FortisBC has completed its purchase of Kelowna’s electrical utility assets.
The $55 million deal closed late last week after approval of the deal by both the B.C. Utilities Commission and Kelowna voters.
The city used its controversial alternative approval process, which puts the onus on opponents of a city-proposed plan to gather enough signatures on a petition to either have force the city drop it or hold a public vote.
The alternative approval process for the Fortis deal did not generate the required number of petition signatures to stop the deal or force a vote, so approval was deemed given by the residents.
The $55 million the city will receive will be invested in FortisBC to generate financial returns that, it says, will be used to help pay for future municipal projects.
The city decided to sell the assts of its electric utility after a study showed it will cost as much as $70 million over the next 20 years to maintain and upgrade the utility’s infrastructure.
For the past decade, FortisBC has operated and maintained Kelowna’s electrical utility assets under contract to the city. A separate company is currently contracted to handle the billing for the utility.
The completion of Fortis deal will allow the company to directly serve the 15,000 customers who were formerly served by the city. FortisB.C already has 115,000 customers between Kelowna and Lake Country.
FortisBC says existing customers will continue to receive their bills as usual, but will move to its rates starting on April 8. FortisBC will transition city utility customers to its billing system in 2014.
According to company spokesman Neil Proban, most residents will not notice much of a change in how much they pay for electricity each per month under the FortisBC rates.
He said while the city has a flat rate of 10.2 cent per kilowatt hour, Fortis has a two-tier system where residents pay 8.8 cents per kilowatt hour up to 800 kilowatt hours per month and 12.95 cents per kilowatt hour after that.
Because of the two-rate system, he said any customer using up to 1,250 kilowatt hours per month will pay the same or slightly less than they pay now and anyone using more will see their monthly bill increase. According to FortisBC, the average Kelowna household uses about 1,100 kilowatt hours per month.
Mayor Walter Gray hailed the deal as good news for city taxpayers.
“The successful transfer of the City’s electrical utility to FortisBC is great news for the taxpayers of Kelowna and our utility customers,”he said. “Taxpayers will benefit from the long-term financial earnings resulting from the reinvestment of the proceeds and customers will receive safe and reliable electricity from an experienced owner and operator, said Gray.