Update: urban power rates will rise to utility bolster reserves, combat rising cost of power
A 5.2 per cent urban rate increase for Nelson Hydro customers is coming to ensure the City maintains the utility’s capital reserves.
City council has given the green light to Nelson Hydro to implement the annual general rate increase for the urban service area — approved by City council on Dec. 5 — in order to keep the reserves in the target zone, said Nelson Hydro general manager Scott Spencer in his report to council on the matter.
The utility’s capital renewal plans added some rate pressure, 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.”
Spencer also felt that the corresponding 6.74 per cent general rate increase being sought by FortisBC, Nelson Hydro’s power supplier, was a contributing factor in the rate rise.
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.
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.
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 was adopted, 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.
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.