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.
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.
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.
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.
Click the questions below to reveal the answer.
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.
The two main drivers of the rate increase are inflation and a rate increase by FortisBC for purchased power.
Nelson Hydro purchases over 50% of its power from FortisBC. FortisBC is increasing its rates by 6.74% as of January 1, 2024. The cost of our poles, meters, equipment and tools is also increasing as a result of inflation. The rate of inflation for 2024 is expected to be 5.62% for recurring expenses.
The City of Nelson Council approved the three readings of a 5.20% increase for the residents of the City on November 7, 2023. The 2024 Revenue Requirement Application (RRA) was filed with BCUC on October 31, 2023 proposing a 6.20% increase for the rural residents within the Nelson Hydro service territory outside of the City of Nelson municipal boundary. Both increases are proposed to be effective January 1, 2024.
The current approved rates can be found here.
Yes. The urban rate increase for City of Nelson residents has been approved by Nelson’s Mayor and Council. The BCUC approved the 2024 rural rate increase on an interim and refundable basis while it formally reviews the Nelson Hydro application.
Based on Nelson Hydro's 2019 Cost of Service Analysis Nelson Hydro found they collected less from rural customers than it cost to service those areas. Further distances, low density development, longer lines, more equipment, remote conditions, and extensive vegetation management needs in these areas all add up to a higher cost of service.
In 2024 the residential rural rate for Nelson Hydro customers will be $0.1299/kWh. If rural customers were receiving power from FortisBC their 2024 rate would be $0.1416/kWh.
Providing service to rural customers in our area requires an immense amount of vegetation management to keep the power on. Nelson Hydro has spent approximately $4 million on vegetation management in the rural areas since 2017. Thanks to this program, tree-related outages have decreased by 80%* in the rural areas.
*Note: The biggest year for outages from tree contacts occurred in 2018 with 5,767,927 customer minutes compared with that of 1,130,180 customer minutes from January 1 to September 30 2023.
Reducing your energy load during peak power times is beneficial to everyone and can actually save you money by reducing our peak demand charges. Try to save your dishes, laundry, EV charging until the later evening, overnight, or early morning.
What is a peak demand charge? A peak demand charge is calculated through the wholesale power purchase agreement Nelson Hydro has with FortisBC. Peak demand charges occur when a new high or maximum demand of energy has been hit by Nelson Hydro customers. This typically occurs from 5-7pm during cold winter months. When the maximum or peak is set, the power agreement calculates electricity charges at that level for 11 months. So the less our customers use, the less money we pay to FortisBC, and the less we have to pass along those fees back to our customers.
Take steps to make your home more energy efficient. Reducing your power bill doesn't always require major investments. Here are some inexpensive ways to save energy and lower your electricity costs:
- Unplug Electronics: Many electronics consume energy even when turned off. Unplug chargers, appliances, and electronic devices when not in use to eliminate "phantom" or standby power consumption. Use power strips to easily turn off multiple devices at once. This is especially useful for electronics that continue to draw power when in standby mode.
- Energy-Efficient Lighting: Replace incandescent bulbs with energy-efficient options like LED or CFL bulbs. They use less energy and last longer.
- Seal Leaks: Ensure that doors and windows are properly sealed to prevent drafts. Use weather stripping or draft stoppers to seal gaps, keeping warm or cool air inside.
- Adjust Thermostat Settings: Lower your thermostat in the winter and raise it in the summer. Wear appropriate clothing and use blankets to stay comfortable. Consider installing a programmable thermostat to automatically adjust temperatures when you're not at home.
- Regular HVAC Maintenance: Keep your heating, ventilation, and air conditioning (HVAC) system well-maintained. Clean or replace air filters regularly and schedule professional maintenance to ensure optimal efficiency.
- Use Fans: Ceiling fans and portable fans can help circulate air, making you feel cooler in the summer and allowing you to lower your thermostat.
- Energy-Efficient Appliances: When purchasing new appliances, look for the Energy Star label, which indicates energy efficiency. Over time, energy-efficient appliances can save you money on your power bill.
- Limit Hot Water Usage: Lower your water heater's temperature and fix any leaks promptly. Consider using cold water for laundry and taking shorter showers.
- Cook Efficiently: Use small appliances like microwaves or toaster ovens for cooking small meals. Match the size of your cookware to the size of the burner on the stove.
- Natural Lighting: Take advantage of natural light during the day to reduce the need for artificial lighting.
- Educate Household Members: Encourage everyone in your household to be mindful of energy usage. Simple habits, like turning off lights and appliances when not needed, can make a difference.
For home upgrades like improving insulation or replacing old windows, help is available through a variety of provincial and federal energy-saving grants and programs. All RDCK and City of Nelson residents are eligible for energy rebates through FortisBC and they are welcome to register for the Regional Energy Efficiency Program (formerly EcoSave) for more information and support. To learn more, please visit: www.nelsonhydro.ca/ecosave
Although FortisBC is raising rates by 6.74%, Nelson Hydro is making budget cuts to keep rate increases below 6.74% even though over 50% of power is purchased from FortisBC.
Some of these cuts include:
- Postponing and reevaluating the timing and scope of some capital projects.
- Renegotiating pole sharing agreements with Shaw/Telus.
- Renegotiating energy prices for electricity sold to BC Hydro.
- Scaling back the rural vegetation management budget to the original budget and proposal.
- Focusing on the basics; safety, compliance and reliability.
- Exploring the feasibility of projects that would give customers more control over their power usage (Automated Meter Infrastructure Project) and alternate ways to store energy to reduce peak demand fees from purchased power (Battery Energy Storage System Project).
No. The individual businesses and homeowners who purchase electric vehicles are 100% responsible for paying for their own infrastructure to support and charge their electric vehicles. Nelson Hydro is encouraging EV charging outside of peak electric usage hours (5pm-7pm) to minimize peak demand charges.
The decision that was recently denied was unrelated to the 2023 or 2024 electrical rate increase. It was the Reconsideration and Variance of Order G-196-22 submitted by Nelson Hydro to have the BCUC reconsider some specific decisions within the 2019 Cost of Service Analysis.
Water that flows down the Kootenay River is 100% allocated by the BC Controller of Water Rights to BCHydro, FortisBC and Nelson Hydro. Nelson Hydro has been granted 2,963cfs of the 46,023cfs of the hydrogeneration output of the Kootenay River. There is no option to increase our water license. We generate electricity to the maximum amount permitted within our water licence, and then the remainder of the electricity is purchased from FortisBC.