N.B. Power turned down for 8.9% rate increase
The New Brunswick Energy and Utilities Board has declined to award N.B. Power the 8.9 per cent rate increase it was asking to impose April 1, and may cut it by as much as half, according to one estimate of a partial decision in the matter released by the board this week.
"It's likely to be half of that," said Rick Williams, referring to where the 8.9 per cent rate increase proposal will end up.
Williams was acting public intervener during N.B. Power's rate hearing and said the "magnitude" of changes the EUB has ordered in the rate application looks to be significant.
"Definitely," he said.
On Thursday, the EUB delivered what it called a "partial decision" on N.B. Power's rates for the coming year and made it clear it found the utility's request for an 8.9 per cent increase to be deficient.
"The Board is not satisfied that the rates, as applied for, are just and reasonable," the regulatory body wrote.
Citing N.B. Power's use of stale cost data from early June 2022 in its original application for April 2023 rates, the EUB said it wanted to base its decision on more recent information the utility was forced to disclose during two weeks of hearings that took place last month.
Those estimates showed major improvements in some of N.B. Power's financial prospects for the coming year, but how much money that would strip out of its need for a rate request is not entirely clear.
N.B. Power has been instructed to recalculate a significant proportion of its fuel and purchased power cost estimates and resubmit those along with a recalculated rate increase.
"N.B. Power is ordered to refile its 2023/2024 test-year budget with the above-noted adjustments identified, cost of service study with adjustments, proof of revenue, and the resulting rates," said the board.
N.B. Power had no immediate comment on the decision, or what its final calculation of the rate increase will be, given the changes ordered by the EUB.
"We plan to take time to review the ruling in full before responding to questions," wrote N.B. Power communications officer Dominique Couture.
N.B. Power's original application to the EUB was for a rate increase large enough to bring in $135.8 million in new revenue.
It was based on what Lori Clark, the utility's acting president, told the board was needed to cover inflation, rising interest rates and operational troubles battering the organization.
"In a single year, the cost of fuel and purchased power necessary to supply customers in New Brunswick has increased by $102.8 million," Clark told the hearing.
"This has occurred largely due to market price increases for natural gas, heavy fuel oil and electricity."
But the utility struggled to defend the trustworthiness of those numbers as the hearing progressed, given they had been put together months earlier, in early June 2022.
Original projections stale
In a pivotal moment days into testimony of N.B. Power witnesses, a lawyer for J.D. Irving Ltd., Conor O'Neil, won an admission that at least two internal updates of those projections had been put together by the utility since last June but were not shared with the hearing.
The board ordered them to be produced and the new numbers confirmed suspicions that N.B. Power's original projections were stale, and the company's revenues and expenses for next year were up to $106.4 million better than its budget showed.
But the update also revealed N.B. Power's current year has involved significant losses that have ballooned its net debt by $380 million and would add up to $30 million next year in unbudgeted interest costs.
In its partial decision, the EUB said it would add those interest costs to what the utility needs for next year, but will also subtract out at least some of the exaggerated amounts from its original budget caused by stale estimates.
Williams said it is not possible to pinpoint where that back and forth will leave the rate increase, but he believes the final figure will be known within the week, and it will not be close to 8.9 per cent.