PUB hearings begin with questions about Hydro costs, reliability

The Public Utilities Board has started hearings into an application by Newfoundland and Labrador Hydro that would see power bills rise, as several key players raised questions over higher operating costs and lower reliability at the utility.

Consumer advocate Tom Johnson said those costs are increasing at an "alarming pace" while Hydro's service has been deteriorating.

"If reliability was through the roof and you were coming in and saying, ''This is what we've achieved for you — it's been expensive, but here is what you've been given.' Well, you'd look at it," Johnson told reporters.

"But in this case, I see costs really, really high, and I'm seeing reliability that has been not impressive."

Newfoundland Power, which buys almost all of its electricity from Hydro, also highlighted increases in operating costs and a decline in the reliability of service — something Newfoundland Power says has resulted in "stress and inconveniences" to its customers.

"So it's a torment more than anything," director of customer and corporate relations Karen McCarthy told reporters.

"And throughout this hearing process, we're interested in asking a few questions to help better understand what has unfolded over the last few years."

Hydro defends rate application

But Hydro CEO Ed Martin defended the Crown corporation's performance, saying it is "no secret" that most generation assets are over 40 years-of-age, and reaching the end of their useful life.

Martin noted that transmission infrastructure is also aging.

And he said "people costs" are also rising — having to hire new employees, and pay to acquire and retain workers in "a very aggressive market."

Martin said none of the additions were frivolous.

"These are things that are going to have to happen to keep the lights on," Martin said in testimony to the PUB.

Hydro vice-president Rob Henderson later took questions from reporters, reiterating that point.

"The increases in costs are ones that we've examined closely and had a hard look at and made sure that they are the right costs, that are required to maintain and operate the power system," Henderson said.

Public hearings underway

Newfoundland and Labrador Hydro is seeking a rate hike that would result in an estimated average jump of 2.8 per cent for those on the island interconnected system in Newfoundland.

Those on the Labrador interconnected system would see an overall average increase of 2.1 per cent. For domestic users, that amount is slightly lower, at 1.9 per cent.

Industrial users and isolated customers would see much bigger bumps.

Hydro has asked to have the increases made retroactive to January, although that decision will also be made by the board.

It's the first general rate application from Hydro to be heard by the PUB in eight years.

Public hearings are expected to go on for several weeks.