Hydro halts PUB review of rates started in 2013

Ashley Fitzpatrick
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Debated for months and expected to be settled in July, it is now unclear when the Board of Commissioners of Public Utilities (PUB) might be able to set new power rates for Newfoundland and Labrador Hydro

Thomas Johnson

Hydro issued a letter to the PUB Friday, stating it is changing its proposal for new rates — a proposal under review and public discussion since the start of August 2013.

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

The move will affect what customers see on their power bills.

The change proposed in 2013 would have resulted in a small de-crease in the price of power for island power customers beginning in 2014, but also a nearly 25 per cent increase in rates for power users on the grid in central and western Labrador. Those numbers are now off the table. Hydro has stated it wants to wait until the fall to propose new numbers.

“The process is continuing. However, the (rate) hearing will be delayed to allow for the filing of amended evidence,” a spokeswoman said.

Consumer advocate Thomas Johnson confirmed, with the new figures and timeline, Hydro’s rates are unlikely to see hearings at the PUB until early 2015.

“It will remain to be seen what rate impacts will come from that new filing,” Johnson said.

Move questioned

“There is no question that the original application using 2013 as a base year (for costing) was a mistake and with the clear unfairness in the cost to Labrador Interconnected customers, cancelling this application was the right thing to do,” said former Liberal MHA Danny Dumaresque in a news release.

He questioned the time and money lost as a result of Hydro’s decision to change its proposed rates.

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

The completed work will now be set aside.

“Hydro will file — by October 2014 — revised and supplementary evidence and will file updated responses to the requests for information from intervenors that will be affected by the updated cost and financial data,” Hydro said in an emailed response to questions.

There will still be the loss of independent calculations, solicited expert opinions and submissions of now-irrelevant information made by everyone from the Consumer Advocate to the towns of Wabush and Labrador City.

“You don’t come back with a rate application every year, because they’re so expensive and time consuming,” Dumaresque said, questioning how the costs and losses will be addressed.

Hydro has apologized in its letter for the late changes to proposed rates.

New rates could be retroactive

A problem arises with any significant delay in the settling of Hydro’s rates.

Changes 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.

Rate changes are meant to allow a utility to recover costs, through power bills, in a timely manner. And address the increase of utility costs over time.

Any delay in deciding what is a fair power bill, any reliance on past rates for too long, can lead to retroactive charges on future bills, once rates are finalized.

Hydro is operating under what has been charged to customers in the past, meaning there is a forecast revenue shortfall for this year, unless something is done.

Johnson said he expects Hydro will, in response, revive an application for an interim increase in rates, or offer a new proposal to cover the gap.

“To the extent that we have a gathering of monies due to Hydro that have to be later collected, that’s obviously a concern of mine, that we don’t have too much accumulating that would make it tougher for customers in the future,” he said.



Organizations: Newfoundland Power

Geographic location: Labrador, Wabush

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Recent comments

  • Susan
    June 10, 2014 - 13:22

    @ Samuel J, You sound more like ball full of wind, His most famous line is ( Elects Me Then Find Out ) ball isn't going to table any bill in the house concerning muskrat falls. just a sucker look on his face..

  • Samuel J.
    June 10, 2014 - 12:11

    Hydro no longer has any credibility with the Newfoundland public. Nor, for that matter, does the consumer advocate who abandoned ratepayers when he became a cheerleader for Muskrat Falls. NALCOR will do its best to stave off the really bad news for taxpayers and ratepayers alike until after the election next spring. Among its campaign promises, the Liberals will pledge to review everything that has been done and to make it public. Shortly after the election Hydro will file a new application with the PUB for an immediate 30% increase in electric rates - the first of many to come. The half dozen Tories still left in the House of Assembly will quickly blame Ball for gouging consumers. Ball will respond by tabling a report that shows that things are much worse than they knew - that the province's electrical energy industry is in a mess and that, as a result of the incompetence and bad judgement of the previous Tory administration, his government has no choice but to allow Hydro to recapture the costs of the Muskrat development. The same report will conclude that cost over-runs are likely to push the price tag for Muskrat to $12 Billion. Moreover, he will also reveal that it is unlikely Holyrood can be dismantled - that independent analysis of the province's grid has concluded a modernized generating station is essential to the security of supply. But Premier Ball will announce new legislation to restore the mandate of the PUB and to curtail the powers of NALCOR. And life in Newfoundland will go on - just that it will be a great deal harder for some.

    • Maurice E. Adams
      June 10, 2014 - 13:35

      Your crystal ball seems to be working well Mr. J..... Good summary. But the province's overall fiscal situation and its credit rating may also be critically impacted.

  • Charles Murphy
    June 10, 2014 - 11:58

    Sad thing about this, we just didn't need this project. or the burden that come with it. I wish someone can tell me, how are the ratepayers going to pay the high increase in their power bill? Mr Ball of the Liberal party, for the longest time, was leading the people on, that he wasn't for this project, "But"Now for some reason he like its. "Question" what change with Ball and the Liberals. Are they for the people, or big business

  • Joebennett
    June 10, 2014 - 08:26

    If NL Hydro was a private company, their management people would be shown the door. They drop the ball very time they have to make a decision. But then again, they are being dictated by Marshall and his cronies. Our power rates will be much, much higher than anywhere in North America once MF comes on stream, and if this is not true, then tell the public or are they waiting for the next election to be over ? Time to move to Nova Scotia.

  • Maurice E. Adams
    June 10, 2014 - 07:24

    Timed no doubt to put off rate shock until after the next election. Premier Martin is always ahead of the curve when it comes to keeping ratepayers in the dark until all dirty deeds are done.