N.B. Power seeking rate hikes of almost 10 per cent in 2024, 2025

N.B. Power is asking the province's Energy and Utilities Board to approve 9.8 per cent rate increases for residential customers in each of the next two years.

The Crown corporation says it needs the hefty hikes now, to set the stage for chipping away at its massive debt before a provincially required target in 2029.

"The requested increases are necessary to allow N.B. Power to fulfilits core responsibility, and to make modest improvements in its financial health," says the application.

"N.B. Power is concerned about affordability for our customers as they face a variety of inflationary pressures and recognizes that many customers will be challenged by this proposed increase."

An additional three-per-cent increase in April 2024 because of a cost variance account, and the end of a rebate this year from the same account worth 0.9 per cent, will bring the total residential rate increase to 13.7 per cent next year.

Most of that additional increase is due to the Point Lepreau nuclear station being out of service for an extended period last winter.

Energy Minister Mike Holland acknowledged that a 13.7 per cent hike will be difficult to swallow but he defended the utility's decision to set the figure it needs to address its debt.

"Nobody wants to see something like that, but it is a part of the process of the utility properly putting together a rate increase request," he said.

Holland also said he'd resist any pressure for the government to legislate a lower rate.

"I would absolutely not advocate for intervening on what a rate increase should be. I haven't from day one, and it is difficult when you see that," he said.

"What I would advocate for is the continued work ... to find ways to offset what that rate increase would be."

That could come in the form of more funds for existing subsidy programs or new "avenues" for helping New Brunswickers who can't afford the increases.

N.B. Power also plans to launch a new service to direct its customers toward the various assistance programs that are available.

Subsidy program needed

Nichola Taylor, the chair of the housing advocacy group New Brunswick ACORN, called the increase "the last thing people in New Brunswick need."

She called for a subsidy program to help low-income people cover the costs of electricity.

The utility was due to file the application earlier this fall but had to go back to the drawing board after a surprise policy change from the Higgs government.

N.B. Power had been ordered to reduce its debt to 80 per cent of the total value of the utility by 2027.

But in October the government extended that deadline to 2029.

Even so, the utility says its $5.4-billion debt and several costly projects on the horizon such asa $3 billion refurbishment of the Mactaquac hydro dam and a conversion of the Belledune coal-fired generating station make big rate hikes necessary now.

"We certainly are seeing challenges with the transformation in the electricity sector, and we need to be prepared for that todayand for the future," N.B. Power CEO Lori Clark told reporters.

While the increases won't be enough to "make meaningful progress" toward the debt target, they "form the starting point" for getting there, the application says.

Clark disputed the conclusions of Auditor General Paul Martin in a report this week that said he was worried about N.B. Power's "ability to self-sustain its operations."

The utility "doesn't seem to have a plan," he said.

The CEO said the utility's plan, in fact, lays out how its rate hikes and cost-cutting will get it to its 2029 debt target, without sacrificing service to customers or system reliability.

"Our strategic plan lays out a clear path for us," Clark said.

She said the shifting of the debt target by two years to 2029 was the Higgs government's ideaafter the utility had "provided analysis" on the impact of the earlier 2027 target, including even bigger rate hikes.

The government moved the target in October, when Premier Blaine Higgs was planning for a possible snap election in the fall.

Holland denied at the time that that the change was timed to avoid an unpopular rate hike on the eve of a possible campaign.

"Not politicking at all, not so," he said.

The average increase in all rate categories for the next two years is 9.25 per cent, not including the variance account.

Figures provided by N.B. Power forecast average annual rate increases of 4.75 per cent for three years starting in 2026, though Clark acknowledged that extreme weather, generating station breakdowns or other surprises could throw it off track.