Nelson city council has approved a proposed 9.9 per cent rate increase for its rural customers, beginning on Jan. 1.
The main reason for the increase is the cost of vegetation management in rural areas, said Nelson Hydro’s general manager Scott Spencer at a Nov. 22 council meeting.
“We have heard loud and clear over the last few years, especially with the storm impacts from 2121, that vegetation management and reliability are important to customers,” he said.
The rate increase is also attributable to high inflation and a general 2023 rate increase of 3.99 per cent by FortisBC, from which Nelson Hydro purchases approximately half its power, Spencer said.
The proposed rate still has to be approved by the BC Utilities Commission (BCUC) and Spencer said he expects a decision by the end of the year.
Rural hydro rates in the Nelson area have been controversial for many years. Before this year, the city has always charged the same rate for urban and rural customers because the BC Utilities Commission insisted it must do so, despite Nelson Hydro’s contention that rural services were more expensive to deliver because of the low-density customer base that lives in heavily vegetated areas. The city also argued that equal rates meant urban customers were subsidizing rural ones.
Rural customers on the other hand argued against higher rates because they said their power outages were longer and more disruptive than in the city, and this constituted poorer service.
In July, after several years of trying, the city received approval from the BCUC for a structure to charge differential rates, and it expects this will bolster its current application for a rural rate that is different from the urban rate.
However, although the BCUC said urban and rural rates could theoretically be different, the agency said generation and power purchase must be attributed equally to rural and urban areas. The city has asked the BCUC to reconsider this.
More detail on the calculation of the rural rates can be found at https://bit.ly/3Vt42kB.
Residents of the City of Nelson will receive a four per cent increase for 2023, Spencer said.
One of the major differences between urban and rural rates is that the urban rates are responsible for maintaining the utility’s capital reserves that this year will be kept between $4 million and $9 million.
“To maintain that capital reserve is the prime driver for urban rates when we look at the options, in terms of maintaining a fair return for the utility,” Spencer said.
The increase is also due to inflation and the 3.99 per cent Fortis increase, Spencer said.
Spencer will be hosting an open house for the public at the Nelson Innovation Centre on Dec. 1. He said the presentation will justify the expenditures planned for 2023 and discuss rate-setting principles.
Councillor Leslie Payne said she has begun following the new Nelson Hydro Instagram account and recommends that the public do the same. It has helped her understand the workings of the utility, she said.