March 11, 2025

By Bill Andrews and Tom Hackney

In late February 2025, the BC Utilities Commission approved BC Hydro’s 2024 rate design application. Following a written proceeding and with BCSEA’s support, the BCUC decided to phase out Hydro’s Residential Inclining Block (RIB) Rate over several years, to make an optional residential flat rate immediately available to BC Hydro customers, and to apply BC Hydro’s Zone 1 (grid-connected) rates to Non-Integrated Areas (NIAs).

Phasing out the RIB Rate over the next few years will impact some 1.97 million customers. The existing RIB Rate is a “Stepped Rate for Conservation and Energy Efficiency” motivated by the BC Government’s 2002 Energy Plan. BCSEA supported the RIB Rate, which did produce conservation and efficiency for many years. However, BCSEA accepted BC Hydro’s evidence in the proceeding that the RIB Rate no longer achieves incremental energy savings.

The RIB Rate originally sent an appropriate price signal: the Step 2 energy charge was at or below BC Hydro’s Long Run Marginal Cost (LRMC) of new clean renewable generation at the time the RIB Rate was introduced. Now, however, the Step 2 energy charge (approximately 14 cents/kWh) substantially exceeds BC Hydro’s LRMC (approximately 10 cents/kWh as of the 2024 Call for Power). This means that flattening the RIB Rate has an economic justification. Further, BCSEA accepted BC Hydro’s evidence that phasing out the RIB Rate would not materially increase residential customers’ energy conservation and efficiency.

BCSEA encouraged BC Hydro to use its customer communications regarding the proposed new residential rate designs as an opportunity to promote participation in its energy conservation and management programs, including home energy efficiency rebates, energy reduction challenges and demand-response programs.

In its final argument, BCSEA also supported the proposed Residential Optional Flat Rate, part way between the Step 1 and Step 2 RIB rates. BCSEA highlighted that the proposal would enable and encourage customers to immediately take measures for electrification, such as using electric heat pumps for space heating and cooling, and decarbonization, such as home-charging of an electric vehicle in substitution for a gas- or diesel-powered vehicle.

BCSEA cited Reconciliation with Indigenous people in supporting the proposal to reduce BC Hydro’s rates for customers in the NIAs to the levels applicable to grid-connected customers.

For another perspective on the BCUC’s RIB phase-out decision, see Electrification trumps affordability as BC Hydro abandons its two-tier residential rate structure by Richard Mason.

Meanwhile, the BCUC has established a separate proceeding to continue the examination of BC Hydro’s proposed changes to its net metering program that had begun in the rate design proceeding. Currently, net metering participants who provide more electricity to BC Hydro than they consume during a billing period are issued an energy credit (in kWh) against their consumption in the next billing period. The financial value of this credit is equivalent to the participating customer’s retail rate (which could be the residential Step 1 rate, the residential Step 2 rate, or the applicable commercial rate for energy). Hydro’s proposal is to replace this with a ‘net billing’ approach in which any net electricity provided by a net metering participant to BC Hydro during a billing period would result in a dollar credit on the next bill rather than an energy credit. The amount of the dollar credit would be determined by the amount of energy (in kWh) times a yet-to-be-determined price (in cents/kWh) reflecting the value of the electricity to BC Hydro. BC Hydro will file evidence on March 20 specifying what it says this price should be. If, as expected, the price is based on BC Hydro’s LRMC (see above), then the proposed dollar credit would likely be somewhat lower than the effective value of the current energy credit based on a net metering participant’s retail rate. Many existing net metering participants have filed letters of comment opposing this change (see the D-series exhibits in the rate design proceeding and the new net metering proceeding).