Pre-paid power rate hikes fuel anger

At the end of May, New Brunswickers will see yet another retroactive review of energy rates they are already paying.

Although the May 28 investigative hearing will be the first-of-its –kind in the province, it has become a recognizable pattern. New Brunswickers waited until the end of February to find out if the Energy & Utilities Board (EUB) aproved or reduce rate hikes for the fiscal year ending this month.

Months earlier, NB Power was granted its request for a 9.6 per cent rate increase. After NBers began paying that rate, it was reduced to 6.4 per cent on Aug. 28, 2007. The final rate for 2007-2008 was set at 5.9 per cent at the end of February.

Then just days later, on the last day of February, NB Power announced it is seeking another 3 per cent rate increase. The announcement caused public outcry from ratepayers who feel overburdened by the rate increases of recent years.

It prompted Energy Minister Jack Keir to order the EUB to conduct an investigative hearing into the hike, which will cost the average ratepayer another $150 per year when combined with the earlier 5.9 per cent increase.

The move was extraordinary because it forces NB Power to explain why it needs more money from New Brunswickers even though the 3 per cent increase wouldn’t ordinarily be considered significant enough to automatically trigger a review under current legislation.

However, the fact the hearings will take place nearly two months after the extra three per cent increase takes effect is nothing new for ratepayers who are growing increasingly accustomed to paying too much money for electricity, before having NB Power return small portions of that money back through credits on more energy once the regulator renders its decision.

Charles Cirtwill, acting president of the Atlantic Institute for Market Studies, says that means NB Power, which buys its fuel 18 months in advance, can invest and collect interest off money that could be used by ratepayers to do the same.

“From NB Power’s perspective it is better for them to have the interest on that money than the people they are giving the money back to,” he said.

“From the perspective of the person paying the bill, it is certainly far more painful.”

Cirtwill said the sequence in which rates are applied for by NB Power and decided upon by the EUB creates a confusing situation for potential investors and the public.

“It is better to have these things reviewed transparently and decided clearly up front than it is to get retroactive (credits),” said Cirtwill.

“You have prepaid us for $150 of electricity, so here in February we will give you a credit on energy that you will be able to use in June when you are hardly using any energy,” he added, mimicking NB Power’s rationale.

The public intervener in the last EUB hearings, Daniel Thériault, argued that NB Power should not be granted an interim rate increase higher than 4.47 per cent, based on the evidence presented by NB Power. However, the utility argument that it would lose $300,000 per day convinced the EUB to set the interim rate at 9.6 per cent originally before dropping it to 6.4 per cent.

Thériault, who has not yet been asked by the Attorney General to participate in the May 28 hearing, believes holding hearings before rates are increased will go a long way to restoring more confidence in the system.

By announcing the three per cent increase just days after the EUB’s February decision, Thériault says NB Power may have fuelled a perception that it is finding ways around the EUB’s decisions.

“I think people were confused by it. Had it been done last May people wouldn’t feel like this is being pushed on to them because (NB Power) didn’t get everything they wanted.”

Thériault said ratepayers will gain confidence in the system as NB Power is brought before the EUB more often.

“The more people will be familiar with the process, the more they will be willing to accept it,” said Thériault, noting that many New Brunswickers will be eager to learn more about the $85 million surplus posted by NB Power last year.