N.B. Power to spend $3.4 million of proposed rate hike on higher industrial subsidies
CBC
New Brunswick's six pulp and paper mills will not be made to pay the same 8.9 per cent increase for electricity next April as other customers of N.B. Power, evidence filed with the Energy and Utilities Board shows.
Last week the utility announced plans to raise rates 8.9 per cent "across the board" to all customers to address its rising expenses. Acting N.B. Power president Lori Clark said financial problems the utility faces in the next year are significant and require every customer to contribute equally to address them.
"The 8.9 per cent is to cover our current costs. We are not making significant progress on debt reduction. It is only to cover our costs," said Clark
"We decided it was in the best interests of all of our customers to put an average rate increase in place."
But in a 200-page evidence package submitted with the application to the EUB, the utility revealed it will be using $3.4 million of the $135.8 million higher rates are expected to generate to raise subsidies it supplies to six New Brunswick pulp and paper mills.
Part of that will cover an expected increase in the consumption of power by the mills next year, but some will partially shield facilities from having to pay the full cost of increased rates.
The mills include three owned by J.D. Irving Ltd. in east Saint John, west Saint John and Lake Utopia, two owned by the AV group in Nackawic and Atholville and the mill in Edmundston owned by Twin Rivers.
According to N.B. Power's evidence, transfers to the mills will increase 30 per cent, from an estimated $11.3 million this year to $14.7 million next year. That will help keep the price of "firm" power supplied to the mills from rising as much as it does for other N.B. Power customers.
The subsidies are the responsibility of N.B. Power to finance, but the payments are required by provincial regulation, and the increases are not the result of business decisions made by the utility.
"It is not discretionary," N.B. Power communications officer Dominique Couture noted in an email to CBC News.
The transfers occur under a ten-year-old policy the province calls the "large industrial renewable energy purchase program" that despite its name serves only pulp and paper mills.
The regulation requires N.B. Power to buy green electricity the companies self-generate at elevated prices, and then sell it back instantaneously at a discount.
Most of the power is supplied from generators fuelled by the burning of biomass in mill boilers, with a portion also supplied by J.D. Irving Ltd.'s hydro electric dam in St. George.
This year, N.B. Power is paying $110.54 per mega watt hour for what it buys. It then sells it back to the mills at an average of just over $77 per mega watt hour, according to information the Crown corporation has filed with the EUB.
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