NB Power seeks 2% rate bump, hoping to avoid steep carbon taxes

NB Power has filed an early application for a two per cent increase for all customers in its rates for next April 1, hoping  whoever wins this month's federal election will allow the utility to escape stiff carbon-pricing penalties.

Earlier this year, NB Power projected it would need a 2.5 per cent rate increase next April to meet long-term debt reduction goals.

But this week, the utility officially lowered the request to two per cent, citing improved finances and a hope that current federal carbon-pricing rules it faces will be replaced after the election with gentler provincial rules.

The utility estimated it will have to pay federal carbon penalties of $380 million over the next 10 years to operate its fleet of fossil fuel-burning generating stations.

Provincial plan not as harsh

But a more permissive provincial plan the government of Blaine Higgs submitted to Ottawa in June as an alternative would cut those penalties to $65 million.

No decision has yet been made by the federal government on that proposal, but NB Power's two per cent rate hike has been prepared on the assumption the provincial plan will prevail.

"The New Brunswick carbon pricing system has been integrated into the (budget)," the utility noted in material submitted with its application.  

"NB Power would be subject to higher costs should the New Brunswick government's carbon pricing plan not be accepted and NB Power was subjected to the federal (plan)."  

NB Power also revealed it is having a significantly stronger financial year than expected, as its exports surge. Out-of-province sales are projected to surpass $350 million — double what was budgeted. 

That is expected to lift earnings for the year to $44.3 million, or 124 per cent above last year's results.    

Carbon-pricing costs could be high

NB Power operates coal, oil and natural gas-fired generating stations that are each facing significant carbon pricing costs next year.

The coal-fired generator in Belledune alone will pay about $45,000 a day more in carbon costs under federal rules than proposed provincial rules, given its planned production schedule.

NB Power was ordered by the Energy and Utilities Board to submit its rate application this year during the first week of October so full hearings can be held and a decision rendered by April 1.

Last year, the utility applied for a rate hike in January and, although it won approval for a 2.48 per cent increase, it wasn't implemented until mid-July.