The B.C. Utilities Commission has rejected an application by FortisBC which would have lowered natural gas rates on Vancouver Island.

FortisBC had sought to amalgamate its utility operations in the province and implement a common rate. That would have meant its close to one million natural gas customers would pay the same amount per gigajoule, the standard measure for natural gas.

But the commission panel said in its decision that the proposal would not be fair. While the plan would have cut rates for Island and Whistler customers, it would have boosted costs for the majority of FortisBC customers in the province.

The B.C. Utilities Commission is an independent regulatory provincial agency. Its main job is to regulate natural gas and electrical utilities.

There are six natural gas rates in B.C.

The Island residential rate for 2013 is $15.725 per gigajoule. Fort Nelson has the lowest rate at $7.280.

Higher rates reflect higher costs for delivering natural gas.

FortisBC said Island customers would have seen costs fall by about 25 per cent, with the annual average bill dropping to $719.92 from $965.45. It based its figures on annual usage of 90 gigajoules.

It predicted that, without a common rate, Island customers could face an increase of 20 per cent, but the utilities commission panel questioned the company’s assumptions about the future. FortisBC maintained losing government subsidies and repaying federal and provincial loans makes the Island market “particularly challenging.”

FortisBC said that a common rate of $11.432 per gigajoule in 2014 for all customers would help stabilize rates. This would allow more customers to absorb local capital expenditures or economic difficulties, thus helping cut the chance of rate spikes for its smaller service areas.

FortisBC has three corporate utilities providing natural gas to six service areas. The largest has 850,000 natural gas customers in the Lower Mainland, Inland, Columbia and the Fort Nelson area (which operates as a separate utility and has its own rate). This utility has 40,000 kilometres of distribution infrastructure.

In the Vancouver Island-Sunshine Coast region, Fortis BC has 102,000 customers in 40 communities, serviced by 6,360 kilometres of pipeline. The underwater pipeline to the Island was completed in 1991. Whistler is the smallest operation with 2,600 customers and 139 kilometres of pipeline.

“We’ll be taking some time, obviously, to more carefully go through the decision with our regulatory team and we just need some time to digest and formulate any next steps that we have,” said Tracy Tang, FortisBC spokeswoman.

The utilities commission panel said the existing system with different rates makes sense, given the circumstances of the regions. Current rates have been determined to be just and reasonable. A common rate means that the Island and Whistler regions would be subsidized by other B.C. customers, it said.

Vancouver Island has unique characteristics, such as a lower consumption rate than other regions, plus continuing use of high-carbon heating fuels, the panel said. It suggested that FortisBC look at region-specific rates and incentives.

FortisBC argued that keeping different rates would make it more challenging to keep existing customers and attract new ones. The commission disagreed.

NATURAL GAS PRICES
What customers pay per gigajoule by zone in B.C.
Fort Nelson $7.280
Columbia $10.868
Inland $10.824
Lower Mainland $10.859
Vancouver Island $15.725
Whistler $17.850
Source: FortisBC

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