EUB hears call for lower increases to avoid rate shocks
Consultant says the increases sought among the largest he's seen a utility request — outside Alberta
An accounting expert was the final witness to testify during an Energy and Utilities Board hearing Wednesday about N.B. Power's proposed rate increases.
Dustin Madsen is a Calgary-based consultant hired by the public intervener to review the utility's proposed power rate increases.
Madsen called for the board to impose lower increases to avoid rate shock, which could see people unable to pay their bills and put some businesses at risk of closure.
"A rate increase of this magnitude would cause, for a fixed-income customer, quite a lot of shock," Madsen said.
A 10 per cent increase is generally considered the threshold for "rate shock," he said. The average increase sought for all customers is 9.25 per cent for this year and next year.
When combined with other increases, figures presented to the board by N.B. Power show a total increase for residential customers of 13.2 per cent in the first year, 15.3 per cent for large industrial customers, and 11.5 per cent for small industrial customers.
Dustin
Madsen, a consultant from Calgary hired to evaluate N.B. Power's rate
increase request, called for a lower rate than proposed. (Ed Hunter/CBC)
He said the increases sought are among the largest he's seen a utility request outside Alberta, which has a deregulated energy market.
His comments came during cross-examination by representatives of the Human Development Council and municipally-owned utilities like Saint John Energy.
"One of the potential risks of rate shocks is increased disconnections for people that can't afford the electricity, those people that are most in that poverty group. Would you agree with that?" Ryan Burgoyne, a lawyer representing municipal utilities, asked Madsen.
Yes, he replied.
"That's why regulators seek to avoid rate shock … because you never want someone to not be able to pay their bill and get disconnected," Madsen said.
His written evidence said the board's overriding consideration should be the affordability of rates.
He testified the board is in an unenviable position in trying to balance the utility's financial position with the impact on consumers.
"A constant issue before every regulator in Canada, and the United States for that matter, is the risk of putting a utility into what they call the utility death spiral," Madsen said.
"Which is an issue where your rates are going up so high that more and more customers seek alternative means of consumption or delivery of their service."
Longer-term plan needed, accountant says
He said alternatives could include solar panels, but it's an option that's harder for people with a lower income.
Madsen called for the board to impose lower rates than N.B. Power has sought and for it to consider a later target date for reducing its reliance on debt.
The provincial government had ordered the utility to reduce its debt to 80 per cent of the total value of the utility by 2027. But last fall that was moved back to 2029.
Madsen has suggested the utility should investigate what moving that date even further back would mean, testifying it could allow for lower rates in the near-term.
In his written evidence, Madsen wrote that "there is no compelling evidence" a date beyond 2029 would be "significantly detrimental to NB Power's financial health or indeed that of the Province of New Brunswick," which borrows on behalf of the utility.
In a written response filed in February, N.B. Power said it views the directive as something it must comply with and that it followed when producing its rate increase proposal.
"Not meeting the target by that date would leave N.B. Power less prepared financially for the investments required for the Mactaquac Life Achievement Project and other needs," the utility wrote.
The board heard in June that work to keep the dam operating into the 2060s could cost in the range of $4.4 billion to $7.2 billion. That's up from a 2016 estimate of $2.9 billion to $3.6 billion.
The board has heard the cost to keep the Mactaquac Dam operating into the 2060s could be more than $7 billion. (Michael Heenan/CBC)
Darren Murphy, the utility's chief financial officer, said in June that the project was the primary driver behind trying to meet the 2029 equity target.
Under cross-examination by Glenn Zacher, a lawyer representing J.D. Irving Ltd., Madsen said he wants a plan beyond five years and a later equity deadline to avoid punishing current customers for historically low rates.
And, Madsen said, without a long-term view the utility could hit the 2029 target and then cut rates.
"That would also shift burden from a future generation to a current generation," he said.
The board will hear final arguments about the proposed rate increases on Monday.
ABOUT THE AUTHOR
"Methinks Higgy and Minister Mikey would agree that their silence on this topic speaks volumes to political animals such as I. For a year they could have picked up the phone to stop this "Not So Smart" Meter madness and saved us 100 million loonies in the process. Instead the conservatives opted to roll the dice and leave the matter in the hands of EUB Commissioners all of whom are politically appointed liberal buddies. Its a wicked game and I am very curious as to how it will play out but I have no doubt whatsoever Jacky Boy Keir already knows N'esy Pas?"
Wow, having to pay what is costs to produce, shocking.
David Amos
Reply to Danny Sterns
There is a lot more to know Perhaps you should read the EUB transcripts since 2015
David Amos
Reply to Fred Emmersen Turner
Why?
