NB Power seeks special pre-approval of big rate hike

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NB Power wants to charge people more for electricity ahead of a hearing that will decide if its proposal has merit.

The public utility has sent a letter to the New Brunswick Energy and Utilities Board asking it for an average interim rate increase of 9.25 per cent on April 1.

It warns that without the interim rate hike, it risks losing close to $33 million, a move that would damage its bottom line.

The letter dated Jan. 29 also says NB Power would lower people’s bills in the future if the board later decided a steep increase wasn’t warranted.

“No factual circumstance exists which would justify the exercise of discretion by the board to deny the requested interim order,” wrote John Furey, NB Power’s lawyer, adding that the date set for the hearing – the board plans on listening to the evidence over 10 days between May 13 and 28 – “was beyond the control of NB Power.”

Last fall, as Premier Blaine Higgs mused about calling a snap election, the provincial cabinet gave approval to a long-standing request of NB Power: it provided the utility with more time to pay down a large chunk of its colossal, $5-billion debt.

The request was granted Sept. 25, only nine days before NB Power was going to formally and publicly make its rate increase request to the board on Oct. 4.

Armed with the new directive granting it an extra two years to pay down its debt by 2029, NB Power asked the regulator for more time to redraw its complicated financial plans.

NB Power eventually submitted the rate request in December, well after Higgs had dropped the idea of an early election call. If granted, the rate hike would be the biggest jump in New Brunswickers’ electrical bills in more than 40 years.

At the time, Energy Minister Mike Holland said his Progressive Conservative government’s decision had nothing to do with politics and was simply in response to NB Power’s entreaties of facing damaging economic headwinds.

If the rate increase is lower than what was put in place for April 1, then customers will receive a billing adjustment

Dominique Couture

In NB Power’s Jan. 29 submissions to the board, it included an affidavit from Darren Murphy, its chief financial officer and senior vice president.

He wrote that without an interim order, NB Power likely wouldn’t be able to pass on rate increases to its 400,000 customers until at least July.

He made this calculation based on the reams of information and evidence the board would have to go through, and the time it took to make previous decisions at other hearings.

For each month there’s a delay, NB Power would lose more money, Murphy warned. For instance, if higher bills don’t go out till July 1, the losses would be about $33 million. Should the date be Sept. 1, the losses would be closer to $53 million.

NB Power also says its projected annual profit risks being cut by more than half, from an expected $64 million to $31 million, if rates don’t get hiked till July.

Those profits are normally used to pay down debt, and NB Power has a directive from the provincial government to improve it debt-to-equity balance by 2029, the equivalent of paying down about $1 billion in five years.

The government is concerned that without big debt reduction, NB Power won’t be able to finance big overhauls of its aging facilities, such as the Mactaquac hydroelectric dam near Fredericton, the Point Lepreau nuclear plant near Saint John and the coal-fired Belledune plant in northern New Brunswick. Electrical demand in New Brunswick is steadily increasing with the rising population.

Dominique Couture, NB Power’s spokeswoman, said on Monday people can rest assured they won’t pay too much for the electricity they use. The independent, quasi-judicial board will ultimately decide how much people should pay after sifting through thousands of pages of evidence and hearing testimony from experts.

“If the rate increase is lower than what was put in place for April 1, then customers will receive a billing adjustment,” she told Brunswick News.