NB Power asks for 9.8% rate increase in 2024 and 2025

NB Power is requesting a 9.8 per cent rate hike for residential customers in each of the next two years as it looks to find its fiscal footing.

The utility says the hikes are needed to meet legislated debt-to-equity targets by 2029, though CEO Lori Clark says she understands the impact the hike would have on customers.

“We’re trying to balance the impact on rates with the health of the utility and the reliability of our assets,” Clark said.

“We are doing this as quickly as we can to improve the financial health but we always have to be concerned about the impact on our customers.”

On top of the general rate hike, the utility is also as the New Brunswick Energy & Utilities Board (EUB) for a 3 per cent increase in its variance account, which asks ratepayers to cover past unexpected financial challenges. That means residential customers could see their bills jump by 12.8 per cent, which would mean an average increase of $24.53 on their monthly bills.

Green leader David Coon said the increases are the result of years of government meddling in NB Power’s rate requests. In a presentation to reporters the Crown corporation said that it’s rates have grown by an average of 1.69 per cent over the last 13 years, far below the growth in other jurisdictions.

“The chickens have come home to roost,” Coon said.

“They kicked things down the road, kicked things down the road as long as they could, and they’ve hit the wall. And so we see this application for high power rates.”

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Coon said immediate help should be delivered to low-income households and that the government should repeal legislation offering lower rates to some industrial customers.

Liberal leader Susan Holt says she wasn’t surprised to hear about the size of the requested hike, but says the provincial government needs to step in to support ratepayers by removing provincial portion of HST from power bills.

“Taking the PST off in time for April 1 would mean a neutralizing of this first rate increase, and so I hope the government will reconsider our proposal to offer relief to folks who are feeling really stressed out right now,” she said.

The utility has been under fire for years over its inability to turn a profit or meet debt reduction targets. On Thursday, the province’s auditor general Paul Martin said that NB Power has failed to demonstrate its financial viability and said that a combination of rate hikes and cost-cutting measures were needed to ensure it will be able to meet the capital demands of the future.

Large expenditures such as the Mactaquac life-achievement project and the conversion of the Belledune coal-generating station to biomass lurk on the horizon.

In October, the province extended the deadline for NB Power to reach a debt-to-equity ratio of 80/20 to 2029 from 2027. The utility had been poised to make its rate application when the change was made, which Clarke said would have been in the double digits for multiple years.

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Energy Minister Mike Holland said he and the department opted to extend the deadline for the requirements after they were told how large the rate request would be.

“We realized that, not by intervening on what they need for a rate increase, but by moving that date on a calendar it would offer them some flexibility and as a result bring a lower rate increase request,” Holland said.

Clark said she is confident the utility will begin to hit its stride and that its projections to meet the 2029 targets will pan out. Part of that confidence is due to the variance account, which means costs incurred during unexpected outages will be recouped in later years. For example, this year’s 3 per cent increase to the variance account was due to the unplanned January 2023 outage at Point Lepreau and the cost of purchasing replacement power.

“We believe the strategic plan we put in front of us… will help us achieve financial health,” Clark said.

It’s unclear how much of an increase the utility will get. Last year, it requested an 8.9-per-cent hike but the EUB, which regulates prices, only approved an increase of 5.7 per cent.