by Tom Hackney, Policy Advisor, and Bill Andrews, BCSEA legal counsel

10 August 2024

For several years now, BC Hydro has been working toward flattening its current 2-tier Residential Inclining Block (or “RIB”) rate, which is the default rate for residential customers (See BCSEA Policy Corner article, BC Hydro RIB Rate: on the Chopping Block?, December 2021). BC Hydro complained the rate no longer serves its intended purpose of driving customer energy efficiency and conservation with the higher-priced Tier 2 rate. And many customers have complained the Tier 2 rate penalizes those who increase their electrical load by installing heat pumps or EV chargers.

But until now Hydro has not applied to the BCUC to flatten the rate. Presumably BC Hydro was held back by the BC government, which has cause to fear political fallout (See Good News for EV Home Charging: BC Hydro’s Proposed Residential Time-of-Use Rate, December 2022). Flattening would eliminate the extra-low Tier 1 rate and drive up the bills of the lower-consuming customers, while lowering bills for higher-consuming customers. The BC government has historically been very sensitive to the political implications of rate increases.

In June BC Hydro finally brought a residential rate application to the BCUC for approval: the 2024 Rate Design Application.

Instead of simply flattening the RIB rate, BC Hydro proposes two transitional measures. First, BC Hydro will freeze the Tier 2 rate and allow the Tier 1 rate gradually to approach it as Hydro’s overall rates increase over time. By about 2028, the two rates would be the same. Second, starting right away, customers would be allowed to switch off the RIB rate and onto Hydro’s flat residential rate, which is currently restricted to special cases, such as qualifying farms.

These two changes together would quickly negate the advantage of the RIB rate to low-consuming customers, as the low Tier 1 price approached Tier 2, and as higher-consuming customers moved off the RIB rate and stopped paying the high Tier 2 price, which would reduce BC Hydro’s revenues and force Hydro to raise rates for all residential customers.

 Other measures in the 2024 Rate Design Application include:

• cancelling multi-residential service rates, under which several dwellings are served by a single account (currently applicable to a small number of customers),
• replacing the generally higher rates for BC Hydro’s customers who are off its main grid with the same rates as are applied in BC Hydro’s integrated service area,
• updating BC Hydro’s Electric Tariff Terms and Conditions (housekeeping items), and
• revising BC Hydro’s Net Metering Program (See Net Metering Gets and Overhaul in this edition of BCSEA’s newsletter).

BCSEA has applied to intervene in this proceeding and is interested in all these issues.

Regarding the RIB rate, while BCSEA strongly supported it in 2008 when it was introduced, circumstances are now very different. BC Hydro is working to build its load by persuading new and existing customers to use more electricity instead of fossil fuels. BCSEA strongly supports this, and in that context, the Tier 2 rate is an impediment.