On April 1st BC Hydro rates are scheduled to increase by 4%, an increase 2.6% above the national inflation rate of 1.4%. This increase is one in a series of BC Hydro rate increases that will compound to a very significant 55% net rise. The importance of energy-efficiency projects has never before been so paramount in order for businesses to compete and thrive in the changing economic landscape.
It’s important for businesses to understand the following three factors about the April 1st rate increase:
1. The rates are compounding
It is important to understand that this 4% rate increase is one in a ten year series of compounding increases.
2. The Rate Rider levy is additional
The Rate Rider is a 5% levy that is charged to your total bill, before tax to recover additional and unpredictable energy costs. After April 1st, the Rate Rider amount that businesses will pay will therefore increase as your total bill will be higher.
3. Don't forget tax
Tax is unavoidable. Commercial accounts pay both PST and GST on their BC Hydro charges. While GST is recoverable for most businesses, the 7% PST is not. In a kind of ripple effect, the total amount of your bill will be higher each year from the rate increase, the higher Rate Rider levy, and the amount of non-recoverable PST.
To put the increase in perspective, for every $10,000 you paid for your electricity in 2009, you will be paying $14,515 from April 1st this year. On April 1st 2018 the same $10,000 of electrical service will cost you $15,474. After adding tax and the Rate Rider levy your total bill would be $17,385 – a significant increase in the share of the operating budget for a business. These figures are excluding demand and power factor charges that many business also pay – Kambo can help to reduce these charges.
How BC Businesses Can Combat Rising Energy Prices
I’s not all doom and gloom! The financial case for making energy efficiency retrofits is stronger than ever before for BC businesses. Typical comprehensive retrofits of commercial buildings can yield savings of 20-50% or more compared with pre-retrofit energy use. BC Hydro also offer a variety of rebates to BC businesses to further incentivize them to make upgrades.
A wide range of retrofit options are available for businesses. At Kambo we see switching to energy-efficient lighting as the low-hanging fruit as businesses can immediately see the reduction in their monthly electricity bill.
Typically our 30 minute energy assessments lead to identifying a 30% reduction in energy bills. Contact us today to arrange an assessment for your facility.
A Series of Rate Increases
In 2013, the province announced a 10-year rate plan for BC Hydro. BC Hydro announced that electricity rates would increase by 28% between 2013 and 2018. Electricity rates rose 9% in 2014, and another 6% last year.
The BC Utilities Commission (BCUC) has capped price increases for 2016, 17 and 18 at 4%, 3.5% and 3% respectively. The 10-year plan creates rate certainty for BC Hydro customers until the end of fiscal 2019. Beyond that, additional rate increases are predicted but exact rates and rate caps are yet to be decided.
Visit BC Hydro’s website for more information about their scheduled rate increases.