Surcharges on customer bills may last another eight years, N.B. Power figures show

A special $236.1 million debt built up in N.B. Power "variance accounts," which electricity customers have been paying a three percent surcharge on every power bill to try to retire, has instead grown by $118.7 million since those payments began two years ago.

This will require surcharges or "rate riders" on customer bills to continue for another eight years to deal with the problem, according to estimates the company has presented to the New Brunswick Energy and Utilities Board.

At a hearing last week, Abby Davidson, N.B. Power's manager of financial reporting, told the EUB the utility is currently forecasting surcharges on customers will be needed until March 2034 to deal with what is now a $354.8 million debt contained in the variance accounts.

"It was just our best estimate at this time," Davidson said of the number of years customers may have to keep paying special surcharges.

But New Brunswick public intervener Alain Chiasson worries this is wishful thinking.   

He told the EUB that power customers are in danger of facing "permanent" surcharges on their bills the way balances in the variance account keep growing.

"This is a concern and hopefully N.B. Power will take action to ensure that this variance account is under control," Chiasson said.

N.B. Power's variance accounts were set up three years ago to transfer the risk of unexpectedly poor financial results in any given year  — or the benefits of surprise good results — from the utility to its customers.

In good years, the system is meant to provide rate rebates to customers. In bad years, extra charges are levied until unpaid balances run up by the utility in the special accounts are paid off.

Events considered to be "beyond the control of management," including nuclear and hydro electricity production that is higher or lower than budgeted, spikes or dips in the price of fuels used to generate electricity, unexpected changes in electricity export prices and other variances all add to or subtract from the variance accounts monthly.

However, multiple production problems at the Point Lepreau Nuclear Generating Station in recent years have meant unexpectedly poor results have overwhelmed the good.   

By October 2023, the variance accounts were quickly in the hole by $236.1 million.

Since April 2024, electricity customers have been billed nearly $100 million in surcharges toward retiring that amount, but instead more financial setbacks at the utility have increased what customers owe to $354.8 million.

At last week's hearing, Chiasson called Lepreau's performance in recent years "abysmal" and expressed doubts it will improve enough to stop the variance accounts — and customer liabilities tied to them — from continuing to grow.