NB Power tries to convince consumers rate hikes are for the best

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Feeling the pressure from consumers, NB Power is saying its huge rate hike demand could have been far worse.

The public utility’s president and CEO Lori Clark says without the extra time the Progressive Conservative government granted it last year to pay down its $5-billion debt, the cost of electricity could have climbed much higher.

“We welcomed this news as it meant there was an opportunity to lessen the rate increase on New Brunswickers,” wrote Clark in an op/ed piece for Brunswick News. “This provided New Brunswickers with significant near-term benefit.”

Without the extra two years to pay down the debt – a date that the provincial cabinet shifted last year from 2027 to 2029 – the utility would have needed an extra eight per cent in rate hikes over the next two years, the CEO noted in the editorial piece.

Add that to the existing request of a 9.8 per cent hike this year for residents, plus a variance account recovery of an extra three per cent, followed by another 9.8 per cent increase next year, and NB Power’s rate hike demands would have added up to an unprecedented 31 per cent over two years.

As it stands, NB Power is seeking to increase residential rates by 23 per cent over the next two years, still the highest hike in generations.

Political scientist Tom Bateman said in an interview NB Power’s business is suffering from high inflation, and the big storms that have battered the province, knocking out electricity to tens of thousands of people, haven’t helped.

As a Crown corporation it needs the public onside or at the very least have a public understanding about what this is all about.

Tom Bateman

A fierce December windstorm caused about one-quarter of homes and businesses in the province to lose power at some point. It took eight days for every last person to get the lights back on.

“The inflation spiral hurts consumers, but it also hurts everybody who’s spending money on wages and materials, including NB Power,” said the St. Thomas University professor.

“Everyone’s going to find a 9.8 per cent increase to power rates to be very difficult to accept. So in terms of the op/ed, I think NB Power felt that they not only needed to speak to government or the Energy and Utilities Board, but also to New Brunswickers in general, who would be a major pressure point in getting the rates passed.”

The CEO has argued, as has Energy Minister Mike Holland, that previous rate freezes and reductions imposed by the provincial government and the regulator have left NB Power seriously short of money.

In the op/ed, Clark argued that New Brunswickers were still getting electricity that’s very cheap.

“Right now, New Brunswickers are paying among the lowest residential electricity rates in Atlantic Canada. Even with the potential rate increase, New Brunswick will still have a lower rate than Nova Scotia and Prince Edward Island, and remain among the lowest in Eastern Canada and the U.S.”

She said the rate hikes would help provide energy security now and into the future.

“It will also allow us to make stronger investments in energy efficiency and make needed improvements at the Point Lepreau Nuclear and Mactaquac Hydro generating stations to improve reliability. And we’re planning to make needed improvements to our customer care services.”

Bateman said NB Power was trying to build up good will with consumers.

“It’s like health care. Everyone gets sick. Everyone needs to see a doctor and everyone is aware of healthcare delays and the lack of doctors. So any public policy change reaches an attentive public. And I think energy is the same. It’s part of our critical infrastructure, everyone depends on it, everyone consumes it, and everyone pays for it. NB Power knows this and as a Crown corporation it needs the public onside or at the very least have a public understanding about what this is all about.”

The utility is asking the board for interim rate hikes in April because it’s unlikely the regulator will make a final decision on rates until July or later, given the mountain of evidence before it and how late NB Power’s application came in.

NB Power had to redraw all its numbers when the Tory cabinet gave it last-minute permission to slow down its debt repayments. Premier Blaine Higgs has rejected the idea that cabinet gave its approval because he was thinking about calling a snap election at the time and feared the electorate’s wrath over high electricity rates.

Clark said if the board later decides the rate hikes shouldn’t go ahead, NB Power will adjust people’s bills.

The board will consider the interim rate hike application March 1 at a special hearing.