Newfoundland Power's PUB request deemed out of line
Consumer advocate says PUB has overreached with expected profit margin
Newfoundland and Labrador's official consumer advocate says Newfoundland Power's rate request is over the top, and argues that ratepayers could wind up giving executives extra pay for delivering a profit to shareholders.
Hearings begin Thursday at the Public Utilities Board on Newfoundland Power's request for a 7.2 per cent increase for its customer base.
Tom Johnson, who was appointed to the watchdog position by the Newfoundland and Labrador government, said the 10.5 per cent profit margin, or return on equity, is simply too high.
"Newfoundland Power is a very well-protected, well-regulated utility. Very safe, no competition," Johnson told CBC News in advance of the hearing.
"And how they could ask their customers to pay [that] return on equity for them? It boggles the mind."
Johnson said he is also unhappy that Newfoundland Power pays incentives to its executives for delivering a high return to shareholders, given that much of the Fortis Inc.-owned company derives its income from rates set by the PUB.
"I don't blame shareholders in Newfoundland Power for wanting every last cent they can get," he said.
"However, if that's going to be the way, the shareholders have got to pay the cost of paying the [executives] to achieve those results, not the customer."
The PUB expects to hear presentations on the rate request through Jan. 25.