EUB hearing room splits on endorsing N.B. Power's rate hike
N.B. Power and it's single largest customer continued their regulatory brawl over the utility's rates during closing arguments in front of the New Brunswick Energy and Utilities Board on Friday, with other parties falling in behind both sides.
In a comprehensive address he apologized for taking two hours to deliver, N.B. Power lawyer John Furey said the utility had proven its need for an 8.9 per cent increase from New Brunswick customers.
"N.B. Power submits that the evidence demonstrates that the revenue requirement is reasonable and should be approved by the board," he said.
But speaking directly after Furey, J.D. Irving Ltd. lawyer Nancy Rubin urged the EUB to grant little of what is requested, based on the case the utility put forward.
"The evidence in this proceeding suggests that the 8.9 per cent rate increase could be entirely or largely nullified," she said, just seconds into her own address.
The two-week rate hearing has been turning on the issue of how to deal with updated budget numbers requested by J.D. Irving Ltd. and reluctantly supplied by N.B. Power just this week.
The new projections seemed to show the utility's revenues and expenses for next year had improved from when it first prepared a budget and asked for such a large rate increase.
But the same numbers also showed N.B. Power is suffering huge and unexpected financial losses in the current year that might justify a big increase, even if next year's budget no longer does.
In his address, Furey urged the EUB to ignore the new information because it updates only part of N.B. Power's budget. Alternatively, he said, if the update is to be considered, it should involve the entire update, including heavy losses being experienced in the current year.
"The financial position of N.B. Power has deteriorated significantly in the second and third quarters of [this] fiscal year," he said.
Noting that the rate increase request was made before a December breakdown of the critical Point Lepreau nuclear generating station helped push debt levels at the utility above $5.3 billion, $380 million higher than last year, Furey said an even larger increase would likely have been asked for "if the current financial information were available to N.B. Power at the time it filed this application."
That position gained some sympathy from acting public intervener Rick Williams who suggested the new evidence should not be used "due to the poor performance" occurring this year.
Williams did question some expenses and suggested a 7.9 per cent increase might be sufficient for next year, but accepted that the overall financial health of N.B. Power is an urgent problem that needs to be addressed.
Scott Stoll, a lawyer representing New Brunswick's three municipal electric utilities in Saint John, Edmundston and Perth-Andover, said his clients do not like it, but support N.B. Power getting every penny it has asked for.
"The last thing anyone wants is an 8.9 per cent rate increase," said Stoll.
"Reluctantly, we view the risk of further deterioration of N.B. Power's financial state … as too great to recommend any reduction in the requested increase."
But on the other side of the issue, Twin Rivers Paper and the Canadian Federation of Independent Business sided with Irving in asking for a reduction of some kind.
Rubin would not give a figure of what J.D. Irving considers reasonable for an increase, except to say 0 per cent is probably too low.
Francois Beaulieu, EUB chair said, he is aware of N.B. Power's desire to have new rates in place by April 1, but said given the complexities of the issues involved that might not happen.
"We are going to work diligently but there is a lot of material to review," he said.