ORDER NUMBER
G-196-22
IN THE MATTER OF
the Utilities Commission Act, RSBC 1996, Chapter 473
and
Nelson Hydro
Cost of Service Analysis and Rate Design Application
BEFORE:
R. I. Mason, Panel Chair
A. K. Fung, QC, Commissioner
T. A. Loski, Commissioner
on July 19, 2022
ORDER
WHEREAS:
A. On November 27, 2020, Nelson Hydro filed a Cost of Service Analysis (COSA) and Rate Design Application with the British Columbia Utilities Commission (BCUC) (Application);
B. Nelson Hydro is owned and operated by the City of Nelson and is excluded from regulation under the Utilities Commission Act (UCA) to the extent it is serving customers within its municipal boundaries. Accordingly, the BCUC’s review of the Application pertains solely to Nelson Hydro’s non-municipal, or Rural, ratepayers;
C. In the Application, Nelson Hydro requests approval of the following:
i. Proposed return on equity for the Rural service area at 9.25 percent on Nelson Hydro’s actual debt to equity ratio to be used for future rate applications;
ii. Nelson Hydro’s Policies approved by City Council relating to the non-municipal portion of the utility (i.e. the Allocation Factors Policy, Generation Rates Policy, Debt Policy, and Deferral Account Policy);
iii. The COSA (2019 COSA); and
iv. Proposed rate changes to Rural residential rates effective September 1, 2021 (to be phased in over a three-year period with follow-up adjustments effective September 1, 2022 and September 1, 2023);
D. By Orders G-346-20, G-117-21, G-224-21, G-278-21, G-332-21, and G-387-21, the BCUC established and amended a regulatory timetable for review of the Application, which included intervener registration, three rounds of BCUC and intervener information requests (IR), and written process for final arguments and Sur-Replies;
E. In response to IR No. 2, Nelson Hydro subsequently withdrew the approval sought for Nelson Hydro’s Policies approved by the City Council relating to the non-municipal portion of the utility; and
F. The BCUC has considered the evidence and arguments filed in the proceeding and makes the following determinations.
NOW THEREFORE pursuant to sections 58 to 61 of the UCA, for the reasons provided in the Decision issued concurrently with this order, the BCUC orders as follows:
1. The 2019 COSA is approved subject to the directives and determinations set out in the Decision issued concurrently with this Order.
2. Nelson Hydro is directed to recalculate the 2019 COSA in a manner compliant with the directions and determinations set out in the Decision issued concurrently with this Order and to submit to the BCUC the modified 2019 COSA with a working electronic spreadsheet to show the calculations as a compliance filing within 30 days after the issuance of this Order.
3. Nelson Hydro’s return on equity is set at a 50-basis point premium above the benchmark as established by Order G-75-13 on a deemed debt to equity ratio of 50 percent/50 percent.
4. Nelson Hydro must comply with all other directives and determinations outlined in the Decision issued concurrently with this Order.
DATED at the City of Vancouver, in the Province of British Columbia, this 19th day of July 2022.
BY ORDER
Original signed by:
R. I. Mason
Commissioner