Sharon Mercer
Reply to Fred Emmersen Turner
Maybe NB Power should start with a reduction in the salaries & bonuses of their executives. That should generate a bunch of cash!
David Amos
Reply to Sharon Mercer
I wholeheartedly agree
You have 10 MP's in Ottawa and you chose to send a bunch of Liberals and now you complain about the price of energy you pay....
go figure...
David Amos
We have a Conservative government as are four of our MPs
"Methinks Higgy and Minister Mikey would agree that their silence on this topic speaks volumes to political animals such as I. For a year they could have picked up the phone to stop this "Not So Smart" Meter madness and saved us 100 million loonies in the process. Instead the conservatives opted to roll the dice and leave the matter in the hands of EUB Commissioners all of whom are politically appointed liberal buddies. Its a wicked game and I am very curious as to how it will play out but I have no doubt whatsoever Jacky Boy Keir already knows N'esy Pas?"
David AmosReply to Holley Hardin
Yea Right
David Amos
Reply to Holley Hardin
Perhaps you should ask our Conservative government and our four Conservative MPs why NB Power is not audited
The provinces that privatized their grids are in deep trouble
Gregory Wulf
Reply to james bolt
I'm in AB and we seem to be doing better than most.
David Amos
Reply to Gregory Wulf
Surely you jest I saw my brother's power bills in Fort Mac
Gregory Wulf
Reply to David Amos
Did he show you his pay stub as well?
David Amos
Reply to Gregory Wulf
Yup In return I showed him my lawsuit against you know who
Gregory Wulf
Reply to David Amos
That's what I figured.
David Amos
Reply to Gregory Wulf
I bet you read my lawsuit Correct?
Gregory Wulf
Reply to David Amos
If Stronach was "handsy" with you, I agree that you should go after him.
David Amos
You think you are witty EH?
Bingo
Winston Gray
Reply to Gregory WulfLol so you argue you’re better off in regards to energy cost, but you admit that you pay a LOT more… so you bring up a pay stub? Lol
Danny Sterns
Reply to james bolt
Really? How?
Danny Sterns
Reply to David Amos
You know how far north Fort Mac is, right?
David Amos
Did you read my other comments before they went "Poof"?
Gregory Wulf
Reply to Winston Gray
I argue that the grid is robust, and that it's rarely down. The cost, is the cost. It went up when we pivoted away from Coal. It will do the same as we move away from natural gas. That's the governments, and consumers choice.
David Amos
Reply to Danny Sterns
"Really? How?"
You don't have to go far Just ask our neighbours in Nova Scotia about their power bills
I would increase the price whatever is necessary.
David Amos
Reply to Jim Redmond
Why does that not surprise me?
Jim Redmond
Reply to David Amos
Why should the utility suffer?
David Amos
Reply to Jim Redmond
Suffer???
David Amos
Reply to Jim Redmond
Why did NB Power sue the EUB and I?
How about no increases. Too much greed going on.
David Amos
Reply to Denis Van Humbeck
Amen
Holley Hardin
Reply to Denis Van Humbeck
Greed?...isn't it a Public Utility?...
MR Cain
Reply to Holley Hardin
He thinks it should be free.
David Amos
Reply to Holley Hardin
Its supposed to be However..........
Is there anyone out there that knows how to run an electric utility? No experience necessary!
David Amos
Reply to Greg Miller
Go Figure
https://www.cbc.ca/news/canada/new-brunswick/nb-power-smart-meter-eub-hearings-1.5434186
Don Corey
Well, at least this consultant (Madsen) is a Canadian, and not another of those overpriced US "experts".
The EUB is composed primarily of individuals appointed by the Higgs government. Given the pending fall election, they may well decide to go along with Madsen's recommendations, especially when it comes to moving the 2029 date down the road a few more years. The result would be lower rates for all of us in the short term.
Just keep kicking the can down the road.....
David Amos
Reply to Don Corey
Don't bet the farm on his opinion
Allan Marven
Keep those zombies on the hot seat for about another month. They'll quit, and then we can restart our power company.
David Amos
Reply to Allan Marven
Dream on
John Pokiok
David Amos
My friend Roger Richard tried very hard to warn everyone
https://www.cbc.ca/news/canada/new-brunswick/nb-power-rate-hearing-eub-1.4544322
David Conner
David Amos
Deja Vu?
https://www.cbc.ca/news/canada/new-brunswick/nb-power-smart-meters-experts-eub-1.4504618
MR Cain
Smart meters are smart; like the tv. No big deal.
David Amos
More?
https://www.cbc.ca/news/canada/new-brunswick/nb-power-smart-meter-eub-hearings-1.5434186
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