FortisBC applies for common natural gas rates for all customers across the province

Application approval would eliminate rate discrepancies

SURREY, BC, Nov. 2, 2011 /CNW/ - FortisBC has filed an application with the British Columbia Utilities Commission (BCUC) to amalgamate its three natural gas utilities into one legal entity, and implement common rates and services for these customers across the province, starting January 1, 2013.

"We are proposing to bring all of our natural gas utilities together which will allow FortisBC to offer consistent natural gas rates and services across the province," said Scott Thomson, executive vice president, finance, regulatory and energy supply, FortisBC. "If our application is approved, each customer in a given customer class will be charged the same rate, regardless of where they live. This provides significant benefits to a sizable portion of our customers, notably on Vancouver Island, Sunshine Coast and in Whistler over the longer-term."

"We are committed to providing all of our customers in British Columbia with economic and fair natural gas rates. This application is revenue neutral to FortisBC and the proposed changes offer several benefits to many of our customers."

Currently, FortisBC provides natural gas to customers across the province under three separate legal entities with entity-specific rate structures. These separate legal entities, FortisBC Energy Inc., FortisBC Energy (Vancouver Island) Inc. and FortisBC Energy (Whistler) Inc., were formed as various natural gas utilities were acquired across the province. Each entity also provides different service offerings by region, such as energy efficiency and conservation initiatives or renewable natural gas.

If the application to amalgamate and offer common rates is approved, natural gas customers would see these changes in their annual bill and common service offerings beginning January 1, 2013.

Without common rates, FortisBC's forecasts indicate an approximate 20-40 per cent cumulative rate increase for Vancouver Island customers over the next three to four years, as a result of the expiration of the Royalty Revenue agreement with the provincial government at the end of 2011. This agreement was put in place to help offset the cost to Vancouver Island customers of bringing natural gas to the Island 20 years ago. The proposed amalgamation will mitigate the impact of this.

For example, based on average consumption and approval of FortisBC's 2012-2013 revenue requirements application, currently before the BCUC, typical residential customers on Vancouver Island and Sunshine Coast would see a decrease of approximately $262 to their annual bill, while typical residential customers in Whistler would see a decrease of approximately $623 to their annual bill.

FortisBC is proposing an initial small decrease to rates for typical residential customers in the Lower Mainland, Columbia and Inland areas in 2013. Based on average consumption and revenue requirements applications currently before the BCUC, typical Lower Mainland residential customers would see a decrease of approximately $14 to their annual bill, typical Inland residential customers would see a decrease of approximately $9 to their annual bill, while typical Columbia residential customers would see a decrease of approximately $13 to their annual bill. In 2014, as a result of amalgamation, typical residential customers in the Lower Mainland, Columbia and Inland areas would see an increase of approximately $29-36 to their annual bill.

For a typical Fort Nelson residential customer, FortisBC is proposing no change to rates from the proposed 2013 revenue requirements application, currently before the BCUC, by deferring the impacts of amalgamation for a five year period after which a gradual annual increase would come into effect over a ten year period until Fort Nelson rates align with the rest of the province.

If the application is approved by the BCUC, all of FortisBC's regulated natural gas utilities will be one legal entity under the name FortisBC Energy Inc. The company's electric operations will remain a separate utility with a separate legal name - FortisBC Inc. - with separate rates and service offerings for electricity customers. Customers will continue to know all of the companies under the shared name FortisBC.

More information about today's filing is available at fortisbc.com/ratedesign.

Additional information is also available in the backgrounder below.

FortisBC is an integrated energy solutions provider focused on providing safe and reliable energy, including natural gas, electricity, propane and alternative energy solutions, at the lowest reasonable cost. FortisBC employs more than 2,000 British Columbians and serves approximately 1.1 million customers in more than 135 B.C. communities. FortisBC is indirectly wholly owned by Fortis Inc., the largest investor-owned distribution utility in Canada. FortisBC owns and operates four regulated hydroelectric generating plants, approximately 7,000 kilometres of transmission and distribution power lines and approximately 46,000 kilometres of natural gas transmission and distribution pipelines. FortisBC Inc., FortisBC Energy Inc., FortisBC Energy (Vancouver Island) Inc., and FortisBC Energy (Whistler) Inc. do business as FortisBC. Fortis Inc. shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at www.fortisinc.com or www.sedar.com.

BACKGROUNDER

Beginning January 1, 2013, FortisBC is proposing to amalgamate its three natural gas utilities into one legal entity with common rates and services across the province. The application is revenue neutral to FortisBC and the proposed changes offer several benefits to many of our customers.

