On February 24, the BC Utilities Commission issued its decision on BC Hydro’s application to change its rates. The commission approved a proposal that could save hundreds of dollars per year for households in rural, remote, and Indigenous communities. At Ecotrust Canada, we have made continued calls for electricity pricing to be indexed to a customer’s ability to pay and their risk of experiencing energy insecurity. While the changes do not fully address this need, they are a meaningful step toward improving energy affordability for those households paying the highest bills.
Over time, BC Hydro will gradually transition customers from the current two-tier rate to a flat rate, charging the same rate for electricity regardless of usage. As of April 1, all residential customers will have the option of moving to the flat rate if it benefits them.
The flat rate will fall in between the current Step 1 and Step 2 charge—meaning that if your home regularly goes into Step 2 usage, you stand to gain from switching to a flat rate. This has the potential to result in large bill reductions for households in rural and Indigenous communities, which tend to have less energy-efficient homes that are heated by electricity. For example, we found that BC Hydro’s two-tiered rate was contributing to electricity bills that were double the provincial average for homes in the Regional District of Mount Waddington.
How much could these households save? BC Hydro estimates that customers who use electric heating, have larger households, or live in colder regions could save an average of $60 per year by switching to a flat rate. Customers who use large amounts of electricity could save even more, over $500 per year in some cases.
A flat rate creates both winners and losers in terms of costs. Customers who currently consume large amounts of electricity (including wealthier households in large homes, but also lower-income rural households living in inefficient homes) could be better off under a flat rate, but others would pay more (including most apartment dwellers and lower-income urban customers who typically use less electricity).
To help address these negative impacts, Ecotrust Canada supports a basic electricity subsidy or rate credit for income-qualified customers as a necessary step toward energy affordability. Unlike a rate discount, which alters the price of electricity, a subsidy is applied directly to the bill—offering more direct and predictable relief. This approach is already in place in several jurisdictions, including Ontario’s Electricity Support Program.
The latest rate changes approved by the BCUC will benefit remote communities even more than grid-connected ones. BC Hydro will end its “Zone 2” rates for off-grid communities, which historically have paid higher rates due to their reliance on diesel-generated electricity. In the future, these communities, most of which are Indigenous, will pay the same rates as everyone else. As a result, residential customers in off-grid communities will save, on average, $160 per year. Eliminating the Zone 2 rate is a step toward reconciliation and greater fairness, aligning with the “postage stamp” principle, where all customers share the costs of maintaining BC Hydro’s system equally.
Overall, the suite of changes approved by the BCUC represents a significant win for rural, remote, and Indigenous communities that rely on electric heating and have faced exorbitantly high bills under BC Hydro’s two-tier rate. We look forward to working with BC Hydro as they consider additional measures to ensure everyone in BC can afford basic energy services like heating and cooling.