The claim that BC Hydro bills will increase by an “average” of 3.75 percent contains enough spin to make you dizzy. In fact, almost 80 percent of BC Hydro residential customers may experience bill increases higher than 3.75 percent on April 1. Low-income customers may fare the worst.
Introduction
Last week the BC government announced that it would be “setting BC Hydro’s annual average rate increase at 3.75% for the next two years”. BC Hydro, the provincially owned electric utility, issued similar media materials, which a contact kindly passed on to me (BC Hydro’s media department isn’t talking to me anymore, I can’t imagine why).
These materials all focus on the “average rate increase” of 3.75 percent, but are curiously reluctant to disclose what the new rates are.
BC Hydro did disclose them, however, in its rates application filed with the BC Utilities Commission (BCUC). Buried deep in the application (on PDF page 409 of 776 in fact – aren’t you glad you have me to read through this stuff?), you will find something surprising. BC Hydro’s Step 1 electricity charge, paid by the majority of residential customers, will actually go up by 6.8 percent (from 10.97 to 11.72 cents per kilowatt hour (kWh)).
This is a far cry from the 3.75 percent “average” that’s been claimed. What’s going on?
Bill increases
Prompted by a question from a reader in Comox BC, I’ve calculated what might really happen to customers’ bills on April 1.
BC Hydro has a two-tier rate structure, which it will phase out by 2028. For now, though, there is a lower (Step 1) rate for consumption up to 675 kWh per month, and a higher (Step 2) rate for consumption above that level. There’s also a Basic Charge, a daily rate that doesn’t change based on consumption.
There are also two “rate riders” on the bill, which were also part of the government’s direction to the BCUC.
Taking all the changes to these components into account, the following table shows the bill increases that different BC Hydro customers can expect on April 1, depending on their usage (the detailed calculations are in Attachments 1 and 2 at the end of this article):
I’m using monthly figures, to be consistent with those in the announcement, even though many customers are actually billed every two months. These figures are necessarily an approximation, as usage varies in different months of the year. Only BC Hydro can do the full annual calculation, but it hasn’t done so, at least not in their application to the BCUC.
As you can see, the increase for the average customer could be almost 5.5 percent (BC Hydro says its customers consume an average of 10,000 kWh per year, i.e. 833 kWh per month). This is considerably higher than the “average increase” of 3.75 percent from the media materials.
For a customer at the median level of consumption (half the customers consume more, half less), the increase will be 6.9 percent!
The only customers who will “enjoy” a bill increase of 3.75 percent or less are those consuming 1,200 kWh a month or more (i.e. 14,400 kWh per year). Customers using less than 1,200 kWh per month will have bill increases higher than 3.75 percent.
Using some customer data from BC Hydro, we can estimate that 78.8 percent of its residential customers will have bill increases higher than 3.75 percent (see Attachment 3 for the details).
It should be no surprise that lower-consuming customers would be paying proportionately more over the next two years, it’s a consequence of BC Hydro transitioning from a two-tier to a flat rate. But the government’s claim to be keeping the “average” increase down to 3.75 percent is misleading if almost 80 percent of customers will see their bills increase by more than that.
So much for energy affordability
This “average rate increase” phrase masks another issue: the bill increase will disproportionately affect low-income customers.
BC Hydro previously estimated that 71 percent of its residential customers consume 12,000 kWh per year or less, but for low-income customers, the figure is higher – around 81 percent. The larger number of low-income customers who use less electricity means that an even larger proportion of them will have rate increases well above the 3.75 percent figure being promoted.
Because the government has prevented the BCUC from reviewing BC Hydro’s application, there was no opportunity to demand that BC Hydro provide an analysis of the effect of the changes on different groups of customers.
Conclusion
It’s easy to see why the government was reticent about disclosing the new rates or allowing the BCUC to review them. The “average increase of 3.75 percent” narrative might have crumbled pretty fast.
BC Hydro’s rates application also discloses that many of its costs have increased dramatically since last year:
- cost of energy up 53 percent to $2.7 billion;
- operating costs up 27 percent to $1.7 billion;
- amortization up 19 percent to $1.5 billion; and
- finance charges up 69 percent to $1.2 billion.
What’s surprising is that rates for everyone didn’t go up even more.
Attachment 1 – 2024/25 residential rates
Attachment 2 – 2025/26 residential rates
Attachment 3 – Percentage of customers using 14,400 kWh or less
