FortisBC “postage stamp rate” for Fort Nelson denied by BC Utilities Commission
The following is the judgement from the BCUC on the FortisBC Application to Amalgamate and Implement Postage Stamp Rates: “Based upon its review of the evidence and submissions received, the Panel determined that the FEU proposal to implement postage stamp rates, involving, as it does, substantial rate decreases for customers of FortisBC Energy (Vancouver Island) Inc. and FortisBC Energy (Whistler) Inc. at the expense of FortisBC Energy Inc. customers in the Mainland and Fort Nelson areas is not fair, when viewed against accepted principles of rate design. The Panel therefore concluded that the postage stamp rate proposal would result in rates which would be “unjust, unreasonable, unduly discriminatory or unduly preferential”, contrary to section 59 of the Utilities Commission Act and should therefore be denied.”
The Chamber registered as an intervener in February of 2012 to protest the application by FortisBC which would have resulted in an over 50% increase in our natural gas rates. “We were not the only intervener. However Fort Nelson was the area most significantly impacted by the proposed implementation of common rates,” said Bev Vandersteen, Executive Director. “We participated in the panel and hired a utilities lawyer, Nick Gretener, out of Calgary to assist with the final submission to the BC Utilities Commission.”
“A great deal of time and energy was expended to prepare and present our case to the BCUC including a petition and letters from concerned citizens. The decision to deny FortisBC’s application was made public February 25th, 2013,” Vandersteen said.
“We are excited to have the application be recognised as unfair and consequently denied. I would like to thank all the residents who signed the petition and provided the Chamber with letters of support!”
The Fort Nelson and District Chamber of Commerce and the Northern Rockies Regional Municipality applied for, and received, intervener status in the hearings.
In handing down its decision, the commission noted that FortisBC serves approximately 2,400 customers out of approximately 850,000 customers located in 100 communities in its four service areas. Analysing the postage stamps rates and example, shows that in the case of residential rates there would be a 5% increase, some rates would drop by approximately 27% and 36% respectively but in the case of the Fort Nelson, rates would have increased by somewhere in the order of 60% for residential customers. This would have resulted in an average annual increase of $541.57. Increases for small commercial and large commercial varied between 21% and 23.5%.
Applying the Bonbright Analysis for utilities, Randolph Robinson expressed the view that “fairness” is subjective. “The changes that this application would bring about is an increase in rate classes for customers who will not receive any new service or commodity in exchange for the increase in their rates.
“In general the panel accepted the view that customers in certain areas understandably support and accept the proposed postage stamp across all regions. Whereas, particularly those of Fort Nelson, are understandably opposed as the rate.”
The Fort Nelson and District Chamber of Commerce took issue with the notion that postage stamp rates will address potential long-term rate instability in the Northern Rockies .
It took the position that rate instability had never been shown to be a problem in the history of the Fort Nelson area and described the proposal as “a solution in search of a problem.”
The Fort Nelson and District Chamber of Commerce noted that the large capital project in this region which was used, Muskwa River Crossing upgrade, is estimated to increase rates by 13.7%, as compared to the approximate 50% increase which would result from postage stamps rates.
Randolph Robinson supported the chamber’s position noting that the delivery rate increase for SCF and as a result of the Muskwa River project is “very small in dollar terms” and “should not have a real impact on long-term stability.” The commission panel agreed with the Bonbright analysis.
In the panel’s view, the significant regional cross subsidisation which would result from the imposition of postage stamp rates is tantamount to undue discrimination, in that rate payers from one area are being asked to subsidise those from another.
Given the commission panel’s decision, it was not necessary to consider the issue of whether stakeholder engagement, particularly in Fort Nelson, which takes issue with it, was reasonable.
Follow
Recent Comments