N.B. Power asks for biggest rate hike in 15 years: 8.9 per cent on April 1

N.B. Power is asking energy regulators to approve an 8.9 per cent increase in power rates for all its customers, at the same time New Brunswickers are already coping with soaring housing, food and gasoline costs.

The Crown utility says it needs the huge increase in 2023-24 just to cover the "unprecedented challenges" caused by the spiralling cost of energy and inflation as well as higher interest rates.

"We recognize that any rate increase is difficult for our customers," acting CEO Lori Clark told reporters.

"N.B. Power has taken steps to ensure the rate increase is as low as it can possibly be, while ensuring that the utility can continue to cover its services reliably, safely and confidently for New Brunswickers now and into the future." 

The rate increase, if approved by the Energy and Utilities Board, would take effect April 1, 2023.

It's N.B. Power's biggest rate application since 2007, when it asked for a 9.6 per cent increase. That was later lowered to 6.4 per cent, and the board eventually set the increase at 5.9 per cent.

The utility says energy costs for fuel purchase and electricity imports from outside the province will increase by $102.8 million in the coming year, and recent interest rate increases will add $31 million to the corporation's bottom line.

The application acknowledges that even an 8.9 per cent increase won't be enough to lower its accumulated debt of about $5 billion or increase its equity relative to that debt.

Officials say it may have to seek rate increases of two to 16 per cent in each of the two following years, but because of market volatility it's not applying for hikes for those years yet.

At the legislature Wednesday, Premier Blaine Higgs blamed the higher costs driving the rate hike on federal climate policies that he said are making energy more expensive. 

"This shouldn't be a surprise," he said. "The policies that are being put on us now are causing a higher cost of energy in our province.

"N.B. Power is reacting to that. They really don't have a choice."

Clark, however, said that only a small part of the increased costs comes from federal carbon pricing requirements.

The utility says 52 per cent of the rate increase can be attributed to fuel costs, but "very little of that is actually attributed to the carbon pricing," Clark said.

"The carbon pricing itself is in the millions of dollars. Most of it is the result of the increase in fuels that we buy and trade on world markets." 

N.B. Power cites pandemic, war in Ukraine

The utility's application mentions carbon pricing and the transition to renewable and low-emitting energy sources as factors in the "significant fiscal challenges" it's facing. 

But it also notes that people "across the world" are facing some of the same challenges as New Brunswickers, such as energy price volatility due to the war in Ukraine and supply chain disruptions from the COVID-19 pandemic.

The application points out rate increases over the last decade have not kept pace with inflation or with many other provincial utilities' rates.

The request would be for a double-digit increase if not for N.B. Power's plan to shave $50 million from its costs, including by eliminating some positions, officials said.

Province not likely to overrule increase

Clark defended the decision to freeze rates in the last two years due to COVID-19, but she would not say whether earlier rate freezes or below-inflation increases, some of them imposed by governments, had been a mistake.

"There's a lot of blame to attribute in the past, and we're going to focus on going forward and ensuring the utility is healthy for the future," she said.

Both Higgs and Energy Minister Mike Holland all but ruled out stepping in to overrule the EUB if it approves the rate increase. 

"I'm strongly in favour of allowing the utility to form their own rate increase without intervention from the government, taking heart and knowing that the EUB is there to ensure that whatever increase they come out the other side with, it's legitimate," Holland said.

Higgs noted the recent announcement of a "probably unprecedented" program to provide free heat pumps to households that use electric heat and have an income of less than $70,000.

He said the province will soon announce another program "for other forms of heating as well, to reduce that."

N.B. Power estimates the heat pump program, which also includes insulation upgrades, will lower a household's yearly bill by $500.