https://www.cbc.ca/news/canada/new-brunswick/nb-power-rates-gallant-liberal-weather-1.4802946
Liberals promise 4-year freeze on NB Power rates for homeowners, small businesses
PC leader says one way or another, New Brunswickers will pay for a rate freeze
A
Liberal promise to freeze power rates for residential customers and
small businesses drew sharp criticism from opposition parties
Wednesday.
Liberal Brian Gallant said the party would introduce legislation to freeze rates for some customers over the next four years and force NB Power to cut jobs and spending.
"Many people's power bills are going up faster than their wages," Gallant said during a campaign announcement on the lawn of a private home in Moncton.
The
legislation would force NB Power to find about $13 million in annual
savings to make up for revenue it would have otherwise raised if it
could increase the cost of electricity.
NB Power spokeswoman Sheila Lagacé said the utility won't be commenting "as this is an election campaign promise."
David Coon, leader of the Green Party, and NDP Leader Jennifer McKenzie both called the Liberal plan an "irresponsible" move.
"We have a regulatory process that's designed to ensure that any rate increase proposals are properly vetted and if they're not warranted, they're turned down," Coon said, referring to the Energy and Utilities Board.
McKenzie called it a "dangerous path" the Liberals have proposed and suggested a better approach would be focusing on developing renewable energy.
Blaine Higgs, the Progressive Conservative leader, said "putting a political hand-cuff" around the utility will make its financial situation less secure.
Liberal Brian Gallant said the party would introduce legislation to freeze rates for some customers over the next four years and force NB Power to cut jobs and spending.
"Many people's power bills are going up faster than their wages," Gallant said during a campaign announcement on the lawn of a private home in Moncton.
NB Power spokeswoman Sheila Lagacé said the utility won't be commenting "as this is an election campaign promise."
Leaders call move 'irresponsible'
David Coon, leader of the Green Party, and NDP Leader Jennifer McKenzie both called the Liberal plan an "irresponsible" move.
"We have a regulatory process that's designed to ensure that any rate increase proposals are properly vetted and if they're not warranted, they're turned down," Coon said, referring to the Energy and Utilities Board.
McKenzie called it a "dangerous path" the Liberals have proposed and suggested a better approach would be focusing on developing renewable energy.
Blaine Higgs, the Progressive Conservative leader, said "putting a political hand-cuff" around the utility will make its financial situation less secure.
Liberals promise to freeze power rates
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NB Power forecasts a two per cent rate increase each year as it seeks to pay down its $4.8 billion debt. The utility recorded a profit of $23 million in the last fiscal year.
People's Alliance Leader Kris Austin said in an emailed statement that the Liberal announcement "is an encouraging idea." But he said the financial strain of increasing power bills isn't new.
'A small relief'
"We question as to why only during an election cycle does the Gallant government offer a small relief, after four years of tax increases that have many at the breaking point," Austin said. "Seeing as this promise is coming from the Liberals, is this a promise the people can really trust?"
Annual increases of two per cent per year would cost residential and small businesses more than $13 million a year over the next four years, said Gallant.
The freeze would also apply for municipal utilities on electricity purchased from NB Power for either residential or small business customers.
Asked what would happen if NB Power shifted the rate increase to industrial customers, Gallant said the utility would have to make up the $13 million difference through "efficiencies" in measures the party has proposed.
'Mandate' savings
"We will mandate them to find the $13 million and we will have a discussion with the measures we'll put in place, and we hope they'll come with their own ideas," Gallant said. "With the measures we put in place, we believe we can find the $13 million, but even more than that."
He said the legislation will include an "incentive" for NB Power to cut costs so rate increases aren't required.
"Call it a stick, if you will, but we're going to make it real clear that they're going to have to reduce power rates and that's going to be the case for four years," he said.
Liberals say there will be no freeze on wholesale power rates, but that government will "work with" municipal utilities to ensure residential and commercial business rate freeze extends to SJ and Edmundston. Haven't said whether that means subsidies or some other mechanism.
The freeze will apply for municipal utilities on the portion of power they purchase from NB Power that is for either residential or small business customers.
No 'weather tax'
A Liberal government would also reduce the size of management at NB Power by 30 per cent and would require a review of senior salaries. It would also set a "cap" on administrative expenses as a percentage of overall expenses.
The Liberals would also prevent NB Power from introducing any kind of "weather tax" to help pay for extreme weather events, he said.
The 2017 ice storm cost NB Power about $30 million.
Voters head to the polls on Sept. 24.
With files from Shane Magee and Nicolas Steinbach
NB Power rate freeze could cost more than Liberal calculation
The total cost of the freeze could be $27M more than the party's estimate
Figures
show the cost of a four-year rate freeze for residential and small
business customers to NB Power will be as much as $27 million more than
the New Brunswick Liberals have calculated.
