Council defeats electrical rate hike

Mona Mattei
By Mona Mattei
March 17th, 2011

Electrical rate increases are on hold as Grand Forks city council defeated the proposed 13.9 percent hike Monday night. The rate increase was expected to be in effect on February billings to cover off increased costs from FortisBC.  “The city has been advised that the wholesale electrical rate charged to the city by FortisBC for the sale of power has increased Jan. 1 by 6.6 percent with a further rate increase of 6 percent in April,” explained Cecile Arnott, chief financial officer, in her report to council. “In order to balance the city’s increased cost of purchasing power and operating expenses, and council’s goal of ensuring that our electrical rates charged are comparable with FortisBC’s rates, we are recommending a rate increase at this time.”  Arnott warned council that the city’s reserves are dissipating and if electrical rates are not raised it could result in a failure of the approved 2011 budget. Even with the proposed rate increases, Grand Forks user rates remain below the cost that residential users buying directly from FortisBC are paying, said Arnott.  Currently, residential users are paying $0.0791 per gigajoule and commercial users vary depending on usage between $0.0920 and $0.0721. The increase would mean rates of $0.0901 for residential (up 13.9 percent) and between $0.1021 and 0.0800 for commercial users (up 11 percent).  As part of the annual budget process, bylaws to ensure revenue matches the approved expenditures for the year are enacted. While the final reading for water and sewer user fee bylaws increasing each by four percent passed, the tie vote on the second reading of the electrical rate increase bylaw resulted in its defeat.  Councillors Gene Robert, Chris Moslin and Michael Wirischagin voted against the bylaw raising concerns about anticipating future increases too early. But recommendations from Alex Love, electric utility consultant for the city, state that the impact to the customers is actually reduced by doing a full rate increase in March.  “This is because energy consumption is being reduced due to warmer weather and hence the rate increase effects will be offset from the customer point of view,” commented Love in a report to Arnott. “Grand Forks, as with most other utilities in B.C., is being faced with very significant rate hikes for 2011 and the next few years. A 13.9 percent rate increase Mar. 1 is equivalent to an 11.16 percent full year rate increase.”  Since the city is already paying higher rates to buy their electricity, Councillor Christine Thompson was at a loss for other solutions for ratepayers.  “If this bylaw fails then our whole financial plan for the electrical utility is at risk,” said Thompson. “That causes me great concern. Those rate increases being passed on by Fortis to the city have to be paid from somewhere, and regrettably it has to come from our users in my opinion.”  Mayor Brian Taylor expressed his concern that there will be even higher rate increases now that the bylaw is defeated and income delayed. Arnott concluded that she will be bringing the topic back to a future council meeting.

“When you’re buying $2.8 million worth of power – people are using this power – the city will have to pay,” said Arnott. “When you think about that the power bill per month is upwards of $200 – 250,000 and… it’s going to quickly eat up your reserves.” 

Categories: GeneralPolitics