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The COSA (Cost of Service Analysis) study is an intensive review to ensure that each customer class both urban and rural is paying its share of each service provided. This 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 the rural areas. Nelson Hydro has also filed a Rate Design Application with the COSA requesting the BC Utilities Commission (BCUC) approval to increase rural residential rates. You can find the report submitted here.
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. For more information click here.
Nelson Hydro was established in 1892 and expanded to service rural area customers in 1922.
Revenue and profits go directly back to the City of Nelson to provide safe, reliable electricity at a lower cost than the alternative of FortisBC. It also funds ongoing capital improvements such as the construction of the submarine cable connection for Harrop and at Lakeside to the Northshore, and into those many services that both rural and city residents enjoy such as parks, arts, and heritage street lights in the downtown.
There are 25 kilometres of transmission lines, 233 kilometres of distribution lines, and more than 5,000 power poles in the rural service area, more than double what is in the City. Therefore, it takes more resources to supply safe, reliable power to our rural customers than to our City of Nelson customers.
Our extensive Vegetation Management Program works year-round to reduce the impact of fallen trees and branches during windstorms. In the past 4 years, we have spent $2.6 million, 86% of which was in the rural areas. This in turn reduces power losses and the cost to repair, as well as safety.
Rates for our customers vary, depending on their use. For example, homes that have access to natural gas for heating would have a lower electricity bill than those that use electricity for heating.
Based on an average use of 2,300 kWh of electricity bimonthly, a rural residential customer’s electric bill was $273.17 bimonthly in 2022. In 2023, this same customer’s bill would be $300.17 bimonthly. That is about $4.93 per day.
Learn how to save up to 30% or more on your energy bills. Lower energy use benefits everyone. By reducing your energy use, you not only lower your hydro bill, but you also reduce the amount of power Nelson Hydro needs to purchase.
Check out Nelson’s EcoSave Program for energy saving tips, energy evaluations, energy consumption monitors, infrared camera kits, and an infrared heat map of your home and learn how to save 30% and more on your energy bills. By using less energy, your personal impact on climate change is lessened.
Nelson Hydro is proposing that rural rates reflect a true Cost of Service model that is standard for other regulated utilities such as FortisBC. Like all utility companies, this includes a rate of return as a way to generate revenue and a way for investors to make a return on their investment. For Nelson Hydro, the City of Nelson is the investor, as the owner of the electrical assets. Unlike a private utility, this return on investment doesn’t go into the pockets of an external investor, but rather it is re-invested in the community. It pays for things like parks, arts, the heritage street lights in the downtown, all for the benefit of everyone who lives, works or plays in and around the City.
With no industrial tax base and taxation only coming from residential and small commercial businesses, these things simply would not be provided at today’s levels if the City of Nelson was not making this return.
Rates have always been higher in the rural area for commercial and street light customers as compared to the City of Nelson. The rural residential rates were also higher for almost 75 years until 1995 when City Council chose to raise city rates to equal rural residential rates to generate additional funds to begin a long-term capital renewal program.
This was at a time when the cross arms on the Hydro poles that hold up the live wires, were literally falling off the poles and lying on the street in the city. The increase in 1995 was meant to be a temporary increase, but the need for capital renewal funds necessitated City Councils to continue with these higher city rates to generate those needed funds. The impact of the capital program on rates in both the City and Rural areas was not quantifiable until the COSA was completed.