But the party says it is not aware of any problems in its numbers and will not re-evaluate the potential effect on the utility's finances.
"We are confident in our estimate," said Jonathan Tower, a spokesperson with the Liberal party.
Liberals have made the promise to freeze power rates for some electricity customers a central feature of their campaign and leader Brian Gallant mentioned it multiple times during Wednesday's leaders debate, including in his closing remarks.
"We will freeze power rates for four years to help our families and small businesses," he said in one of several plugs.
Critics have raised concerns the freeze may worsen NB Power's long-term financial problems, but Gallant has argued there is enough inefficiency inside the organization to deal with less revenue through internal cost cutting.
"It is very possible for NB Power to be more efficient and save approximately $13 million per year," Gallant said while announcing the freeze two weeks ago.
The $13 million figure was Gallant's estimate of the value of the freeze in its first year.
But there is some evidence that estimate is well below the amount of money the freeze actually involves, a miscalculation that will widen as the freeze progresses.
According to documents on file with the New Brunswick Energy and Utilities Board and elsewhere, about $784 million in NB Power electricity sales will be subject to the freeze next year.
That's 55 per cent of NB Power's in-province sales.
The figure includes $669 million in sales to NB Power's 329,000 residential customers and $45 million in sales to 18,000 of its small commercial customers who consume a maximum of 20 kW of electricity at any one time.
But the party says it is not aware of any problems in its numbers and will not re-evaluate the potential effect on the utility's finances.
"We are confident in our estimate," said Jonathan Tower, a spokesperson with the Liberal party.
Liberals have made the promise to freeze power rates for some electricity customers a central feature of their campaign and leader Brian Gallant mentioned it multiple times during Wednesday's leaders debate, including in his closing remarks.
"We will freeze power rates for four years to help our families and small businesses," he said in one of several plugs.
Critics have raised concerns the freeze may worsen NB Power's long-term financial problems, but Gallant has argued there is enough inefficiency inside the organization to deal with less revenue through internal cost cutting.
"It is very possible for NB Power to be more efficient and save approximately $13 million per year," Gallant said while announcing the freeze two weeks ago.
More than estimate
The $13 million figure was Gallant's estimate of the value of the freeze in its first year.
But there is some evidence that estimate is well below the amount of money the freeze actually involves, a miscalculation that will widen as the freeze progresses.
According to documents on file with the New Brunswick Energy and Utilities Board and elsewhere, about $784 million in NB Power electricity sales will be subject to the freeze next year.
That's 55 per cent of NB Power's in-province sales.
The figure includes $669 million in sales to NB Power's 329,000 residential customers and $45 million in sales to 18,000 of its small commercial customers who consume a maximum of 20 kW of electricity at any one time.
Banning NB Power from raising rates by two per
cent on $784 million of its sales will save all of those customer groups
— and cost the utility — about $15.7 million in the first year of the
freeze, $2.7 million more than the $13 million Liberals announced.
But that's just the first year.
The freeze on the $784 million in sales is compounded annually — costing four percent in year two, 6.1 per cent in year three and 8.2 per cent in year four.
That raises the total cost of the freeze to NB Power to $160 million over four years, about $27 million more than the total Liberal estimate.
On paper, the utility can absorb the reduction because it was projecting profits over those four years, before the freeze of $376 million. Still, those profits are considered critical in NB Power's long-range plan to reduce its elevated $4.8 billion debt load.
Peter Hyslop, a long time NB Power critic and a former public intervenor at its rate hearings in front of the Energy and Utilities Board said he wouldn't mind seeing some belt tightening among top executive at the utility, but doubts there is enough fat to cut to keep profits up.
"NB Power has a significant debt and part of the two per cent increase each year was to deal with that debt," said Hyslop.
"Again it seems we've stepped in and said, 'Well look, we can gain politically here and the heck with our debt repayment plans.'"
Cost to grow
But that's just the first year.
The freeze on the $784 million in sales is compounded annually — costing four percent in year two, 6.1 per cent in year three and 8.2 per cent in year four.
That raises the total cost of the freeze to NB Power to $160 million over four years, about $27 million more than the total Liberal estimate.
On paper, the utility can absorb the reduction because it was projecting profits over those four years, before the freeze of $376 million. Still, those profits are considered critical in NB Power's long-range plan to reduce its elevated $4.8 billion debt load.
Peter Hyslop, a long time NB Power critic and a former public intervenor at its rate hearings in front of the Energy and Utilities Board said he wouldn't mind seeing some belt tightening among top executive at the utility, but doubts there is enough fat to cut to keep profits up.
"NB Power has a significant debt and part of the two per cent increase each year was to deal with that debt," said Hyslop.
"Again it seems we've stepped in and said, 'Well look, we can gain politically here and the heck with our debt repayment plans.'"
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