Revelation at N.B. Power rate hearing triggers order for more evidence

A surprise revelation that N.B. Power internally updated estimates about how much its power generation and purchase costs are likely to be in the coming year — and did not disclose at a rate hearing now going on — has triggered an order from the Energy and Utilities Board to produce the material.

The board made the order over strenuous objections from the utility.

"N.B. Power does … have an obligation to advise the board if there has been a material or exceptional change in its evidentiary package," EUB chair François Beaulieu said in ordering the updated material be provided. 

"If corrections to the evidence are required, such corrections should be made at the earliest opportunity."

N.B. Power is seeking approval from the EUB for an 8.9 per cent rate increase effective April 1.

Opponents of the application, principally forest product manufacturers J.D. Irving Ltd. and Twin Rivers Paper Company, have been questioning whether stale budget numbers used by N.B. Power in its application are exaggerating how much of an increase it really needs.

N.B. Power's evidence shows it plans to buy $1.09 billion worth of oil, coal, natural gas, uranium and wholesale electricity to generate and supply power to customers in the coming year — an estimated increase of $403 million over the current year.

It's the main reason for the size of the rate increase N.B. Power is seeking, but costs quoted for those commodities in the application were calculated back in June 2022 and that has become a focus of the hearing.

Commodity prices have generally fallen since then and hearing participants have been probing whether that opens the door to the rate increase being lowered.

That effort has been energized by a surprise disclosure made during cross-examination of an employee at the centre of creating the cost estimates from last summer who acknowledged newer estimates exist.

Under questioning from J.D. Irving Ltd. lawyer Conor O'Neil, Craig Church, N.B. Power's chief modeller, explained elaborate simulations of N.B. Power's operations meant to estimate electricity supplies and costs are created internally every three months.

That immediately caught O'Neil's attention.

"Did you run one in January 2023?" he asked.

"Yes we did," said Church.

"Can we have that?" said O'Neil.

N.B. Power lawyer John Furey objected to the request.  

Furey told the board many things have changed positively and negatively for N.B. Power since its budget was first prepared and said J.D. Irving Ltd. is fishing only for certain things that would support its view the rate increase is exaggerated.

"Interveners don't just get to focus on one thing that they think may have gone favourably and ignore all of the negative variances that have likely occurred," said Furey.

"What does that do to the fairness of the process?"

The three-member panel hearing the rate application, including Beaulieu, Stephanie Wilson and former public intervenor Heather Black who is now an EUB member, recessed to consider the issue and emerged with a ruling in J.D. Irving Ltd.'s favour.

"Considering that the magnitude of the fuel and purchased power and their revenue requirements for this year, the board will permit the ... January update results to be provided to Mr. O'Neil," said Beaulieu.