Fortis Vancouver Island Rate Amalgamation

Friday April 26, 2013 

Fortis BC applied for a reconsideration of the rejected application this spring to amalgamate their various service territories into one postage stamp rate territory and  actually amalgamate the various regional cost centers into one cost center.  Postage stamp rates are called that because they are rates that are the same everywhere, like a Canadian stamp for letter delivery, regardless of the cost of the service. Sending a letter across the country costs the post office more than sending  a letter across town but the stamp costs the same.

The BCUC had rejected the Fortis application on the basis that the rates would be unfair for lower cost of service regions and therefore they could not approve what they saw as a "cross-subsidy". Fortis has made the fairly complex but technically correct counter that the evidence on rates must be seen from the context of an already amalgamated company and in that context the cost of service is not different for any one region compared to another. They argue that it's in the public interest that consumers and businesses within the province pay the same rates for natural gas.  

Interestingly the BC Energy Ministry has given Fortis the full weight of their support and says it intends to actively intervene in support of the Fortis application.

It's our opinion that this application will, in due course, go ahead. This will mean eventual reductions in rates for Vancouver Island natural gas consumers and bring them into line with Lower Mainland and Interior customers. The playing field will then be level.