A Newfoundland Power employee works on lines along Logy Bay Road. Newfoundland Power will have to file a new proposal with the Public Utilities Board after a proposed power rate hike was denied. — Telegram file photo
The Public Utilities Board (PUB) has issued its decision on an application filed by Newfoundland Power, denying the company approval for a specific rate hike.
The company filed its request on Sept. 14, 2012. It included a proposed 7.2 per cent hike for homeowners.
The request was subject to hearings before the energy regulator in January and February.
In a decision issued Wednesday, the PUB did not award a 7.2 per cent hike and ordered Newfoundland Power to file a new proposal — one in line with certain statements from the board. For example, the board accepted the company’s forecast for energy demand on the island in 2013 and 2014.
On the other hand, the PUB rejected a requested return on equity for the company of 10.4 per cent for the coming year, saying 8.8 per cent would be a more appropriate return.
The ultimate effect on customers of the board’s written decision will not be known until the company files its new numbers with the PUB.
“What we have to do now is go through the document ... determine what the impact will be to our customers’ electricity rates,” said Newfoundland Power spokeswoman Michelle Coughlin.
The company expects to be in a position to offer some idea on the new plan for rates within the next 24 hours, she said.
The Telegram will have updates as they become available.
When the rate application was being debated before the regulator, members of the Newfoundland Power executive said the rate hike proposed was needed to both maintain a strong financial position for the company and provide a fair return to shareholders.
According to Consumer Advocate Thomas Johnson, the PUB’s decision means any power rate hike will not be as high as first proposed.
“One of the main drivers for the rate increase was the (requested) return on equity,” he told The Telegram following the decision.
He argued the proposed hike was a show of corporate greed — for shareholder profit, rather than in the interest of fairness.
For the future, the PUB has taken interest in Newfoundland Power’s increasing costs associated with energy conservation programs — increasing from about $3 million a year to an expected $4.8 million in 2013 and 2014.
The board has called upon Newfoundland Power to file a report by April 1, 2014, providing an update on its conservation programs and recommending a way to review the work in depth in future.