Nelson Hydro is proposing a 7.54 per cent increase to rural hydro rates for 2025, and a five per cent increase for urban rates.
The increases were provisionally approved by city council at its Nov. 5 meeting, but must come back to a future meeting to be finalized.
In the meantime, Nelson Hydro will hold a public information session about the increases on Dec. 2 at the Balfour Hall from 1:30-3:30 p.m.
Nelson Hydro general manager Scott Spencer explained following the council meeting that the increases were driven largely by a 5.3 per cent rate increase imposed by FortisBC, from which Nelson Hydro buys half its power. (The other half is generated at Nelson Hydro's station on Kootenay River.)
The five per cent increase for customers within the City of Nelson amounts to $6.56 per month per 1,000 kilowatt hours.
The rest of the urban increase is attributed to capital projects, especially the $8.3-million replacement of the Mill Street Substation, a project that began in 2021 and will wind up this year.
"Without that substation, we wouldn't have power to half of the North Shore," Spencer said, "and we would be severely straining the Rosemont substation to supply the rest of the city."
He said the rebuilt substation will now last another 50 years.
The increase will also keep capital reserves (held for equipment and other purchases) within the preferred range of $4-9 million.
Nelson Hydro's urban power rates are approved annually by Nelson City Council on the recommendation of Spencer, and apply only within the city limits.
Rural rates, however, are governed the B.C. Utilities Commission, which uses a complex costing system over which the city has little control.
Nelson Hydro's rural service area extends from its power plant on the Kootenay River up Kootenay Lake to Coffee Creek north of Queens Bay, and along Highway 6 past Perrier Road.
The rural increase of 7.54 per cent, or $10.55 per month for 1,000 kilowatt hours, also covers the increased cost of buying power from FortisBC and the cost of capital projects including the Mill Street substation.
The rural increase is higher than the urban increase, Spencer says, because all work in the rural area takes more time due to the distances that need to be travelled.
"The geographically larger area and consequent lower population density means that there is more infrastructure per customer," he said. "There are a lot more trees in the rural area that threaten our infrastructure so vegetation management costs are significantly higher."
Spencer said that in 2018 and 2019 the reliability of Nelson Hydro's service in its rural areas "as compared to other utilities in Canada was quite low."
This was a source of criticism from customers at the time.
"But we have been working hard to make that change," said Spencer. "We've done a lot of vegetation management. We've done a lot of technology changes and system upgrades to improve that reliability. We've worked very closely with FortisBC, who have improved their reliability."
The rural increase for 2025 also includes the balance of costs from various deferral accounts, set up to spread out unexpected costs like higher-than-budgeted power purchases or storm and weather-related repairs incurred in preceding years. When uncontrollable costs are under budget, the amount shows as a credit in the deferral accounts.
