of economics: if prices go down, consumption goes up.

Therefore Marty argues the RCR is not maximizing the potential for energy conservation. He suggests the threshold for those living without access to natural gas should be more like 6,400 kWh every two months; and for urban dwellers it should be closer to 1,200.

Marty calls ironic the fact that a major rationale for having BCUC regulate electric utilities is to ensure that rates are non-discriminatory. “So, BCUC is violating the conditions of its own mandate,” he asserts.

He suggests possible fixes would be to:

a) Set a higher block threshold for those customers with no access to natural gas

b) BCUC could return to a flat rate for those customers with no access to natural gas and continue two-tier pricing for remaining customers

c) In the longer term, BCUC could move to time-of-use pricing as is being done in Ontario.

It was pointed out that time of use pricing would require smart meters; and a number of people at the meeting said they were not in favour of those.

He said his goal is not special treatment for rural customers. “As rural residents we realize we have higher energy costs because we live in a rural area. We are just asking them to stop making a bad situation worse.”

The group has an online petition.

FortisBC has filed two RCR reports with the BCUC; the most recent in November. Marty is eager to see the BCUC response to that report.

If BCUC says everything is fine with the program, as they did last year, Marty said the group will urge the government to provide policy direction to the BCUC to bring the RCR into line with their mandate.

Marty said the way ahead would require both action and community champions. He urges B.C. residents, regardless of whether they are FortisBC or BC Hydro customers, to sign the online petition.

McKenney said AMCA welcomes groups in other communities to help set up meetings in their locale.

Vivien Browne of the FAR society reported several homes in the area suffering hardship. She said government policy encourages low-income families to move to the area, but there is a lack of adequate rental housing and the power bills they face are forcing them to choose between paying the power bill or putting food on the table.

Marty said it is important that these people feel empowered to find a voice so that their stories are known.

Some of those present at the meeting shared details of their mid-winter bills under the RCR. One West Boundary couple using wood heat with electricity for backup saw a $1,000 bill. A Beaverdell couple that rely solely on electricity for space heating opened their last bill to find themselves owing $1,980 for the two-month billing cycle.

Another Beaverdell resident showed a bill for $778, with almost 73 per cent being charged at block two rates. A third was billed $670, with two-thirds being charged at the block two rate.

Marty urged everyone to sign the petition; write to the government, BCUC and Fortis; and to contact their MLA.

“We believe this can be fixed. We think this can be changed so it would be fair. This is just not designed well and let’s fix it.”