N.B. Power facing $32.6M revenue loss after September surprise by Higgs scrambled its budget
Late rate increase application caused by premier is threatening utility's bottom line
N.B. Power is appealing to the New Brunswick Energy and Utilities Board to save it from a "deleterious" financial loss caused by the Higgs government blowing up months of its corporate budgeting last fall.
The utility has applied for a 9.25 per cent rate increase that it says it needs to begin on April 1 but a hearing into the request isn't scheduled to even start until mid-May because the company was more than 10 weeks late in filing its request.
N.B. Power says that means a decision on new rates from the board, after it reviews evidence from a May hearing, will probably take until July 1. That, it claims, will cost the utility millions of dollars in lost revenue in April, May and June that it cannot afford to give up.
To remedy that, N.B. Power lawyer John Furey filed a motion with the utilities board last week asking for an "interim" rate increase on April 1, before a hearing is held into whether or not the increase is reasonable.
"Even in the most optimistic scenario in which the board is able to render a partial decision which enables the implementation of rates by July 1, 2024, N.B. Power will sustain a negative net impact of $32.636 million," Furey wrote in the motion.
N.B.
Power lawyer John Furey and utility president Lori Clark at an Energy
and Utilities Board hearing in 2020. Furey is asking the board to grant
an interim rate increase of 9.25 per cent on April 1 before a hearing
into the increase is held in May. (Roger Cosman/CBC)
He said missing out on higher rates for three months could wipe out any profit N.B. Power might earn in the coming year and will further deepen its already serious debt problems.
"The likelihood that N.B. Power's earnings would be so substantially reduced, or become negative, is a deleterious impact that justifies the implementation of interim rates," Furey wrote.
Last year N.B. Power was operating under a directive from the Energy and Utilities Board to file for new rates by Oct. 4 to allow for a February hearing into the request.
That was to give the board plenty of time to approve rates or reject and adjust them prior to the beginning of N.B. Power's fiscal year on April 1.
The utility had spent months developing plans and budgets to meet those deadlines.
It was a major undertaking because of N.B. Power's growing financial troubles, major upcoming capital projects and a directive from the Higgs government for it to lower its debt level by hundreds of millions of dollars from 94 per cent to 80 per cent of its total capital structure by March 31, 2027.
Plans
for a fall 2023 election in New Brunswick were so advanced organizers
for Premier Blaine Higgs booked a bus and outfitted it with PC branding,
a new campaign slogan and a giant photo of the premier. A large rate
increase announcement from N.B. Power was planned around the same time
but postponed after cabinet upended its budget. (Submitted by Charles Doucet)
However, on Sept. 25, nine days before N.B. Power's deadline to submit its rate request, Premier Blaine Higgs signed a surprise cabinet order extending its debt reduction target two years, to March 2029.
It significantly lowered the amount of money the utility would need for immediate debt reduction and upended months of budgeting which then had to be reconstructed.
Eventually N.B. Power filed its rate request 72 days late, on Dec. 15.
"The entire GRA [general rate application] filing package, which was largely complete as of September 27, 2023, when the directive was received, must be updated and/or revised to reflect that directive," N.B. Power's chief financial officer Darren Murphy said in an affidavit explaining the delay to the board.
Premier Blaine Higgs has acknowledged he was on the verge of calling a fall general election around the time N.B. Power was originally scheduled to apply for its rate increase .
Reducing N.B. Power's debt target just days before the filing deadline pushed the announcement of a large increase outside of a potential election window but the government has denied that was a consideration in the last minute change.
"Not politicking at all, not so," Mike Holland, minister of natural resources and energy development, said about the cabinet decision at the time.
"This has been a part of our daily work — not something that we dream up off the cuff."
Higgs eventually changed his mind about the election — despite his party preparing election materials for it, including the renting and outfitting of a campaign bus and Elections New Brunswick spending $1.7 million to prepare returning offices.
Costs to N.B. Power are much higher.
According to the utility it will lose $12.2 million in revenue in April, $10.8 million in May and $9.6 million in June if the original delay in its application pushes the approval of higher rates to July.
