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FortisBC’s new rate structure is deeply flawed and punishes rural homeowners to benefit city dwellers, says Osoyoos reader
I am writing to you to understand the government’s position on FortisBC’s new Residential Conservation Rate (RCR).
No doubt, you will think that I’m one of those wasteful electricity consumers whose rates have gone up because I failed to conserve electricity and significantly increased my consumption.
In fact, my electricity bill for February-April 2013 went up 20.3 per cent compared to the same period in 2012 even though my electricity consumption declined from 2012 by 1.5 per cent.
And, I would point out, my house is very energy-efficient. It was built just five years ago.
It is well insulated, has energy-efficient windows and uses a geothermal heat pump for space heating, which is the most electrically-efficient technology available.
Why did my electricity bill go up 20 per cent due to the implementation of a “conservation rate”?
Is it simply because I use electricity for space and water heating – I live in a rural area that does not have access to natural gas?
The RCR is designed in such a way that it places a major surcharge on the electricity bill of homeowners such as myself. It uses the resulting revenue to reduce the electricity bills of those customers that only use electricity for appliances and lighting – those who live in towns and cities so they use cheaper natural gas for space and water heating.
In effect, the RCR re-distributes wealth from rural homeowners to benefit urban homeowners.
While the RCR is effective at redistributing wealth, it is not very effective at encouraging electricity conservation and might actually lead to an increase in electricity consumption.
This is because, by Fortis’ own admission, more than 75 per cent of their customers saw a reduction in their electricity bills due to the RCR, with no requirement for them, at first, to reduce their consumption.
As a conservation initiative, it makes no sense.
It also provides a major incentive to rural homeowners, who use electricity for space heating, to switch to wood fireplaces; thereby producing harmful air emissions.
I do not make these statements out of hand. Before I retired in 2007, I was a senior executive at Natural Resources Canada where I worked for more than 17 years on analyzing and designing initiatives to improve energy efficiency and reduce greenhouse gas emissions.
So, my observations about the RCR are based on a solid understanding of how conservation initiatives work.
I have communicated the results of my analysis to Fortis and BCUC (see my e-mail, below, to BCUC and their response).
Neither the BCUC nor Fortis refuted any of my conclusions.
However, neither of them are in any hurry to act.
They do not intend to make any changes to the RCR design until after they have completed a formal review sometime in 2014.
Mark Warren, director of customer service at Fortis, publicly stated that the only way customers would experience a “dramatic” increase in their electricity bills would be if there were a corresponding increase in consumption.
However, when I informed him of the increases in my bills and those of my neighbours, that exceeded 20 per cent without there being any increase in consumption, he replied that, in making that statement, he didn’t consider a 20 per cent increase to be “dramatic”.
Well, a 20 per cent increase on my annual electricity bill is nearly $900 a year and I consider that to be quite dramatic, particularly in view of the fact that I have not been increasing my electricity consumption at all.
The root of the problem is that Fortis’ RCR applies the same Block 2 threshold rate of 1600 kWh to all customers when there are major differences among those customers in terms of how they use electricity.
In a typical residential home in B.C., 77 per cent of the energy consumed is for space and water heating.
So, those homes that use electricity (rather than natural gas) for space and water heating, are going to use four to five times the amount of electricity as a home that uses electricity only for appliances and lighting.
Clearly, the Block 2 threshold for the former should be much higher than that for the latter.
And both thresholds could be set at levels that would provide a strong incentive to conserve.
Designed in such a fashion, the RCR could provide a conservation incentive to 100 per cent of Fortis’ customers without imposing punitive rate increases on any one group.
It’s not rocket science and Fortis’ and BCUC don’t have to spend the entire winter “studying” the issue in order to correct the major injustices that exist in the current RCR design and which, in the coming winter, will again add hundreds of dollars to the monthly electricity bills of rural customers.
In view of the above, I would request the provincial government to answer the following questions:
1. Is the provincial government of the same view as Fortis that a 20 per cent increase in electricity bills, when there has been no increase in electricity consumption, is not “dramatic”?
2. Does the government believe it is appropriate to use a “conservation” rate to impose increases of 20 per cent or more on those customers that use electricity for space and water heating while reducing electricity rates for the more than 75 per cent of Fortis’ customers that only use electricity for appliances and lighting, regardless of whether or not customers have actually conserved electricity?
3. Does the government support electricity pricing that is designed to redistribute wealth from rural to urban dwellers?
4. Does the government intend to require BCUC and Fortis to take action immediately on this issue, so that rural electricity users are not subjected to another winter of punitive electricity bills?
I look forward to receiving your response to these four questions. I have copied my local newspaper on this e-mail because I know there are many other rural customers of Fortis in my area that would like to understand your position.
Thanks very much for allowing me to express my thoughts on this very important issue.