Currently, FortisBC provides natural gas to customers across the province under three separate legal entities with entity-specific rate structures. These separate legal entities were formed as various natural gas utilities were acquired across the province. Each entity is responsible for providing natural gas service in different areas of the province and customer rates differ based on which region of the province a customer lives in. The three natural gas utilities are:

  • FortisBC Energy Inc. - serving customers in the Lower Mainland, Columbia and Inland regions
    • Fort Nelson, although legally part of FortisBC Energy Inc., is treated as a separate region and has its own rate base and rate structure
  • FortisBC Energy (Vancouver Island) Inc. - serving customers on Vancouver Island, Powell River and the Sunshine Coast
  • FortisBC Energy (Whistler) Inc. - serving customers in Whistler and Squamish

If the application is approved by the BCUC, all of FortisBC's regulated natural gas utilities will be one legal entity under the name FortisBC Energy Inc. The company's electric operations will remain a separate utility with a separate legal name - FortisBC Inc. - with separate rates and service offerings for electricity customers. Customers will continue to know all of the companies under the shared name FortisBC.

Benefits of amalgamation and common rates

Overall, amalgamation offers several benefits including lower rates for some Vancouver Island, Sunshine Coast and Whistler customers, rate stability and simplicity for all, consistent programs and services, and greater reporting and operating efficiencies.

Lower rates for Vancouver Island, Sunshine Coast and Whistler customers

Common rates will result in annual bill decreases of approximately 26 - 48 per cent for residential and business customers in both the Vancouver Island and Whistler regions.

For example, based on average consumption and approval of FortisBC's 2012-2013 revenue requirements application currently before the BCUC, typical residential customers on Vancouver Island and Sunshine Coast would see a bill decrease of approximately $262 to their annual bill, while typical residential customers in Whistler would see a decrease of approximately $623 to their annual bill.

Rate stability and simplicity

The costs to operate our business, including costs related to infrastructure investments, ongoing maintenance or system replacements required to meet new customer demand for natural gas, will be spread across all customers around the province. Also, loss of customers or a reduction in use per customer will have less of an impact with a larger customer base. For these reasons, amalgamation will help provide rate stability for all customers, particularly those in smaller service areas such as Vancouver Island, Whistler and Fort Nelson.

Consistency

FortisBC will offer similar services for similar prices and be able to expand its service offerings, such as the renewable natural gas program, to all customers across the province.

Reporting and operational efficiencies

FortisBC may see efficiencies in its reporting requirements for regulatory, legal and financial filings. Any savings arising from reporting and operational efficiencies will help to lower rates for natural gas customers.

Fort Nelson

For a typical Fort Nelson residential customer, FortisBC is proposing no change to rates from the proposed 2013 revenue requirement, currently before the BCUC, by deferring the impacts of amalgamation for a five year period after which a gradual annual increase would come into effect over a ten year period until Fort Nelson rates are aligned with the rest of the province.

Over the longer term, Fort Nelson customers will benefit in a similar way as customers in Whistler. Costs from the region, such as significant localized investments in infrastructure, will be absorbed by the broader customer base, thereby stabilizing rates.

In addition to rate stability, Fort Nelson customers will benefit from access to new service offerings not previously offered such as renewable natural gas.

Lower Mainland, Columbia and Inland

FortisBC is proposing an initial small decrease to rates for typical residential customers in the Lower Mainland, Columbia and Inland areas in 2013. Based on average consumption and revenue requirements applications currently before the BCUC, typical Lower Mainland residential customers would see a decrease of approximately $14 to their annual bill, typical Inland residential customers would see a decrease of approximately $9 to their annual bill, while typical Columbia residential customers would see a decrease of approximately $13 to their annual bill. In 2014, as a result of amalgamation, typical residential customers in the Lower Mainland, Columbia and Inland areas would see an increase of approximately $29-36 to their annual bill.

Next steps

If the BCUC approves FortisBC's application, there will be common rates and service offerings for all natural gas customers across the province beginning January 1, 2013.

FortisBC is committed to consulting with its customers and stakeholders, and will meet with stakeholder groups to gather information and feedback as FortisBC prepares for the next phase of the rate design application. Any proposed changes will need approval from the BCUC.

Visit fortisbc.com/ratedesign for more information or to provide feedback.

 

SOURCE FortisBC

For further information:

Media Contact:

Kirsten Walker
Senior Corporate Communications Manager
Phone: 604-592-7507
Cell: 778-888-6049
Email: kirsten.walker@fortisbc.com
fortisbc.com
twitter.com/fortisBC
youtube.com/fortisBC


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