Letter: Government must heal in corporate (FortisBC) profits

Letter: Government must heal in corporate (FortisBC) profits


As the architect of the Oct. 4 RDOS motion to intervene in the Fortis rate design application which passed unanimously, I have been asked how I feel about the decision by the RDOS to not join in the intervener motion but to support the Anarchist Mountain Residents Society (AMRS) in their intervention.

In a small part, I can justify this as a win as the original goal was to see the end of the two-tier system but in another way, I have to see this as a loss as the two-tier system will still unjustly punish heat source reliant customers for another five years. Joining with the AMRS would have added more weight to the stance that the two-tier system be removed immediately and if Fortis then so desires, faze in the time of use option. That fight is now left to the AMRS with (support ?) from the RDOS.

As director Mark Pendergraft has stated this is a fight that is far from over as the cost of electrical power is still going to create enormous social issues.

Most of the problems that are being seen today are a result of the Gordon Campbell government pandering to large corporations, in this case, the Independent Power Producers (IPP). This is by no means only a B.C. problem only.

By guaranteeing a fixed return to the IPPs and forcing public utilities to purchase unneeded power at inflated prices, a huge weight was transferred to residents. If I remember right Fortis is 9.1 per cent guaranteed a return better than any pension plan I know of but there is also the issue of how the capital investment is calculated which could artificially inflate this number. I am not an expert in accounting but some auditing may be required here.

The 11.74 cents/kWh that will be the flat rate is currently the farm flat rate and even though less than the second tier rate or 15.115 cents/ kWh is still extreme for those without alternate heat sources. As most farms are not inside an area serviced by natural gas the alternate sources not only for farms but all rural residents tend to be wood. For those of you that have been around long enough you might remember when the provincial government and what was then West Kootenay Power came door to door requesting that we change over from oil, propane,  even gas to the much cleaner very abundant and what was to remain cheap electrical heating.

One other point on the flat rate of 11.74 cents/kWh. That is in today’s value, at this time Fortis is headed to the BCUC to apply for its latest round of rate increases that will no doubt be rubber-stamped as uncontested. That means that at the recent speed of Fortis rate increases the flat rate in five years will likely be the same as or more than the second tier rate is now.

You might think the current first tier rate of 10.117 cents/kWh would be what the flat rate should be but that is not true. It is actually subsidized down by a little over one cent by the second tier users. That was a revelation exposed by Corey Sinclair (Fortis spokesperson and manager of regulatory affairs) at one of the Osoyoos meetings. That means that to maintain their current rate of return (we do not know if this is above their minimum) the flat rate must be 11.74 cents/kWh. This effectively makes a mockery of Fortis claiming this to be a conservation rate as it actually encourages the frivolous use of electrical energy by Fortis’s natural gas customers enjoying a very low rate per joule of heating energy and a subsidized low rate for electrical energy. (I think a hot tub would be nice.) Even trying to say that this has been successful is insulting and criminal, unless you consider fixed income, lower income, seniors or any other group living wrapped in blankets, huddling in the dark, because they can’t afford the 50 per cent increase to the second tier on their power a success. This is not conservation, this is enforced poverty at the hands of a greedy corporation with no social conscience. If conservation was the true goal then the same formula would have to be applied to natural gas, also supplied by Fortis but that price is actually going down. No move toward conservation there.

This was an attempt to appease the environmental element in government at a cost to what Corey Sinclair admitted was only five per cent of their customer base. It looks good on paper to those pesky environmentalists. There actually may be a basis for a class action lawsuit but that would take a very good legal company and deep pockets to figure out where to point the gun. The decision came from the Campbell government as a directive to the BCUC. That being said, the punitive damages alone would be enormous as a decade of this nonsense has had enormous costs for the many trapped by this. That is wishful thinking though.

Now a little bit on the price per kWh. This is set by the use of a system called the Cost of Service Analysis (COSA). The problem here is that in absence of a competitive environment or in a collusive (monopoly) environment this is established by the producer (back to that guaranteed return), which means the more you spend the more you are guaranteed to make without the normal checks and balances in place by a truly competitive environment. This is rife for abuse.

With poverty and homelessness on the rise it will become even more incumbent on governments to heal in corporate profits and their own appetite for ever more cash or face a very Orwellian future. There is no longer any doubt that the middle class is rapidly being eliminated and the working poor becoming commonplace.

Rick Knodel, alternate Area C director