Now is the perfect time to take a step back and look at the financial landscape for your business in the year ahead. Regardless of the size of your facility and the nature of your business, energy is an important budget item that should be closely watched. While there may be a number of unknowns in the future of energy for BC, here is what we can share with you.
Consumers will carry the costs of large electrical infrastructure investments
The conference board of Canada estimates that over the next 20 years, some $350 billion must be invested just to maintain the reliability of the electrical system we have today. Across Canada many electricity assets are approaching their end of life and need to be upgraded or replaced. These factors, compounded with increasing demand, are spurring the nation-wide construction of new power plants and related infrastructure.
Given this, rate increases are inevitable as the costs for new electrical infrastructure such as transmission and generation facilities will have to be carried by consumers. BC Hydro’s construction of Site C dam which is estimated to cost $8.335 billion is an example of this.
Above: A rendered image of BC Hydro’s Site C dam.
50% rise in electricity rates
A study by CBC News of provincial utilities’ power-purchase agreements and financial statements indicates the average cost per kilowatt-hour across Canada will rise more than 50% by 2020 from 2011 rates.
In 2013 BC Hydro announced that electricity rates would increase by 28% between 2013 and 2018. Electricity rates rose 9% in 2014, and another 6% this year. The BC Utilities Commission has capped price increases for 2016, 17 and 18 at 4%, 3.5% and 3% respectively. Additional rate increases are predicted beyond 2018 but exact rates and rate caps are yet to be decided. The BC government has exempted BC Hydro’s Site C dam from review by the BC Utilities Commission, so it is predicted that the rate increases will be significant.
Rely on natural gas prices to be unreliable
Natural gas has a different scenario to electricity as Fortis simply passes on the market price of gas to customers, charging for delivery. Market price means that natural gas is pegged to international markets which are reliably unreliable and ever-evolving. In recent years BC and the rest of North America have benefitted from relatively low natural gas prices due to a glut in shale-gas.
What you can do to offset rate increases
While the forecasted rise in prices may seem like doom and gloom, not all is lost. In order to remain competitive in this changing landscape businesses need a fresh perspective on energy consumption. Typical comprehensive retrofits of commercial buildings can yield savings of 20-50% which is easily enough to offset rising energy prices.
In order to soften the blow of rate increases, and in an effort to reduce strain on the grid, utilities are offering a number of incentive programs. Both BC Hydro and Fortis offer rebates for businesses that upgrade to more energy efficient technology and equipment. As the old saying goes, you can lead a horse to water. The onus is on businesses to take advantage of these programs and make the upgrades.
The reality is that technology is continually changing and there are a range of things businesses can do to be more energy efficient. The question you need to ask yourself is, what is your business doing?
Kambo’s team of energy experts specialize in helping businesses to lower their energy costs and increase their energy efficiency. A free 30 minute energy assessment can help you to learn more about energy efficiency for your business. Talk to us today.