Why does New Westminster have its own electrical utility? What benefits does it deliver to residents and businesses? Seeing as every time Hydro raises its rates to pay for new infrastructure or repairs we have to raise ours too.
Reason I ask is that as a single homeowner living in an apartment, I pay a flat rate that is higher than BC Hydro’s step 1 rates, and I never use enough electricity to move me into step 2 if we were on BC Hydro. So basically…families and people who use a lot of power over a two-month billing period are getting a discount compared to BCH, and I’m paying more.
We also don’t get the benefits of online access to our electricity consumption or basic things like e-bills. It’s nice that I could still pay my bill in person at City Hall if I chose…but I think I’d take being able to see my usage online, just like my cellphone bill or my cable/Internet.
I could have sworn I already wrote this blog post and drawn the graph below, but I can’t find anything in my archives, so I guess I just dreamed about it, or half-wrote it then moved on. So thanks for the reminder!
First off, we have our own electrical utility because we have always had our own electrical utility. It started in 1891, which makes it 70 years older than BC Hydro, and even 7 years older than Hydro’s grandfather, BC Electric Railway Company. Though most local municipal power systems across BC were amalgamated into BC Hydro (or West Kootenay Power, now FortisBC, or other entities), a few still remain independent.
The most obvious benefit is that the City makes money selling electricity. We purchase it at wholesale rates from BC Hydro, and we sell it at retail rates similar to what BC Hydro charges users in adjacent communities (more on this below). The difference between the two is about $8 Million a year. Some of that goes to pay for the operation of the utility (maintaining all those poles and wires, and the staff to do so) and contingency funds to pay for asset replacement as the system ages, but a significant portion of it goes into the City’s coffers, where it effectively offsets property taxes.
There are a few other benefits as well. We generally have more reliable power service and faster response during storm events, because we have dedicated crews and contractors who concentrate on dealing with New West issues while BC Hydro is sometimes stretched a little thin during large storm events. We also, by owning so much of our own utility assets, can leverage that for things like installing a fibre network (happening now) and district energy utilities (coming soon, I hope).
Historically, our Electrical Utility has emphasized reliable service and economy, and has (how can I put this politely…) lagged behind a bit on customer service innovation like on-line billing. They don’t have much of a web presence, and mostly operate out of a non-descript building adjacent to our works yard. Even finding out how our rates work can be a bit of a challenge with the City’s website, as most customers would not think to search for Schedule A of the Electrical Utility Bylaw to get answers. Really, in 2016, they shouldn’t have to. This is a place where a little Community Engagement effort would go a long way.
Now onto the rates issue. The City’s policy has been to maintain retail rates similar to BC Hydro retail rates, and overall when all of our different residential, commercial, industrial, and other rates are combined together, you find this is the case. However, the actual structure of how we charge is slightly different, and ultimately, some people pay a little more than they would on BC Hydro, some pay a little less.
As you have discovered, our base rate for residential users (the amount you pay to have an account, regardless of electrical use) works out to be a few cents higher per 2-month billing period (New West charges $11.92 per 2-month period, BC Hydro charges $0.1835 per day). We then charge a flat $0.0993/ kWh of use, where BC Hydro charges $0.0829 for the first 1350kWh per billing period (2 months) and $0.1243 for any above 1350kWh. So, although collectively, we pay about the same rate, residential users (like you and I ) who use less electricity probably pay more per unit relative to BC Hydro rates, that people who use a lot. To graph it out, it looks like this:
According to BC Hydro, the average BC household uses about 900kWh of electricity every month. If this average holds true for New West, then the average household is paying about $5.80 per month more than they would in a BC Hydro service area, or almost $70 more per year. Strangely, if you are an efficient apartment dweller and use half that amount of electricity, your monthly New West premium is even higher – at $93 per year.
If you use about 1130kWh per month, then your rates are the same as BC Hydro, and the more you use, the more your savings go up. At twice the average, 1800kWh/month, you would get about a $200 per year discount off BC Hydro rates by living in New West.
As our rate structure is flat, you are not subsidizing larger users – we all pay the same for each unit of electricity in New West. However, comparison to BC Hydro’s stepped rate structure gives the impression that we are encouraging consumption, but not doing enough to actively discourage it. If you add the base and metered values together, here is the true cost of what you pay for every kWh of electricity, based on your usage:
For context, my (admittedly back-of-the envelope) estimate is that the average New West household saves about $160 a year in Property Taxes (or, depending on your viewpoint, receives $160 worth of extra services from the City they don’t need to pay for through taxes) because we have an electrical utility and the profit it earns for the City. That might make you feel better, except that property taxes index with the value of your home, so again, the big-house-owner probably gets more benefit than the apartment dweller.
In summary, I don’t think this is good. I support the concept of City using the Electrical Utility to provide a financial benefit to the residents that own the utility, and offset their taxes. I support using “similar to BC Hydro” as the benchmark for our retail rates. However, I think the impression of benefitting larger users that is created by our flat rate structure sends the wrong message. I remember asking some questions about this back when I was still pretty new to the job, and I seem to remember getting a report that more of less confirmed what the graph above shows.
I’m not on the Electrical Commission, and I’m not sure when the next rate review will occur, but I’ll see what I can do.