Update: Rural rate rise ratified as city sets sights on 6.2 per cent
Although it has not officially been approved, a proposed 6.2 per cent annual general rate increase for rural electrical service is likely on the way, says the City’s manager.
Kevin Cormack said the rural rate application to be charged for city-owned Nelson Hydro rates is still before the B.C. Utilities Commission, when he was asked by City councillor Kate Tait if there was a cost-of-service analysis (COSA) decision that could affect the 2024 budget.
“This 2024 (rate) was based on the COSA that was approved, so the utility commission has not made any changes to that,” he said. “At this point they have given interim approval for the 6.2 per cent increase for rural.”
Nelson Hydro presented its 2024 budget to City council on Nov. 7 at its regular meeting and proposed a bylaw that implements a 6.2 per cent annual general rate increase for the rural service area, effective Jan. 1.
The bylaw was adopted Dec. 5 by the City but a rate application to the BCUC requesting approval for the rate increase went in on Oct. 31 with no decision handed down.
The rate increase has basis in the cost-of-service analysis 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 Nelson Hydro general manager Scott Spencer in his report to council last month. “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.
The 2024 Nelson Hydro revenue requirement application also seeks approval for the creation of four deferral accounts.
Three of the deferral accounts are temporary, designed to capture one-time costs: the participant assistance/cost award (PACA) deferral account; the cybersecurity audit deferral account; and the provincial cost of living credit deferral account.
Spencer said Nelson Hydro is also seeking approval for a flow-through deferral account that will “allow the utility to capture the annual variances between the approved and actual amounts for those expenses and revenues which are included in rates on a forecast basis and are uncontrollable in nature.”
These would include: revenues; power purchase expense; amortization expense; and regulatory costs.
Approval is still pending for the revenue variance deferral account to allow the utility to track revenue it may be entitled to, depending on the outcome of the utility’s other pending regulatory applications and the BCUC’s generic cost of capital proceeding.
“Additionally, the utility is also awaiting approval for a permanent storm regulatory deferral account to allow the utility to smooth the impact of major storm costs,” said Spencer.
Source: City of Nelson agenda, Nov. 7