It argues granting a full 9.25 per cent increase on April 1 is not harmful because if a full hearing later determines a lower increase should be awarded, overpayments from customers in the early months can be calculated and returned through discounts on a future bill.
It may be a tough argument for the utility to win.
In 2016 the EUB rejected N.B. Power's application for an interim rate increase under similar circumstances. The utility had failed to apply for an increase until late December but requested it be granted on April 1 prior to a hearing.
The request was denied.
Christopher
Stewart was a lawyer for J.D. Irving Ltd. in 2016 when he argued
against N.B. Power receiving an interim rate increase from the utilities
board before a full hearing was held. He's now a board member and will
likely have to rule on a similar application this year. (Shane Fowler/CBC)
An additional problem for N.B. Power is that two of the lawyers who argued against awarding an interim increase in 2016, then Public Intervener Heather Black and J.D. Irving Ltd. lawyer Christopher Stewart, have since been appointed to the utilities board as members. Both will likely be involved in ruling on whether or not to grant an interim increase this year.
Stewart was especially skeptical back in 2016.
"What N.B. Power is asking this board to do in this particular application is to say, 'look, we didn't get our work done on time but we would like the result we had wanted if we got our work done on time,'" Stewart said in his 2016 argument.
"That's no basis for you to grant an interim rate increase in this circumstance."
N.B. Power lawyer John Furey, who lost that 2016 application, notes in his motion this year that the late application is the New Brunswick government's fault, not N.B. Power's — a distinction the utility hopes will make a difference.
"The basis for the requested variance of the filing date for this application was beyond the control of N.B. Power," wrote Furey in his current motion.
The EUB has scheduled a hearing for March 1 to hear arguments on the request.
ABOUT THE AUTHOR
Surprise Surprise Surprise
David Amos
Does anyone recall NB Power suing the EUB last year???
Don Corey
Reply to David Amos
Yeah, I remember them suing the EUB, but no idea what's happened since.
David Amos
Reply to Don Corey
Its just another one of those lawsuits that never happened Even though I am named in the complaint nobody will tell me what happened
David Amos
Reply to Don Corey
"N.B. Power lawyer John Furey, who lost that 2016 application, notes in his motion this year that the late application is the New Brunswick government's fault, not N.B. Power's — a distinction the utility hopes will make a difference.
"The basis for the requested variance of the filing date for this application was beyond the control of N.B. Power," wrote Furey in his current motion."
Too too Funny It was the lawyer John Furey who wrote and served me the lawsuit and It was the lawyer Christopher Stewart who did not want to discuss it with me as he asked my opinion of N.B. Power filing its rate request 72 days late, on Dec. 15
Feb 24, 2023
Don Corey
There are a few things that really stand out here:
1. Like it or not, the rate increase NB Power is looking for will be the norm (if not even higher) for well into the future
2. With Belledune coal phased out by 2030 (just 7 years away), we could well be looking at electricity shortages at times right here in NB
3. Demand for electricity will definitely be going up
4. NB Power will have to refurbish/rebuild Mactaquac
5. The path to net zero by 2050 is about as clear as the mud (thanks Justin and Stevie Greenpeace)
6. Carbon taxes have done nothing, and will continue to do nothing, to drive the transition to lower carbon emissions (all they contribute to is a higher inflation rate).
N.B. Power seeking rate hikes of almost 10 per cent in 2024, 2025
Despite longer debt deadline, utility says 2 big increases needed to maintain service, start tackling debt
Jacques Poitras · CBC News · Posted: Dec 15, 2023 1:03 PM AST
"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 idea after 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. "
Christine Martinez
NB Power execs are consistently at the top - by far - of the sunshine list. They continue to get exorbitant bonuses even though they have amassed 5 billion in debt. Perhaps paying for performance is in order at this grossly mismanaged company.
Reply to Wilbur Ross
Reply to Jeremy Amott
Reply to Jeremy Amott
Reply to Mac Isaac
Already conceding before any vote is cast?
