Power rates up in the air

Ashley
Ashley Fitzpatrick
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Hydro puts pin in unresolved 2013 rate application

Newfoundland and Labrador Hydro has put a pin in a proposal to change power rates, including a requested decrease in what it charges island power customers.

Newfoundland and Labrador Hydro‘s thermal generation station in Holyrood. — File photo by Joe Gibbons/The Telegram

The proposed rate change was highly contested, as it was expected to also result in a 25 per cent increase in rates for power users on the grid in Central and Western Labrador.

Now, it remains unclear when the cost of power will be settled for all of Newfoundland and Labrador and where the numbers will ultimately stand.

The proposed rate changes, debated over much of the past year, were put to the province’s public utilities board (PUB) in August 2013, as a general rate application (GRA).

The review of the application has involved extensive information gathering, meetings and written exchanges of questions and answers about Hydro’s operations and predicted costs going forward by both the PUB and case interveners. It is all information the PUB uses to determine where rates should actually stand.

The work completed to date will now be set aside, according to a letter from Hydro to the PUB, dated Friday, June 6.

“Please be advised that Hydro will be filing an amended application in the fall of 2014 based on updated financial information,” it states.

It was sent on the last working day before detailed, sit-down discussions around proposed rate changes were set to begin.

Hydro’s decision to make a change means much of the calculations completed to date, expert opinions solicited and submissions made by everyone from the Consumer Advocate to the towns of Wabush and Labrador City, will be made worthless.

A meeting of representatives for Hydro, the PUB, the Consumer Advocate and case interveners has been scheduled for 2 p.m. today in relation to Hydro’s letter.

The Telegram will have more as it becomes available.

Meanwhile, the utility’s letter states it also wants to have discussions around “matters dealing with customers’ rates that require more immediate attention.” It hopes to address those matters before coming back to the larger question of where power rates should be set.

Hydro has stated it will file an updated GRA by October. That means power rates are unlikely to be settled until 2015.

Changes in Hydro rates directly affect customers on the utility’s interconnected system in Labrador and the isolated diesel systems of the island and Labrador coast. Hydro is also the main supplier of Newfoundland Power and a change in its rates can directly affect how much is charged on Newfoundland Power’s bills to customers.

Hydro had proposed a decrease from 12.4 cents per kilowatt hour of electricity to 12 cents per kilowatt hour for rates relevant to the island power customers. The 10,500 customers on the Labrador interconnected system were to see an average rate increase from 3.9 cents per kilowatt hour to 4.9 cents, if the PUB approved the proposal on the table.

Hydro has apologized for the lateness of its change in plans.

Annual adjustments can be made by the PUB between rate applications, to reflect changes in key factors used in forecasting the cost of power. This is because rates are based on the expected need for power and what it is expected to cost utilities to meet that need.

If there is a significant change in the price of oil, for example, the PUB can adjust the amount being charged to power customers in Newfoundland and Labrador.

Given this, separate from its unresolved general rate application, Hydro has filed for an increase in power rates as of July 1 of this year, tied to higher forecasted fuel costs for the Holyrood power plant.

The application for the adjustment does not address increased costs to Hydro expected to come with increases in capital spending, including $292-million for a new power line from Bay d'Espoir to the Avalon Peninsula, roughly $300-million for a new line from Churchill Falls to Labrador West and a $119-million spend, already approved, for an additional 100 MW generator Hydro is expected to have in service by December.

 

afitzpatrick@thetelegram.com

Organizations: Newfoundland Power

Geographic location: Newfoundland and Labrador, Wabush, Holyrood

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