N.B. Power is proposing to increase its electricity rates by 17.4 per cent over the next three years, starting with a 5.5 per cent increase next April, to address various financial challenges.
Increases would begin with a 5.5 per cent jump in April if regulators agree
N.B. Power is seeking to raise its rates by 17.4 per cent over the next three years, with an initial 5.5 per cent increase planned for next April, the utility announced.
While the requested amount exceeds the inflation rate, the funds are necessary to manage several upcoming issues, particularly the deteriorating state of its generation and distribution assets, according to the company.
"Investments are required to maintain and replace aging infrastructure across the electricity system," N.B. Power stated in a document outlining its funding needs.
N.B. Power president Lori Clark informed reporters that higher rates are unavoidable.
"There's a lot of discussion about N.B.'s debt and the financial health of the utility, and we're looking to balance all of those things," she said.
"I would say there have been years in the past where the rate increases have not been as high as they should have been, and we have an infrastructure deficit that we need to address."
For the first time, N.B. Power is applying to the New Brunswick Energy and Utilities Board for approval of three years' worth of increases simultaneously. The application has been officially filed, and a full hearing is expected to be scheduled early in the new year.
In addition to securing funds for asset modernization, N.B. Power aims to improve its financial performance and anticipates generating $564 million in profit over three years from the proposed rate hikes.
N.B. Power's residential customers have seen a cumulative increase of 36.4 per cent in electricity consumption charges over the past four years. The utility acknowledged that an additional 17.4 per cent increase over three years will pose difficulties for some customers.
"Electricity is an essential service," the company wrote in its application. "NB Power recognizes that proposed rate increases will affect customers differently and may have a disproportionate effect on low-income customers and others experiencing financial hardship."
The utility also intends to increase certain fees, including an additional $14 million from the rental of over 276,000 water heaters. Proposed three-year increases for water heater rentals range from 27 to 39 per cent, depending on the tank size.
Despite projected revenue increases, N.B. Power forecasts a significant 62 per cent rise in its net debt, reaching $10.8 billion over the three-year period. A substantial portion of this increase is attributed to new long-term leasing obligations associated with a natural gas generating station to be built in Tantramar.
