October 14, 2025

By Bill Andrews and Tom Hackney

In a written argument filed with the BCUC today, BCSEA expressed strong opposition to FortisBC Energy Inc.’s (FEI’s) proposal to defer to January 1, 2027 and five years thereafter the gas distribution utility’s recovery of the revenue deficiency required for delivery services that were provided in 2023 and 2024 and that will be provided in 2025 and 2026.

BCSEA argued that FEI’s costs of providing delivery service in 2023-2026 should be fully recovered by the permanent delivery rates to be approved in this proceeding for 2025 and 2026.

BCSEA said this would “maintain a reasonable balance between intergenerational equity and customer acceptance of increasing delivery rates.” BCSEA emphasized that “the costs of FEI’s current delivery service should be recovered in current delivery rates and not transferred to future customers.” BCSEA said, “This is particularly important for the delivery rates of a regulated public utility such as FEI that distributes a carbon-intensive blend of mostly fossil gas with some renewable natural gas and is experiencing flat or declining load.” BCSEA added that “Deferring a portion of the current costs of gas distribution delivery service to future ratepayers would send a perverse price signal that would encourage existing and new gas customers to increase the usage of fossil gas and discourage them from substituting energy conservation and efficiency measures and lower-carbon energy types for fossil gas.”

BCSEA acknowledged that its proposed pay-as-you-go approach to annual increases in delivery rates for gas distribution service may be difficult for some customers to bear. However, BCSEA urged the Panel not to further postpone boosting FEI’s gas distribution rates to levels that fully reflect the cost of the delivery service. 

For a gas distribution utility, a customer’s bill includes both a charge for delivery of the gas and a charge for the gas commodity itself. The Commission does approve the charge for the gas commodity, but the charge for the gas commodity is based strictly on how much the utility is paying for gas on the market plus taxes. There’s no profit or a return on equity built into the gas commodity charge the way there is in the delivery rates. Because a customer’s bill reflects both the delivery rate and the commodity charge, the “delivery rate impact” of an increase in the delivery rates is smaller in percentage terms that the “bill impact” of the same increase in the delivery rates (just arithmetically). It is often an open question whether a proposed delivery rate increase should be evaluated on the basis of delivery rate impact or the bill impact. While BCSEA would normally focus on the delivery rate impact, the BC Government recently eliminated the Carbon Tax on fossil gas, which directly reduces the commodity charge on a customer’s bill. Therefore, BCSEA argued that if the BCUC considers that bill impact here it should recognize the BC Government’s elimination of the BC Carbon Tax.