BCUC Ends FBC Residential Conservation Rate
The BC Utilities Commission issued its decision on the FortisBC-electric 2017 Cost of Service and Rate Design Application on February 25, 2019. Unfortunately, the Commission granted FBC's request for a five-year phase-out the Residential Conservation Rate (RCR). During the proceeding, BCSEA strongly supported the continuation of the RCR and filed expert evidence (by Philip Raphals, Helios Centre, Montreal). BCSEA argued that the two-tier RCR has achieved considerable amounts of energy efficiency and conservation savings and would continue to do so. Opponents of the RCR argued that the two-tier rate is unfair to high-consuming residential customers whose bills are higher under the RCR than they would be under a flat rate.
Interestingly, the Commission accepted FBC's argument that a flat residential rate would facilitate low-carbon electrification better than the two-tier rate would. BCSEA had argued that while low carbon electrification (replacement of fossil fuel use with clean electricity) is a crucial energy objective, energy efficiency and conservation is still essential. Wasting clean renewable electricity by failing to implement cost-effective conservation and efficiency measures would be a hindrance to low carbon electrification.
The Commission panel did reject FBC's proposed "optional time of use" (TOU) rate, on the ground that the purpose and structure had not been thought through. FBC pitched the optional TOU rate as a "conservation rate." However, BCSEA saw this as false advertising in the absence of proof that the proposal would actually reduce peak demand and lower the utility's costs for the benefit of all customers. The fundamental challenge with an optional TOU rate is that it is susceptible to free-ridership whereas mandatory TOU rates are not. BCSEA obtained an admission from FBC that more than 22,000 residential customers – 19% of residential customers – would be financially better off under the proposed optional TOU rates with no change in consumption pattern. This would result in an added cost of $0.007 per kWh for customers in the residential class. The average lost revenue per free-rider would be would be $34.86 per month. The Commission panel agreed with BCSEA that FBC should look at a broader selection of approaches to load shifting and demand response, such as critical peak pricing and direct (smart) load control.
Meanwhile, BC Hydro's two-tier Residential Inclining Block (RIB) remains in place and is not directly affected by the phase-out of the FBC two-tier rate.
BCUC proceeding page for 2017 FBC RDA https://www.bcuc.com/ApplicationView.aspx?ApplicationId=610
BCUC Decision and Order G-40-19 https://www.bcuc.com/Documents/Proceedings/2019/DOC_53486_2019-02-25-Dec...
BCSEA-SCBC Final Argument https://www.bcuc.com/Documents/Arguments/2018/DOC_52797_2018-11-07-BCSEA...