Rate increase needed to help prepare New Brunswick grid for the future
February 20 2024, 11:02 AM
From Lori Clark, President and CEO
Skyrocketing housing prices, astronomically high-priced items on grocery store shelves and ever-increasing pain at the pumps: it’s no secret that New Brunswickers are facing higher prices on their everyday needs. Life in 2024 is resulting in many NB Power customers struggling to keep their heads above water financially due to the myriad of market, inflationary and ever-evolving industry forces at work in our society today.
0n December 15, 2023, NB Power made the difficult decision to ask the New Brunswick Energy and Utilities Board (EUB) to grant an electricity rate increase. We knew this request would be a tough one for New Brunswickers to hear and we’re truly taking to heart the concerns being raised in response.
On January 29, we asked the EUB to grant an interim rate increase related to this General Rate Application. Since then, there have been many questions and the topic continues to be discussed in the media, so we wanted to set the record straight.
NB Power is a cost-of-service utility, which means our rates must cover the costs of delivering electricity to New Brunswickers.
We had planned to file our rate application in October 2023 as mandated by the EUB but asked for an extension following news that the provincial government extended our 80/20 debt-equity target from 2027 to 2029.
We welcomed this news as it meant there was an opportunity to lessen the rate increase on New Brunswickers. Ultimately, it meant a reduction of approximately 8% in our rate increase needs for the two-year application. This provided New Brunswickers with significant near-term benefit.
It also meant a delay in our filing with the EUB as our team worked diligently to fully understand the impacts, leading us to file two months later. At a time when we’re doing everything we can to reduce cost pressures on customers while continuing to provide New Brunswickers with the electricity they need when they need it, the delay was definitely worth it as it gave us a chance to fully evaluate how much the increase could be lowered for our customers.
The delay in filing, while good for New Brunswickers, unfortunately means that the normal timelines for the EUB to conduct its thorough and independent review have been similarly delayed.
The rate application hearing is scheduled for May 13-28 with an expectation that we will not receive a full decision on the rate increase until July at the earliest. The work done by our analysts and independent experts supports the fact that we need an increase in residential rates of 9.8 per cent in year one and a second 9.8 per cent increase in year two in order to cover our cost of delivering electricity to New Brunswickers in the next two years.
Our revenue projections assume that the new rate will start on April 1, which is the normal course of business. This is why we’ve filed asking the EUB to grant an interim rate increase for April 1, to avoid revenue shortfall, which could put further pressure on our debt situation and lead to more tough choices and could impact our ability to properly run the business.
Our request for interim rates, or for rates to be in place for April 1, 2024, is allowed as part of the EUB’s process. It asks to increase rates on an interim basis only, pending the EUB’s final decision on the matter, which isn’t expected until July at the earliest. A hearing on the interim rate increase has been scheduled for March 1. NB Power will continue to respect the regulatory process and the EUB’s commitment to ensuring a fair process is followed to determine the rates New Brunswickers pay for power.
I want it to be clear to all New Brunswickers that if the EUB approves our interim rate request and then later issues a different decision, customers’ bills will be adjusted accordingly. For example, if the EUB approves our interim rate request now and then decides on a lower rate later, we will rebate the difference to customers.
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.
The proposed rate increase will directly impact all customers in a number of ways, including providing increased 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.
This is not business as usual for any of us. This industry is changing. We’re excited for the future and the opportunities it brings. While change can be overwhelming, it can also yield tremendous reward if implemented carefully, and we’re continuing to make advancements to not only improve our operations and our financial position but also contribute to a brighter, more secure and prosperous future for all New Brunswickers.
