Province not obliged to pay for delayed N.B. Power rate increase it helped cause

More than $75 million in fees, taxes and other charges collected annually from N.B. Power by the New Brunswick government could be adjusted to compensate the utility for a delay in this year's rate increase, if it occurs, but the province's public intervener says that is a solution only the government itself can decide on.

"In terms of a break from the government, that has to come from the government," said Alain Chiasson in an interview this week.

New Brunswick imposes a number of levies on N.B. Power annually including, in this coming year, utility taxes of $25 million, right-of-way taxes of $1 million and, in conjunction with local governments, municipal and provincial property taxes of $24 million.  

In addition, the province charges an annual fee for guaranteeing N.B. Power's debt that is equal to $1 for every $154 the utility owes. With N.B. Power's debt now above $5.3 billion, that is an annual charge of $35 million. Interest costs on the debt are a separate expense for the utility.

The province also requires N.B. Power to pay for mandated government policies, such as subsidizing rates for pulp and paper mills at a cost of $12.6 million.

The sum of those charges provides significant financial room for the province to help the utility deal with $32.6 million in costs it is worried about facing, after it submitted this year's rate increase request to the New Brunswick Energy and Utilities Board 72 days late.

Chiasson said the provincial government played a central role in why the rate filing was late but nothing obliges it pay for that if N.B. Power is penalized financially.  

"That's a decision that the government will have to make — how much money they pull out of the utility and how much of a break they want to give them on property taxes, or any other taxes N.B. Power pays right now," said Chiasson.

N.B. Power has applied for a 9.25 per cent rate increase that it says it needs to begin on April 1 to meet long range financial targets set for it by the province.  

However, the rate increase request, which was due on Oct. 4, wasn't submitted until Dec. 15 because of last minute changes the province made to those targets.  

That has delayed a full rate hearing by the New Brunswick Energy and Utilities Board until mid-May

To deal with that, the utility has applied for a special interim rate increase to take effect on April 1.

N.B. Power argues it can rebate any excess money it collects from customers if the rate increase is eventually found to be too high.  

Otherwise it says it will lose up to $32.6 million in critical new revenues if higher rates are delayed until July 1. It believes that is a likely date after a May hearing is concluded and a decision by the EUB is rendered sometime in June.