2013 Electric Rate Increases December 10, 2012

Electric Rate Comparison – Residential Highest charge Kelowna and FortisBC Lowest BC Hydro and Nelson Penticton in the middle Highest and Lowest varies with consumption Shape of the graph illustrates the inclining block rate structure of BC Hydro, Summerland and Fortis rate structure

Electric Rate Comparison – Commercial Highest charge Grand Forks and Summerland Lowest BC Hydro Penticton in the middle to the top third Highest and Lowest varies with consumption

Electric Rate Comparison – Industrial Highest charge Nelson Lowest BC Hydro Penticton in the middle

Increases to be Addressed Increases that flow from British Columbia Utility Commission mandated increases: – FortisBC Cost of Service Increase – 1.60% – FortisBC Revenue Requirements Increase – 4.20% Increases to address Revenue differences between actual and modelled – 1.28%

Increases to be Addressed Traditionally Penticton rates have increased using three methods: – Apply the FortisBC increase at the Retail Level – Apply the FortisBC increase at the Wholesale Level – Apply the FortisBC increase at the average of the Retail and Wholesale Level

Rate Increase Alternatives Alternative 1 – Mandated BCUC increases (5.80%) at the Wholesale Power Purchase level – Revenue Loss increase (1.28%) at the Retail Power Sale level – TOTAL increase of 6.18%.

Rate Increase Alternatives Alternative 2 – Mandated BCUC increases (5.80%) at the Retail Power Sale level – Revenue Loss increase (1.28%) at the Retail Power Sale level – TOTAL increase of 7.87%.

Rate Increase Alternatives Alternative 3 – Mandated BCUC increases (5.80%) at the Average of the Wholesale and Retail levels – Revenue Loss increase (1.28%) at the Retail Power Sale – Total increase of 7.03%.

Residential Inclining Block Rate Structure Examined as part of the 2013 Review Found that the Residential Rate code would have to be split into three new Rate codes: Single Family Residential Customers using less than the median or average power use Single Family Residential Customers using more than the median or average power use Multi-Family Residential Customers Necessary to work with the Billing Software company to revise the billing process The above will take some time so the Residential Inclining Block Rate will be brought back to Council at a latter time for consideration

Impact on the Customer

Significant Projects On Bill Loan Program to help finance Residential home owners with retrofits that will save electrical energy Westminster Substation project $6,000,000

Projected Status of Electrical Reserve

Proposed Implementation Schedule December 10, 2012 – Introduction of the proposed rates December 17, 2012 – Public input session January 7, 2013 – First 3 Readings of an amending Bylaw to the Fees and Charges Bylaw January 21, 2013 – Adoption of the amending Bylaw to the Fees and Charges Bylaw February 1, 2013 – New electrical rates take effect

Staff Recommendation THAT the City of Penticton Electric Rates be revised to reflect: The 1.60% FortisBC Cost of Service Adjustment increase; The 4.20% FortisBC Revenue Requirement increase; and The 1.28% increase to cover revenue loss from modeled numbers vs. actual numbers.

Staff Recommendation AND that the following three alternatives be considered in the rate setting process: Alternative 1 – Apply the two FortisBC increases (5.80%) at the Wholesale Power Purchase Level and the Revenue Loss increase (1.28%) at the Retail Power Sale level for a Total increase of 6.18%. Alternative 2 - Apply the two FortisBC increases (5.80%) at the Retail Power Sale Level and the Revenue Loss increase (1.28%) at the Retail Power Sale level for a Total increase of 7.87%. Alternative 3 - Apply an average of the FortisBC increases from Alternative 1 and 2 and the Revenue Loss increase (1.28%) at the Retail Power Sale level for a Total increase of 7.03%.

Staff Recommendation AND THAT that the following schedule for the rate setting process be utilized: December 10, 2012 – Introduction of the proposed rates December 17, 2012 – Public input session January 7, 2013 – First 3 Readings of an amending Bylaw to the Fees and Charges Bylaw January 21, 2013 – Adoption of the amending Bylaw to the Fees and Charges Bylaw February 1, 2013 – New electrical rates take effect

Staff Recommendation AND FURTHER THAT notification advising the public of the public input session on December 17, 2012 be advertised in both local papers.

Questions