Hydro can't justify proposed rate increase, says consumer advocate

The province's consumer advocate is trying to delay Newfoundland and Labrador Hydro's general rate application because of a proposed hike in household power rates and a lack of clear information.

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NL Hydro is scheduled to have a hearing with the Public Utilities Board Jan. 30. But Dennis Browne says the utility doesn't have the facts to back up the proposed 23 per cent jump in electricity rates on the island by January 1, 2019, and the hearing should be delayed.

"Hydro can't justify that rate increase at this time. We've been looking for information from Hydro about where they're coming up with this 23 per cent, they can't give us that information," he said.

"It's time Hydro gave specific answers to questions in reference to what kind of increase, if any, that they're seeking."

'It's all very nebulous'

Browne said Hydro seems to want to fund its Off Island Purchases Deferral Account to mitigate future increases for rate payers, but their plan is unclear, and there is no regulatory precedent for that sort of decision. 

"It appears that they want to increase rates now so they'll be able to squirrel away money for some kind of deferral account once Muskrat Falls comes on stream," he said. 

"Then they'll be able to use the proceeds from that deferral account to mitigate against people's rates, but it's all very nebulous."

The consumer advocate said there should be a transparent hearing before the PUB to examine the entire Muskrat Falls project.

"Let's figure out if there's a new regulatory regime we can develop here to deal with Muskrat Falls and the debt that we're all going to assume."

"We need a plan. What they're proposing is no plan at all."

Browne said he is hoping Newfoundland Power and industrial customers will join in the application to delay the general rate application to make for a strong case before the PUB.

In a statement to CBC News, NL Hydro vice president of regulatory affairs and corporate services Dawn Dalley wrote that Hydro has answered over 950 requests for information since filing its application.

Dalley wrote that the utility has applied for a 13 per cent increase in its general rate application (GRA), spread over two years to ease strain on ratepayers.

"Hydro's GRA proposes an increase in electricity rates of 6.6 per cent in 2018 and 6.4 per cent in 2019 for most residential customers on the island — a combined impact of 13 per cent over this time period."

Electricity rates are also influenced by a separate rate stabilization plan (RSP) adjustment to account for fuel cost variances, which Dalley could not put an exact value on.

"Although some forecasts on the potential RSP change were developed upon filing Hydro's GRA, Hydro has been clear that there is still a large degree of uncertainty as to what the RSP rate change will be this year, due to the volatility in world oil prices."

As for the deferral account, the release said that Hydro "does not benefit" from the account, and is "very open to any rate mitigation options" that could benefit customers.