New Brunswick

Final arguments set to begin over request for an 8.9% power rate increase

N.B. Power's request for an 8.9 per cent rate increase enters its final phase in Fredericton today with closing arguments in front of the New Brunswick Energy and Utilities Board. Stiff opposition, led principally by J.D. Irving Ltd., has left the outcome in some doubt.

N.B. Power's largest customer J.D. Irving Ltd. has led the charge against the proposed increase

A women in a suit looks off to the side.
N.B. Power's acting president Lori Clark laid out the utility's case for an 8.9 per cent rate increase during the first day of hearings. (Jonathan Collicott/CBC)

N.B. Power's request for an 8.9 per cent rate increase enters its final phase in Fredericton today with closing arguments in front of the New Brunswick Energy and Utilities Board. Stiff opposition, led principally by J.D. Irving Ltd., has left the outcome in some doubt.

Three lawyers acting for the forestry, manufacturing and transportation company dominated questioning of witnesses over seven days of hearings and are likely to lead calls for the increase to be reduced, if not scuttled outright, even if the utility's growing financial problems will require customers to pay more in future years.

JDI's lead lawyer in the case, Nancy Rubin, a partner with Stewart McKelvey in Halifax, has been building a case the increase is not specifically needed for the coming year, even if that means putting off dealing with N.B. Power's growing debt troubles to future years.

pulp mill with a sign that reads: Irving Pulp and Paper
Stiff opposition led principally by J.D. Irving Ltd has left the outcome of the hearings in some doubt. (Robert Jones/CBC)

"As an individual residential customer, or a business operating in New Brunswick, do you believe that  those customers would prefer to have that cash in hand now for their own capital, an investment, or their daily expenses versus pre-paying it against a future debt?," Rubin asked utility expert Robert Knecht on Tuesday, previewing what is likely to be the company's core message to the board today.

Between customers paying now or paying later for N.B. Power's significant financial problems - JDI's position appears to be that later is better.

Not surprisingly, N.B. Power is leading the charge for the increase to be granted in full.

On the hearing's opening day, the utility's acting president Lori Clark delivered its argument for needing the 8.9 per cent increase, citing inflation, rising interest rates and operational troubles.

"In a single year, the cost of fuel and purchased power necessary to supply customers in New Brunswick has increased by $102.8 million," Clark told the hearing.

"This has occurred largely due to market price increases for natural gas, heavy fuel oil and electricity."

But the utility has struggled to defend the trustworthiness of those numbers, given they had been put together several months ago, in early June.

In a Perry Mason moment during cross examination last Thursday, JDI lawyer Conor O'Neil won an admission from the utility that at least two internal updates of those projections had been put together by the utility since, but not shared with the hearing. 

A man in a navy suit is sitting down looking straight ahead with a pen up to his mouth. A woman with her back to the camera sits between him and the camera.
J.D. Irving Ltd. lawyer Conor O'Neil successfully wrestled updated financial information from N.B. Power about its rate increase during the hearing. (Ed Hunter/CBC)

O'Neil convinced the board the updates should be turned over despite objections from N.B. Power lawyer John Furey, a decision that has taken the hearing in unexpected directions. 

The updated projections were released by N.B. Power on Tuesday this week, but cut both ways.  

They confirmed JDI's suspicions that N.B. Power's budget numbers were stale and the company's revenues and expenses for next year are better than it has been claiming.  

But they also showed N.B. Power's current year has involved significant losses that have unexpectedly ballooned its net debt by $380 million to $5.3 billion as of December 31.

Independent utility experts Robert Knecht and Dustin Madsen both expressed shock at the rapid deterioration in N.B. Power's financial health in just the last few months revealed by the financial updates.

"When I first saw it, I did not believe it," said Knecht. 

"I'm as surprised as Mr. Knecht," said Madsen  

"I agree the position is deteriorating." 

A man in a suit sits at a table with a microphone infront of him.
Energy and Utilities Board Chair Francois Beaulieu ordered the release of updated financial information from N.B. Power mid-hearing, but asked all parties to give an opinion during final arguments about whether it should be used to decide on a rate increase. (Jonathan Collicott/CBC)

EUB Chairman Francois Beaulieu has said the board is not sure how it will treat all of the new information and asked all sides "to make submissions on this issue during the closing arguments,"    

Those begin this morning at 9:00 am.

ABOUT THE AUTHOR

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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