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Return to the PST

The return to the Provincial Sales Tax (PST) on April 1, 2013 is expected to increase the cost of LEC's service. LEC prepared a report to the Council of the City of North Vancouver concerning this issue which can be found here.

The report provides detailed information on the impact of the PST and discusses the efforts that are being made to bring forward the issue to the attention of the provincial government. Since the presentation of the report to Council, LEC has been working with the Union of British Columbia Municipalities, a group of Lower Mainland municipalities as well as district energy providers to further raise the awareness of government officials. Various BC municipalities have also adopted resolutions concerning this issue.

While the report mentions an increase of 5% of LEC's rates due to PST, this is a long-term forecast and in the short-term, the immediate impact is expected to be of roughly 6% of the Commodity Charge or approximately 3% of the total invoice of an average customer. Considering the fact that the new PST is expected to mimic the rules and regulations of the former PST, the impact is expected to be as follows:

  • Since the input tax credit on energy purchases that was available under the HST will no longer be available, LEC's Commodity Charge will increase by 6%. (The PST does not apply to the carbon tax which is a component of the Commodity Charge calculation which explains that while the PST is 7%, the impact is only of 6%.)
  • Since the input tax credit will also no longer be available on the purchase of material and equipment, there will be a long-term impact on the construction cost of LEC's installations. This will be reflected over time by increasing the Capacity and Meter Charges.

LEC's main issue with regard to the impact of the PST is that it does not provide a level playing field to district energy customers. Residential customers do not pay PST on their natural gas and electricity purchases but end up paying it through the Commodity Charge when buying heat from district energy providers. Commercial customers must pay PST on their natural gas, electricity and heat purchases. But because PST is included in the Commodity Charge in addition to being applied to the invoice of district energy providers, commercial customers end up paying twice the PST on their purchase of energy.

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