PUB rejects 10.6% rate increase, tells Newfoundland Power to cut expenses

The Public Utilities Board of Newfoundland and Labrador has rejected a proposal from Newfoundland Power to increase customer rates, telling the company to instead cut expenses, and come back with a revised proposal.

Newfoundland Power wanted an overall average customer rate increase of 10.6 per cent, but on Thursday the PUB shot down that proposal. If it had been accepted, the increase would have come into effect on July 1.

"The board directs that Newfoundland Power's revised proposals should reflect, among other things, the board's findings with respect to reducing operating costs and a lower rate of return on equity than proposed," the PUB wrote in a statement.

The PUB says Newfoundland Power — the private utility that sells electricity to most Newfoundland homes and businesses — should cut its operating costs by $2 million over the next two years, by managing its costs and finding ways to cut inefficiencies.

The board also wants the company to bring in a new proposal that excludes the costs associated with short-term incentive payments to its executive and directors.

Newfoundland Power had also asked to increase its rate of return on equity from 8.5 percent to 9.85 per cent. The PUB also rejected that proposal and instead told Newfoundland Power to aim for a rate of return of 8.6 per cent.

"The balance of cost and reliability was an important issue in this proceeding," the PUB wrote.

"The board directs Newfoundland Power to develop a scope of work for the development of a strategic plan with respect to balancing cost and reliability, identifying issues and challenges that may have significant potential implications for its system and customers, such as electrification, climate change and aging infrastructure."

The PUB is also asking for the private utility to submit reports and updates on a number of subjects, from its advanced metering infrastructure, load research study and rate design review, as well as executive and director compensation.

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