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.

Rate Setting Graphic 3

Why are rates increasing in 2024?

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. 

What are the proposed electric rates for 2024?

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.

How can I reduce my electricity bills?

Rebates and other energy conservation programs through the EcoSave Program are available to help you reduce your electricity bill.

Have more questions?

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