Reply to Brian Robertson
Reply to William Morton
Reply to William Morton
Oh right, only lower level people will be affected
Reply to June Arnott
Bill Phemister
Disgusting...typical political move. Deferring needed rate increase til tomorrow so that he can appear to be the defender of all nbers. Actually by deferring today's obvious needs he will cost us even more in the future and in quality of service. Oh yeah he's my hero..sad excuse for a new Brunswicker. Thx.. for nothing.
Don Corey
Reply to Bill Phemister
You'll be seeing some huge rate increases soon enough, and then complaining that Higgs didn't do enough to keep them lower.
David Amos
Reply to Don Corey
Of that I have no doubt
Samual Johnston
Reply to Bill Phemister
NB Power has been a mess. A huge Liberal mess and a huge Conservative mess. Lots of blame to spread around there over many decades.
David Amos
Reply to Samual Johnston
Oh So True
rick haars
Only way NBP gets out of debt is if it's sold to JD.
Rosco holt
Reply to rick haars
JD already has ownership of NBP since he owns NB government.
Bill Phemister.
Reply to rick haars
Wait til you see your power rate increases then.
David Amos
Reply to Rosco holt
Sad but true
Al Clark
Shame that the finance minister and former finance minister couldn't pool their genius to fix this; "stronger together" ha!
Don Corey
Reply to Al Clark
Shame on all the high priced bureaucrats at NB Power for an F performance.
David Amos
Reply to Don Corey
I second that emotion
Geoff MacDonald
I really wish Gallant had pulled the trigger on the deal to sell NB Power to Hydro Quebec.
Al Clark
Reply to Geoff MacDonald
you mean give?
Raymond Leger
Reply to Geoff MacDonald
It was Graham not Gallant that put that question to an election and lost to Alward.
Don Corey
Reply to Geoff MacDonald
It was Shawn Graham who was unsuccessful in dumping NB Power. To even attempt such a process would have been way beyond the capabilities of Gallant.
Don Corey
Reply to Raymond Leger
It wasn't an NB decision. Quebec backed out.
Raymond Leger
Reply to Don Corey
After the election and Alward's "modification" of the original deal.
David Amos
Reply to Don Corey
True
David Amos
Reply to Raymond Leger
False
Churchill Sunak
Reply to Geoff MacDonald
Why? Right now we have one of the lowest rates in the country. Who cares what NB Powers debts are. That is a them problem and will only really ever impact on their ability to keep the million dollar salaries and bonuses flowing.
Don Corey
Reply to Raymond Leger
There was no deal for Alward to modify, as you are well aware.
Perr Farrell
Reply to Geoff MacDonald
Every since I was younger people have been demanding the government dump NP Power, when Graham finally decided to do it, the people voted him out, seems we have only ourselves to blame ?
Higg`s is poor politician, Say`s he want to save taxe payers$ but manage to spend 32 million on a setup
Bobby Richards
Reply to Michel Pelletier
Sabotage
Don Corey
Reply to Michel Pelletier
Where did he send $32 million on a setup? Did you read the article?
Chantal LeBouthi
Reply to Michel Pelletier
Totally agree a poor politician who costs millions and millions more to taxpayers
Michel Pelletier
Reply to Don Corey
He was not sure to get support from ministers who were not supporting him, he set a trap, to declare an election, the 32 million was the cost to for election in nb at that time, this mean if ever in election in 2024 add more $$ to this
Don Corey
Reply to Michel Pelletier
And where exactly did you get the highly exaggerated $32 million figure?
David Amos
Reply to Don Corey
Good luck getting a reply
Don Corey
Reply to David Amos
I'm not holding my breath. It's another invented allegation.
Don Corey
The NB excuse that all their budgeting work was "blown up" by the Higgs government and that it took them 10 weeks to redo the budget is a joke, excuse and completely false. All large corporations are often told to go back to the drawing board and come back with something more acceptable.....within 1-2 weeks. Budgets are prepared with elaborate computer programs that provide the ability to plug in every imaginal assumption possible, and can be easily and quickly revised.
To blame this one on Higgs is ludicrous.
Alison Jackson.
Reply to Don Corey
Some people take great pride in excusing the faults of Higgs. Full time job for a few of the lads.
Chantal LeBouthi
Reply to Don Corey
It’s seam you didn’t read the article
Don Corey
Reply to Chantal LeBouthi
Try again.
