ERICA HAMILTON COMMISSION SECRETARY

SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, BC CANADA V6Z 2N3 TELEPHONE: (604) 660-4700 BC TOLL FREE: 1-800-663-1385 FACSIMILE: (604) 660-1102

Commission.Secretary@bcuc.com web site: http://www.bcuc.com

Log No. 44515

VIA EMAIL

jfries@pentictonwesternnews.com

September 9, 2013

Dear Mr. Fries: Re: Document Request for Information Regarding FortisBC's New Residential Conservation Rate Further to your August 14, 2013 request to access documents, enclosed please find the BC Utilities Commission's August 20, 2013 briefing notes regarding FortisBC Inc.'s Residential Conservation Rate Evaluation Report. The briefing notes are redacted, pursuant to section 13 (1) of the Freedom of Information and Privacy Act.

Erica Hamilton /kbb Enclosure

IP/FOI/09-09-2013Jries_Request for FBC RIB documents

BRITISH COLUMBIA UTILITIES COMMISSION ACTION

MEMO TO:

Erica Hamilton Commission Secretary and Director Patrick Wruck Customer Service Specialist Policy, Planning and Customer Relations- on behalf of Rates FortisBC Inc. Residential Conservation Rate Evaluation Report

August 20, 2013

FROM:

RE:

FortisBCs Section 13(1)

RECOMMENDATION
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BACKGROUND The FortisBC RIB rate was approved on January 13, 2012 by Order G-3-12 and the rate was implemented on July 1, 2012. FortisBC renamed the RIB Rate to the Residential Conservation Rate (RCR) upon

2 implementation. In Order G-3-12 FortisBC was directed to provide a RIB Rate Evaluation Report (Report) covering the period from the date of implementation [July 1, 2012] to December 31, 2013... The purpose of that Order was to implement a RIB rate [that] is intended to promote conservation by employing a tiered rate structure in which consumption that occurs above a certain threshold level is billed at a higher rate.1 During the period (from implementation) July 1, 2012 - June 30, 2013, the Commission received 149 complaints regarding FortisBCs RCR resulting from this Order. This is a significant increase in complaints regarding FortisBC. For comparison, the Commission received 3 FortisBC complaints in 2010, 15 in 2011 and 44 in 2012. Over the three year period from 2010 to 2012 (before the new rate structure was implemented), 30 complaints were regarding rates. In addition to complaints from customers, the Commission received two complaints from the Regional District of Okanagan Similkameen, one complaint from the Village of Keremoeos Mayor and Council, and a complaint from an NDP candidate in Kaledan, BC. The Commission also received complaints from businesses, primarily geothermal companies who argue that the new rate structure has severely impacted the geothermal business in a negative way. Aside from complaints sent directly to the Commission, there was significant media attention including many letters to the editor in local newspapers, and several members of the public organized petitions and held protests. The concerns raised by residents can generally be summarized as follows: RCR is causing bills to increase up to 50%; Residents in areas that only have access to electricity are concerned that they are being penalized because they simply have no option but to heat their home with electricity; Residents that use geothermal and air source heat pumps are concerned because their cost to operate this equipment has risen dramatically due to the RCR; Many complainants argue the threshold has been set too low; and Many customers state that they are now resorting to wood heating and/or natural gas instead of electric heating systems.

ANALYSIS AND FINDINGS

Section 13(1)

Executive Summary page 1 FortisBC Inc. Residential Inclining Block Rate Decision January 13, 2012

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Section 13(1)

UTILITY RESPONSE FortisBC has reviewed the draft Order and comments provided by that utility have been incorporated into the draft Order where appropriate. Fortis BC representatives are in general agreement with the new due date and the expanded terms of reference.

REFERENCES Order G-3-12 and Decision Customer Complaints (examples provided below)

Examples from the Complaints Received

Section 22(1)

I am asking and urging the BCUC to investigate the possibility of a rate structure that would be fair for all. The current rate schedules are not fair for those of us that only have the option of electricity. I am sure if the BCUC looked further into the average electricity used by those with natural gas and those without they would see that 1600kWh would not be a reasonable number for those of us without natural gas.
Section 22(1)

A much more effective and fairer way to improve energy conservation is to change the BC Building Code to require more energy efficient building practices for all new structures. Punishing current home owners for energy consumption over which they have no control is not only ineffective, but also unfair and punitive.

