Large price hikes requested by N.B. Power to get long-delayed review

A long-delayed hearing into two large rate increases sought by N.B. Power is scheduled to begin in Fredericton today, although for months the utility has been charging customers some of the higher prices that will be under review.

The New Brunswick Energy and Utilities Board is expected to hear evidence sporadically over 16 days starting this week and ending in late August to determine whether N.B. Power should be allowed to raise its electricity rates by nearly 20 per cent over two years.

The utility says it needs the money to slow growth in its $5.4 billion debt load as it begins spending billions more on major infrastructure projects, including a refurbishment of the prematurely aging Mactaquac hydro electric dam outside Fredericton.

Highlighting the gravity of the request, N.B. Power president Lori Clark will appear at the hearing for a second straight year to personally give evidence about the need for higher rates, something previous chief executives at the utility have rarely done.

"The cost of delivering electricity has risen significantly," Clark says in an opening statement that has already been filed with the EUB and is expected to be delivered today.

"We need to raise rates to allow us, as a cost-of-service utility, to cover our costs and that is reflected in our application.  We understand that nobody likes to see rates going up, and we know this is a difficult time for our customers as they are already facing cost pressures on their everyday needs from gas to groceries."    

Because of delays in scheduling the rate hearing, mostly caused by the New Brunswick government, N.B. Power was given permission by the EUB to raise its base rates for this year on April 1 by an average of 9.25 per cent, including 9.8 per cent on residential and large industrial customers.

The hearing will investigate whether that increase was justified. It will also determine whether a second average increase of 9.25 per cent, including another 9.8 per cent increase on residential and large industrial customers scheduled for April 2025, is warranted.

By the time the hearing concludes in late August, N.B. Power will have collected an estimated $52 million in additional  revenue from customers from the higher rates awarded in April.

The utility will be required to refund a portion of that if the EUB eventually decides the full increase is too high.

"The Board directs NB Power to make billing adjustments for customers in the event that final rates approved by the Board are different than the rates approved in the interim Order," the EUB wrote in its decision to allow increased rates to take effect in April before the hearing into whether they are reasonable.

Last year following a hearing, the EUB approved only two-thirds of an 8.9 per cent rate increase requested by the utility.

N.B. Power's application is the first seeking approval for rates that cover more than one year.

New rules allow that option.