Don Corey
Reply to Alison Jackson
And some people only believe what they want to hear. They get a steady diet of it here.
Alison Jackson
Reply to Don Corey
And some people spend way too much time on 'Canada Proud'.
David Amos
Content Deactivated
Reply to Don Corey
"To blame this one on Higgs is ludicrous. "
Methinks we should agree to disagree N'esy Pas?
Don Corey
Reply to Alison Jackson
Are you quite familiar with it? I'm not.
Raymond Leger
Another one of Higgs classic "Knee Jerk" reactions is costing New Brunswickers millions again. Time for a change!
stephen magee
Reply to Raymond Leger
What's our options on change?
Don Corey
Reply to Raymond Leger
Where is there anything about this story that is costing NB'ers millions? It's all about rate increases and revenues. The NB Power ridiculous excuse for the 10 week delay is simply deferring rate increases, so actually saving ratepayers that money for a short period.
Yves Savoie
Reply to stephen magee
Different color, that's about it....
David Amos
Reply to Don Corey
NB Power's losses are our losses
Don Corey
Reply to David Amos
True.
Corrie Weatherfield
so what NB Power is claiming is that because the province softened up the debt repayment requirement it took them months to re-do their budget . . . this from "joi scientific" game, convert Belledune without any fuel contract, re-do Lepreau without any performance requirement on the contractor . . . so would we believe any claims from NB Power that are about money ?
Lou Bell
Reply to Corrie Weatherfield
Higgs rejected another " FAILED " NB Power budget that would never have gotten approved and ordered them to come up with something realistic . NB has among the lowest power rates in Canada and it's hilarious how the left wanted the " budget that was going nowhere " to be presented . And like with anything finances the left don't seem to realize is that what they get is not free and it has to be paid for !
And I'm sure once the next budget is approved and with an increase in power rates they'll complain once again !
Bruce Martin
Reply to Corrie Weatherfield
Your post doesn’t seem to make sense. At least not to me.
Corrie Weatherfield
Reply to Bruce Martin
well, just like anything to do with money claimed by NB Power does not make sense . How long should it take to "re-do" a budget if rules are changed to slow down the rate at which you re-pay your debt? months?
Gerry Wootton
Reply to Lou Bell
"NB has among the lowest power rates in Canada" N.B.s residential rates are on a par with Ontario - and that's not a standard to be proud of - and well above B.C., Manitoba, and Quebec. With the
suggested increase, they would double up on Quebec. An interesting side bar: New Brunswick is resisting development of the Atlantic Loop which would make inexpensive electricity from Quebec and Labrador available all across New Brunswick. Conservatives always bet on private enterprise as the best way to provide public services and always get burned.
Bobby Richards
Reply to Lou Bell
Why doesn't Money Manager Higgs straighten it out then?
Bobby Richards
Reply to Gerry Wootton
If Mactaquac doesn't get refurbed soon we'll be buying power from Quebec.
Andrew Martin
Reply to Gerry Wootton
You forgot to mention how NB rates are cheaper than all their neighbors, and cheaper than other areas of the country as well. You could be in NS paying 18cent/kwh, 23 cents/kwh on peak. When you look
at the rates across the country, we're below average. Also, Ontario's time-of-use peak rates are roughly 18 cent/kwh, similar to NS' average. Nb rates = 12.3 cent/kwh
David Amos
Reply to Bobby Richards
We already do
Rosco holt
Reply to Corrie Weatherfield
You seem to forget Higgs significantly increased the subsidy on electricity for 6 mills to compete with BC, which isn't sustainable.
Dan Flanagan
Reply to David Amos
We buy electricity off the grid when needed & sell power into the grid when we have a surplus. Nearly every province & state does this.
David Amos
Reply to Dan Flanagan
What part of that do you think I didn't already know?
Lou Bell
Another LW story denigrating HIggs over the crown corporation's losses that has been on life preserve for years . The NB power debt will continue until the government is prepared to bail it out and that is much closer withn Higgs paying off the NB debt by 2 billion dollars that was built up exponentially by the last Liberal government ! NB power rates are among the lowest in Canada and the Liberals did
nothing to help alleviate the debt of both province and NB Power !
