NB Power budget projections affected by problems

NB Power acknowledged the sagging Canadian dollar, a lack of water in the province's rivers and problems at the Point Lepreau nuclear plant are throwing its budget projections off kilter less than three months into its current fiscal year.

"A lot has changed," NB Power's chief financial officer Darren Murphy told the utility's rate hearing on Thursday.

NB Power is in front of the New Brunswick Energy and Utilities Board to ask for a two per cent rate increase and although it originally wanted the extra money to boost already healthy profits, a poor spring means it may need the increase to record much of a profit at all.

Problem number one has been poor performance from the Point Lepreau nuclear reactor.

Budgeted to run at 96 per output for the entire year, the plant has been operating at just 80 per cent for the past two weeks after posting numbers only slightly better than 60 per cent in April and May. 

Point Lepreau needs repairs to a reheater that the utility was hoping to have fixed by the end of July but Murphy said those may not happen until September.

Added to Point Lepreau's problems was a poor spring runoff on the rivers, driving expected hydro generation in April and May — the two most productive months of the year — down more than 20 per cent.

That has all forced NB Power to buy much more replacement power in the New England marketplace than expected, a problem made worse by the low Canadian dollar,

Heather Black, the public intervener, asked Jonathan Dobson, the director of enterprise, risk and treasury management at NB Power, if he had a sense of how far over budget the utility's expenses for power generation and purchases was running.

"An estimated overall increase is in the range of over $40 million," said Dobson.

NB Power originally submitted its rate increase request to the Energy and Utilities Board last November based on budgets for 2015-16 it had drawn up well before that. 

At the time the utility said it expected to earn a profit of just more than $90 million, if it was awarded the $21-million rate hike.

But with the budget assumptions those numbers were based on proving unreliable, a large profit this year is looking unlikely.

"It continues to be a very dynamic environment," said Murphy