NB Power's rate hike plan for April 1 has been caught in pandemic limbo
'Increasing electricity prices at the wrong time may slow the economic recovery'
A rate increase NB Power was hoping to have in place April 1 to help boost its troubled finances is still in limbo heading toward next month as the province and utility both ponder when customers and the economy might be ready to absorb higher prices.
"Increasing electricity prices at the wrong time may slow the economic recovery and hurt our most vulnerable citizens," said province of New Brunswick spokesperson Nick Brown in an email Thursday.
In February, NB Power presented its case to a full Energy and Utilities Board (EUB) hearing for a 1.9 per cent increase in rates to take effect April 1 but on March 19, with a ruling imminent the utility requested an indefinite suspension of the application in light of the COVID-19 pandemic.
"Many businesses are closed or at reduced operation for an unknown time frame and many employees of those businesses have been affected as a result," said then NB Power president Gaetan Thomas in a letter to the EUB
"NB Power has concluded that a rate increase implemented on April 1, 2020 would be counterproductive."
The utility said it would inform the EUB when a better time for an increase presented itself "In consultation with the Government of New Brunswick" but four months later the suspension continues with no word yet when the EUB will be released to deliver its rate decision and the utility freed up to charge customers more.
Marc Belliveau, a spokesperson for NB Power, suggested there is no decision on the immediate horizon.
"NB Power continues to monitor the impact of COVID-19 on its customers and its operations, which includes the impact of the timing of the EUB decision on rates," Belliveau said in an email.
Complicating the issue is that NB Power's own finances have been battered by the pandemic, worsening its already considerable money problems.
Two weeks ago the utility declared a $16 million loss for the fiscal year ended in March, its first year of negative earnings in a decade.
Expensive delay
In the current year, NB Power has been budgeting for a modest $40.9 million profit, but that was put together long before the global economy began contracting in March and assumed a full rate increase beginning April 1st.
At the hearing in February the utility's director of financial planning Diane Fraser estimated any delay past April 1 for an NB Power increase would be expensive.
"The effect of the delay of an increase roughly I would say its between two and three million dollars per month," said Fraser.
NB Power is under strict instructions by the Higgs government to lower its debt levels significantly by 2027, a directive that the current rate freeze is not helping.
But there are also political issues to be weighed, with a series of byelections, if not a general election, coming by the end of the year.
The province says it is aware of the financial pressure NB Power is under but has other issues to worry about as well.
"As we continue to deal with the pandemic, government is trying to balance the needs of New Brunswickers while keeping its fiscal house in order," said Brown.
"We continue to have discussions with NB Power and recognize the utility's need to recover their costs and not add to their long-term debt."
NB Power has reduced or delayed some capital spending plans for the year, including the temporary suspension of its application to acquire and deploy smart meters in New Brunswick which Brown said has been helping to cut the utility's costs.