If British Columbia wants to continue to promote clean energy initiatives than residential customers who install geothermal heating and cooling should be able to purchase a larger quantity of electricity at tier one rates; 1600 kWh in a two month winter billing cycle is not enough to justify a geothermal system.

Section 22(1)

5 years ago my wife and I moved into a new home. We had built the home with an eye to being environmentally conscious. We invested a huge amount of our funds into what we understand, from research we completed on our own and from information provided by the Province of BC (among other sources), to be the most energy efficient home heating and cooling system available in the market place. Fortis BC's website also confirms this opinion citing ground source heat pumps as saving "up to 65% on your home's heating and cooling costs". Since that time the BC Utilities Commission has approved the new Residential Conservation Rate, which "is designed to encourage conservation and to incent customers to use less electricity". However, this policy is overly punitive to home owners that have been encouraged and supported (through the Livesmart BC program even) to invest in geothermal heating and cooling, the most environmentally sensitive home heating/cooling system available. It is simply not possible to operate a geo-thermal based home on 1,600 kWh in a billing period. Since homeowners such as myself have intentionally chosen to follow the environmentally sensitive direction encouraged by the Province of BC, I do not believe it is fair or appropriate to subsequently turn around and punish us with exceptionally high electrical rates. I appeal to you and your sense of responsibility and fairness to examine establishing a policy that will treat geothermal home owners more appropriately. We have spent a tremendous amount of our personal financial resources in an attempt to 'do the right thing' for the environment. Please dont punish us forevermore with exorbitantly high electrical rates. I would suggest geothermal homeowners could be given a rebate on the electrical use associated with the geo thermal unit. I am prepared to pay the higher rate on electricity consumed above your threshold for any other purposes, but given our dependence on the geo

Section 22(1)

7 system for heating and cooling I do not believe it is appropriate to charge us the higher rates to operate that system.
Section 22(1)

I would like to express my outrage at the punitive effect this new Two-Tier billing system has on homeowners like myself who have chosen to heat/cool their homes with (what we were lead to believe is) a cleaner & more environmentally friendly Geothermal system. Granted my electricity usage has increased compared to conventional systems I had on previous homes but my gas consumption has dramatically decreased. I do suggest Fortis look into rectifying this situation as, besides my own increasingly irate position on this (just received another outrageous bill where the Block 2 charge is 1 times the block 1 amount), I can see the beginnings of a groundswell of discontent amongst other users in the same situation (ex: the upcoming meeting in Penticton & the petition signed in Oliver PLUS feedback from folks in my neighborhood!).
Section 22(1)

I take pride in the attempts we have made over the years to conserve power, equipping our new home with an air-based heat pump, and installing windows that capture solar heat in the winter. I even sited my house to face directly South on June 21st 1994 to maximize the exposure to the sun. I equipped the South side of my house with 4 foot Eaves to provide shade in the summer and minimize the need for air conditioning, but still allow the low winter sun to enter and heat my home. On sunny days my heating systems rarely runs because of the solar heat, even in below zero weather. I also bragged that I was able to keep my total utility bill under $1200. for the entire year for a very long time until your Utilities Commission and the Power Company (Fortis in my case) began to jack the rates regularly. The end result now is my bill is $1025.63 and that is just the first quarter of 2013. We live in a province that is power rich and this is the best our government and utility companies can do? I hate to think what my total bill will be for 2013. My last bill Dec 12 to Feb 13 was 30% higher than last year for the same period. You have definitely eroded my desire to conserve energy or anything else for that matter. There is definitely no reward in doing it. To say that this two-tier billing system is a conservation program is laughable. It is a punishment program for all older citizens who are on fixed incomes and who must rely on electricity to heat and light their homes. The BCUC must be told to return to the one lower rate system so people can plan their food and rent budgets more closely. As citizens of this country we should be entitled to power and water at the cheapest possible rates. This will not happen as long as you continue to `privatize` power sources and raid B.C. Hydro's profits to make up for your mismanaged shortfalls.
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the "Conservation Rate" that was approved to Fortis BC has not considered the novel practice of net metering sufficiently. This is understandable since net metering is still practiced by the tiniest of minorities of Fortis BC's customers and has likely not appeared on the radar of the BCUC sufficiently. However, with energy conservation and development of non-polluting renewable energy being generally considered an important objective, policies should be developed to encourage, rather than discourage net metering. The latter has unfortunately happened with the switch from Fortis BC's previous rate structure to the Conservation Rate. The arguments can be found in the attached exchange.