N.B. Power lost $43M last year, saw total debt increase to $5.4B

N.B. Power customers could face extra surcharges on their electricity next spring after the utility wracked up tens of millions of dollars in losses last year.

Financial statements filed at the legislature show a loss of $43 million in fiscal 2022-23, mostly due to problems at the utility's Bayside natural gas plant and its Point Lepreau nuclear generating station. 

CEO Lori Clark cited outages at the two plants, higher prices and other factors.

"NB Power operates in a complex business environment and we experienced many challenges in 2022/23 that were outside of our control, including higher fuel prices due to the global energy crisis and inflation," Clark said in a statement.

The figure of $43 million doesn't include another $234 million in losses that the Crown corporation is allowed to shift off its balance sheet and into a separate deferral account — essentially a different accounting envelope. 

It can then recoup the money from customers with surcharges.

That calculation will be made in October, meaning an influx in revenue in the next three months could erase or reduce the losses in the deferral account and avoid or mitigate the need for surcharges.

Customers would see those extra amounts on their bills next April.

Either way, the 2022-23 statements show that losses that have driven N.B. Power's debt back up to 94 per cent of its equity, the same as it was in 2020.

The progress it was making — the figure was down to 87 per cent in 2022 — has been wiped out. The debt now stands at $5.4 billion.

N.B. Power saw its costs soar last year after its Bayside gas plant in Saint John required a new turbine and generator at a cost of around $46 million — the same price the utility paid to buy the facility in 2019.

The utility's nuclear generation station at Point Lepreau also had a bad year, forcing N.B. Power to buy replacement power from Quebec.

The extra electricity purchases cost $269 million and were offset by $34 million of extra revenue from higher-than-expected electricity sales, leaving a total of almost $234 million in losses in the deferral account.

The surcharges to customers are subject to approval by the Energy Utilities Board and can't add more than three per cent to any regular rate increase.

The losses make it more difficult for N.B. Power to reach the target set by the Higgs government of getting its debt to 80 per cent of equity by 2027.

The utility pointed to that objective in a recently filed court application attempting to overturn a March rate ruling by the EUB.

8.9% hike requested

N.B. Power asked the EUB for an 8.9 per cent rate hike to take effect April 1, but the board ruled that updated figures from the utility warranted only a 5.7 per cent increase.

A surplus in the deferral account last October required the corporation to rebate customers, which shaved another percentage point off its rate increase, reducing it to 4.8.

But the utility says the EUB failed to use a broader set of new numbers in its decision and also failed to take into account that 2027 debt-to-equity ratio goal.

It's asking the New Brunswick Court of Appeal to award it the 8.9 per cent increase it asked for.

Clark's statement said the corporation's leadership is "committed to making the necessary changes to improve N.B. Power's financial situation and are expecting stronger results in the new 2023/24 fiscal year."

She said the new strategic plan includes "transforming our overall operations and seeking new partnerships to positively impact the bottom line."

Among those partnerships is a possible deal with Ontario Power Generation to have that utility take an ownership stake in Point Lepreau.

But even that, and a court victory awarding N.B. Power a higher rate increase, wouldn't mark the end of the utility's financial challenges. 

It recently filed its environmental impact assessment application for an upgrade of the Mactaquac hydroelectric power dam that could cost $2.7 billion to $3.7 billion and must be undertaken soon.

N.B. Power also has yet to settle on how — or whether — to convert its Belledune coal generating station to another energy source — another costly project — ahead of a federal phase-out of coal power in 2030.