N.B. power rate hike to be nearly 13 per cent on April 1: intervener

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Editor’s note: This is a developing story. There is a more recent article here.

NB Power residential customers will be hit with a rate increase of nearly 13 per cent on April 1, after a second decision by the province’s utilities board adds even more to bills, says New Brunswick public intervener Alain Chiasson.

The New Brunswick Energy and Utilities Board decided on Friday to approve a call for an interim rate increase on April 1.

That hands down an average increase for all customer classes of 9.25 per cent.

It specifically means 9.8 per cent for residential customers.

But Chiasson says that’s not all as a second hearing slated for Tuesday is likely to add another three per cent to that interim increase, meaning bills will likely spike by nearly 13 per cent all at once in just two weeks time.

On a $150-a-month residential bill, an extra 12.8 per cent equates to an extra $19.20 a month.

That’s $230.40 annually.

“It’s significant,” Chiasson said in an interview.

“Everything is going up and some people will have a hard time making ends meet.”

NB Power made the unusual move of asking the province’s energy and utilities board to approve its request for a rate increase on an interim basis, before a full hearing on the matter could be completed, citing its deteriorating financial standing.

Its application cited an expected revenue shortfall that would be $32.6 million higher if a decision on its proposed rate increase wasn’t approved until July. The utility has maintained that it needs the extra profit to pay down debt, in order to achieve a capital structure of at least 20 per cent equity as mandated by its governing legislation.

In a report issued in December, auditor general Paul Martin noted the utility’s debt-to-equity ratio had fallen to 94:6 last year.

NB Power also argued that a full hearing of its rate application was delayed.

The utility blames that on a last-minute decision by the provincial government to move back its debt reduction target from 2027 to 2029.

The change allowed NB Power to lower its initial rate increase request from 12 per cent to 9.25, but in turn made it miss filing deadlines.

A transcript of Friday’s decision shows the EUB agreed, stating that a delay in hiking rates “would have deleterious impact on NB Power.

Meanwhile, a second hearing anticipated to hike rates further is set for Tuesday, with the board set to deliver a decision on what’s called a “variance account recovery” filing.

NB Power annually projects the costs of delivering electricity for the upcoming year, and previously had to swallow any variance if it was off with its calculations.

But following changes to the Electricity Act in 2021, NB Power must now file a report each year detailing where actual costs landed, with the energy and utilities board then deciding if ratepayers should pay more or receive a reduction in rates.

Last year, customers received a 0.9 per cent rebate on their bills over 12 months.

This year, the utility called for a three per cent increase to rates for a year, blaming an unplanned outage at the Point Lepreau Nuclear Generating Station.

“That’s going to be granted because it’s mostly an accounting exercise, so there’s not much we can oppose with it,” Chiasson said. “It’s more a calculation embedded in the legislation and the EUB doesn’t have much discretion.”

He added: “But it means you could have an overall increase over last year of 12 to 13 per cent on April 1.”

Chiasson said he will argue against the average increase for all customer classes of 9.25 per cent later this year when full hearings are held.

But those aren’t slated until May.

A final ruling won’t come until July, or even later, the EUB has acknowledged.

In the transcript of Friday’s hearing it maintains the massive increase isn’t final and NB Power still must argue its case.

“This ruling does not mean that the board accepts NB Power’s proposed 2024-25 revenue requirement, rates, or other requested approvals for the purposes of the final decision in this matter,” utilities board member Christopher Stewart said.

“All of these issues will be considered, and the evidence will be examined, during the full hearing of NB Power’s general rate application in May.”

Chiasson said he will argue against what he called an “unprecedented increase.”

“There could be a modification,” he said, noting that the board has a history of granting a lower rate than initially asked.

“What could happen is that if they cannot justify their full rate increase, there would probably be a credit on NB Power invoices later this year, giving a credit for the amount that was not approved by the energy and utilities board.”

NB Power spokesperson Dominique Couture said on Monday that NB Power awaits the utilities board decision on the variance account, slated for Tuesday. It will then adjust its rate schedules and file those with the EUB for approval to go into effect on April 1.