Electricity in BC

BC Hydro to stop conservation rates and switch to flat rates

Six years after introducing conservation rates for medium and large businesses, BC Hydro is switching to a flat rate model for electricity consumption.

On April 1, 2017, all Medium General Service (MGS) and Large General Service (LGS) customers will charged for energy consumption with a flat rate for energy used and another flat rate for demand usage.

“As most customers found the current baseline rates too complex and did not achieve energy conservation as expected, we proposed simpler, flat rates,” stated a BC Hydro release on Feb. 14.

“We believe the new rate will make it easier for you to plan and budget for your electricity costs, energy efficiency or expansion projects.”

BC-Hydro-flat-ratesBC Hydro is removing tiered pricing for energy and demand charges, and there will be no more baselines. Customers will be billed for actual electricity consumption.

Conservation rates will remain for residential customers, where they are considering more effective in promoting electricity conservation.

Forecasting electricity consumption from the conservation rates was “terribly difficult,” says Matthew Redekopp, CEO of Rede Energy Solutions.

Matthew adds the conservation rates had the potential to penalize customers in two ways:

  1. A drastic one-time reduction in energy use for any reason (such as from restructuring or construction work) from one year would be averaged into the three-year rolling baseline. Going back to pre-change operations resulted in higher electricity costs. BC Hydro would exempt only significant reductions in energy usage – below 80%.
  2. The payback for conservation projects would rise after three years when the new energy consumption was averaged into the baseline.

The new flat rate will not penalize customers for one-time reductions in energy use, but Matthew says the proposed rates will reduce energy costs and may discourage conservation efforts.

“They want us to use more energy now that they have a surplus.”

One year after the conservation rate structure was introduced, BC Hydro announced in a news release on Jan. 9, 2012 that they have “been paying off for those who’ve tackled energy-efficiency projects.”

“With a year of billing under the new rate structure, many LGS customers who have been working towards energy efficiency — working with Power Smart through the Product Incentive Program and the Industrial Program — are seeing the results.”

The charge per kWh for the new flat rates have not yet been finalized, but BC Hydro estimates MGS and LGS customers will be charged the following:

Proposed flat rates for MGS

Demand Charge$4.92 per kW
Energy Charge$0.0880 per kWh

Proposed flat rates for LGS

Demand Charge$11.21 per kW
Energy Charge$0.0550 per kWh