LETTER NO. L-21-00 ROBERT J. PELLATT SIXTH FLOOR, 900 HOWE STREET, BOX 250 COMMISSION SECRETARY VANCOUVER, B.C. CANADA V6Z 2N3 Commission.Secretary@bcuc.com TELEPHONE: (604) 660-4700 web site: http://www.bcuc.com BC TOLL FREE: 1-800-663-1385 FACSIMILE: (604) 660-1102 Log. No. 2608, 2861 VIA FACSIMILE 294-4120 June 2, 2000 Mr. Keith W. Sashaw Executive Director Electrical Contractors Association of B.C. 201 – 3989 Henning Drive Burnaby, B.C. V5C 6N5 Dear Mr. Sashaw: Re: British Columbia Hydro and Power Authority Electrical Contractors Association of B.C. – _Complaint regarding Padmounted Transformers_ Currently, B.C. Hydro customers that need transformers over 500 kVA are required to provide their own transformation and take electricity from B.C. Hydro at primary voltage. B.C. Hydro is proposing to offer 750, 1000 and 1500 kVA transformers such that customers requiring the larger transformers may, at their option, choose to receive electricity at secondary voltage. Customers receiving electricity at secondary voltage would avoid the installation and maintenance costs related to the transformer, but would forego the $0.25/kW rate discount available to customers providing their own transformation. In a letter dated February 4, 2000, the Electrical Contractors Association of B.C. (“ECA”) filed a complaint with the Commission related to B.C. Hydro’s decision to supply the larger transformers. The ECA argued that B.C. Hydro’s provision of the larger transformers would impede future efforts towards deregulation and impose economic hardship on the electrical contracting/manufacturing industry. The ECA also argued that B.C. Hydro operates under different regulations and has an artificial competitive advantage in providing transformation. This competitive advantage appears to be related to the electrical code requirement that customers providing their own transformation must install a primary disconnect switch, while other less expensive alternatives are available if B.C. Hydro supplies the transformation. The Commission finds that the provision of larger transformers by B.C. Hydro would not significantly affect future efforts towards deregulation. Transformers are and will continue to be a normal part of the regulated distribution infrastructure. The possible impact of the provision of transformers on the electrical contracting/manufacturing industry is beyond (not within) the jurisdiction of the Commission. The competitive advantage issue appears to be primarily related to electrical code requirements, which are, again, beyond the Commission’s jurisdiction. The Commission was concerned about the possible impact on other ratepayers of B.C. Hydro’s proposal to supply larger transformers. Furthermore, the Commission acknowledges that an unfair economic advantage could exist if B.C. Hydro’s other ratepayers are required to subsidize customers with transformers in excess of 500 kVA. To verify that other ratepayers will not be required to subsidize customers with larger transformers, the Commission requested that B.C. Hydro provide a comparison of incremental costs and revenues related to providing these transformation services. A copy of B.C. Hydro’s May 19, 2000 response is attached for your information. . . . /2
2 LETTER NO. L-21-00 Upon review of B.C. Hydro’s May 19, 2000 response, the Commission is satisfied that B.C. Hydro’s decision to supply larger transformers will not require subsidization by other ratepayers. The Commission notes that B.C. Hydro’s estimates of the incremental benefits to the customer were not taken into account in arriving at this determination. The provision of larger transformers by B.C. Hydro is in response to customer requests and enables greater customer choice. This service is already available from other electrical utilities. It allows businesses to be more competitive and will provide benefits to B.C. Hydro’s ratepayers. Accordingly, the Commission will allow B.C. Hydro to offer electricity at secondary voltage to customers requiring 750, 1000, and 1500 kVA transformers under the same terms and conditions currently available to customers requiring transformers no larger than 500 kVA. Yours truly, Original signed by: Robert J. Pellatt MG/cms Enclosure cc: Mr. Ray Aldeguer, Senior Vice President Legal and Regulatory Affairs and General Counsel British Columbia Hydro and Power Authority Complts/BCH/Cor/ECA PadmountTransformers
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