The New Brunswick Energy and Utilities Board has declined to grant NB Power the 8.9 percent rate hike it said the board was scheduled to raise on June 1 this week.
“It’s probably going to be half of that,” Rick Williams said, pointing to where the 8.9 percent rate hike proposal will end.
Williams served as a public intervener during NB Power’s interest rate hearing and said the “magnitude” of the changes the ESA mandated in the interest rate proposal appears significant.
“Absolutely,” he said.
On Thursday, the EUB presented what it called a “partial decision” on NB Power’s tariffs for the coming year, making it clear that it found the utility’s request for an 8.9 percent increase insufficient.
“The Board is not satisfied that the proposed rates are fair and reasonable,” the regulator wrote.
Citing NB Power’s use of outdated cost data from early June 2022 in its original request for April 2023 tariffs, the ESA said it wanted to base its decision on more recent information the utility was required to disclose during two-week hearings last month.
Those estimates showed significant improvements in some of NB Power’s financial outlook for the coming year, but how much money that would take away from the need for an interest rate inquiry isn’t entirely clear.
NB Power was ordered to recalculate a significant portion of its cost estimates for fuel and purchased electricity and to resubmit these together with a recalculated tariff increase.
“NB Power is directed to resubmit its budget for the 2023/2024 test year with the adjustments identified above, the cost study with adjustments, proof of revenue and the resulting rates,” the board said.
NB Power had no immediate comment on the decision or the final calculation of the rate hike given the changes ordered by the EUB.
“We plan to take time to fully review the judgment before responding to questions,” wrote Dominique Couture, NB Power communications officer.
NB Power’s original application to the EUB was for a tariff increase large enough to generate $135.8 million in new revenue.
It was based on what Lori Clark, the utility’s acting president, told the board it was necessary to cover for inflation, rising interest rates and operational issues hitting the organization.
“In a single year, the cost of fuel and electricity needed to power customers in New Brunswick has increased by $102.8 million,” Clark said at the hearing.
“This is mainly due to market price increases for natural gas, heavy oil and electricity.”
But the utility struggled to defend the credibility of those numbers during the hearing because they were compiled months earlier, in early June 2022.
Original projections outdated
At a crucial moment, days after NB Power witnesses testified, a JD Irving Ltd. attorney, Conor O’Neil, won an admission that at least two internal updates to these forecasts had been compiled by the utility since last June, but not the Case was shared with the hearing.
The board ordered their creation, and the new numbers confirmed suspicions that NB Power’s original projections were out of date, with the company’s next-year revenue and expenses exceeding its budget by as much as $106.4 million.
But the update also revealed that NB Power’s current year has seen significant losses that have pushed up its net debt by $380 million and would add up to $30 million in unbudgeted interest expense next year .
In its partial decision, the ESA said it would add these interest costs to what the utility needs for the next year, but would also deduct from its original budget at least some of the excess amounts caused by out-of-date estimates.
Williams said it’s not possible to pinpoint exactly where this back-and-forth of the rate hike will exit, but he believes the final number will be known within the week and won’t be anywhere near 8.9 percent.
