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
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.
“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.