How Rates are Set

How Rates are Set

The City of Nelson Mayor and Council approve rates for the Nelson Hydro Urban Service Area and provide overall governance to the utility as a whole. Urban means areas within the City of Nelson. The British Columbia Utilities Commission (BCUC) approves rates and rate-setting principles for the Nelson Hydro Rural Service Areas. Rural means areas outside of the municipal boundary and within the Regional District of Central Kootenay.

Rate Setting Graphic 1

All utilities whose jurisdictions fall under the BCUC are required to have an approved Cost of Service Analysis (COSA) to set electric rates. In Nelson Hydro’s case, this is the rural portion of the service territory only.

On November 27, 2020, Nelson Hydro submitted the 2019 Cost of Service Analysis to the BCUC. The review looked at the hydro rates and services in detail and recommended an adjustment to rural rates in order to cover the additional costs incurred to provide service to these areas. Based on the 2019 data, Nelson Hydro collects less from rural customers than it costs to service rural areas. On July 19, 2022, BCUC issued a Decision and Order approving the 2019 COSA subject to a number of modifications. 

Annual Process

BCUC requires utilities under their jurisdiction to apply annually for their rates for the upcoming year. This is called a Revenue Requirements Application (RRA). Nelson Hydro submits the upcoming year's Revenue Requirements Application for rural customers based on the approved principles of the 2019 COSA in the fall of each year. Interim approval from BCUC is expected by the end of each year, in the year the application is made, to be effective January 1st of the next year. Final approval from BCUC will occur sometime later in that same year.

Going forward, the approved 2019 COSA will inform the annual Revenue Requirement Applications submitted to support the strategic and operational objectives of Nelson Hydro each year until a new COSA is approved by the BCUC. Cost of Service Analyses are typically reviewed every 10 years or sooner when the costs of operating are not met by the revenue received from electric rates.

COSA vs RRA vs City Council

2024 Rates FAQ

Nelson Hydro is a caring utility that empathizes with our customers' concern over rising rates because we are customers too. 

We review our costs annually to ensure that i) customers are receiving value for service, ii) the utility can provide a safe and reliable electric service in compliance with provincial and federal regulations, and iii) the utility provides an equitable return on investment back to the City of Nelson.

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BCUC is an independent agency of the Government of British Columbia to ensure utility rates are fair, just and reasonable for both the utility and ratepayers, and there is transparency across the province.

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