Until the left come to realize they're going to pay their fair share of the cost nothing is going to change ! In fact it has been shown the Liberal plan with the Atlantic Loop was gonna cost NBers much higher
power rates , and all to the benefit of Quebec !
Bobby Richards
Reply to Lou Bell
Since Higgs boasts about being such a great money manager, why he hasn't taken the reins on NB Power?
Gerry Wootton
Reply to Lou Bell
"NB power rates are among the lowest in Canada" not. B.C., Manitoba and Quebec have much lower rates. Being on a par with Ontario's equally badly managed system is nothing to be proud of.
MR Cain
Reply to Gerry Wootton
Due to predominately hydro power.
David Amos
Reply to Lou Bell
Properly so
Marcel Belanger
Why would 2 lawyers who argued in front of the EUB , one of them a JD Irving lawyer, to lobby against power rate increases be named to that very same board?
That seems odd.
Kate LeBlanc
Reply to Marcel Belanger
That sounds typically typical for governments.
MR Cain
Reply to Marcel Belanger
Might explain why the citizens are paying the clean fuel surcharge and not the refinery. Who appoints these people to the board?
Jim Lake
Reply to Marcel Belanger
It’s called “Higgs patronage appointments” … all designed to get the EUB to make decisions Higgs wants … absolutely nothing to do with what is right for the province or in the best interests of New
Brunswickers.
Dan Flanagan
Reply to MR Cain
They been charging us that since October & won't do anything until April. Outrageous, gouging, blatant.
Deborah Reddon
Reply to Marcel Belanger
Fully agree, and can only add that the decisions are made for Irving via Higgs. NB is poor because the Irvings manipulate all aspects of life here.
.
David Amos
Content Deactivated
Reply to Marcel Belanger
It worse than merely odd
Don Corey
Reply to Marcel Belanger
It seems to me that it's much worse than odd. Among other things, it comes across as a gross conflict of interest.
Kyle Woodman
"Not politicking at all, not so," Mike Holland, minister of natural resources and energy development, said about the cabinet decision at the time.
Mike was already out the door. He will say anything.
Dan Lee
Reply to Kyle Woodman
probably in irving s door by next winter
Kyle Woodman
Reply to Dan Lee
Or NB Power executive.
Jim Lake
Reply to Kyle Woodman
Or another Higgs patronage appointment to the EUB.
Kyle Woodman
Reply to Jim Lake
I'm sure his dance card is full.
Bobby Richards
Reply to Kyle Woodman
He doesn't have the skills to be an exec for any company. He's a good talker. Bass Pro customer service rep maybe.
David Amos
Content Deactivated
Reply to Kyle Woodman
I suspect he will play dumb as usual
David Amos
Reply to Kyle Woodman
Hmmm
Eugene Peabody
Higgs interference method is costing money. What a surprise ! LOL
David Amos
Reply to Eugene Peabody
I guess we might as well laugh at the nonsense of it all
Raymond Leger
Taxpayers should not have to pay for this.
Dan Flanagan
Reply to Raymond Leger
Who else will pay for it? Taxpayers pay for everything.
David Amos
Reply to Dan Flanagan
Par for the course
Alex Butt
Proof as to why this was, is and always will be a failure of a province. The greed, corruption and narrow mindness will keep this province in this state. We have a premier that is nothing more than an irving puppet who couldn't care about the average New Brunswicker at all. Then we have nb power, a complete failure and mess that rewards its employees and ceos no matter how many millions of dollars they waste.
Doug kirby
Reply to Alex Butt
Well said...100%
Greg Miller
Reply to Alex Butt
Agreed. and absolutely no solution in sight -- regardless of the political party chosen. A true example of a hopeless situation -- no wonder newcomers are exiting the Province.
David Amos
Reply to Doug kirby
Welcome back to the circus
Kenneth Dwight
Its sort of like he doesn't care.
Doug kirby
Reply to Kenneth Dwight
He doesn't..he's like a school yard bully
David Amos
Reply to Doug kirby
Amen
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