NB Power faces searing critique from J.D. Irving Ltd., as rate hearing ends

NB Power endured a searing critique from its largest customer toward the end of its five-day rate hearing in Fredericton last week, but with no party seriously opposing the utility's need for a rate hike, it seems likely a jump in costs is on the way.

The utility appeared in front of the Energy and Utilities Board last week to defend its request for a two per cent overall rate hike beginning April 1, which includes a 2.3 per cent increase for residential customers.

"I believe the board will be in a position probably at the end of March, beginning of April, to provide some guidance on the application," said François Beaulieu, vice-chairman of the Energy and Utilities Board, as the hearing came to an end Friday afternoon.

Eight hearing participants either actively supported or did not oppose NB Power's request for increased rates during closing arguments.

However, Christopher Stewart, a lawyer for J.D. Irving Ltd., ripped the utility for not taking enough responsibility for causing its own financial problems or helping to fix them.

"Lowering the debt of the utility is not solely a ratepayer's responsibility," said Stewart, who accused NB Power of squandering previous rate hikes instead of containing costs and paying down debt.

JDI is NB Power's largest industrial customer and the Irving Paper mill in Saint John is the single largest user of electricity in New Brunswick.

"We do not want to pay more simply to create an ever increasing spending cushion for the utility. There is an obligation on the utility to live up to their part of the bargain [to cut expenses]," he said.

"And our experience so far is, well frankly, that the utility has not."

Utility to pay down debt

NB Power is under direction from the province to pay down $1 billion in debt in advance of having to rebuild the Mactaquac dam and generating station beginning in the middle of next decade and has been applying for a series of rate increases to boost profits.

Stewart reviewed how the three most current rate increases, including last year, this year and one proposed for take effect in April were supposed to help generate combined profits of $268 million to reduce debt.

Instead, unexpected costs have eaten $145.2 million of that expected return, cutting profits by 54 per cent.

At the hearing, NB Power blamed much of the deterioration on "operating variability" and issues "outside management's control."

But Stewart railed against that idea, instead pointing to preventable problems at the Point Lepreau Nuclear Generating Station as an example of how management has been directly at fault for cost increases.

"Point Lepreau, especially, especially the non-nuclear side, which seems to be the issue, has been exclusively under the operational control of the utility for the last 34 years," said Stewart.

"The state of Point Lepreau is not a mere inherent variability of the utility's business. It is a matter which has been entirely within the utility's control.

"From our perspective, it seems as if the utility spends ever more and the ratepayers pay ever more. The utility has at some length told us how every darn penny is required, but I assure you my client, and I strongly suspect every ratepayer on this system has an equally necessary use for the money that they will now be giving to the utility as their rates increases."

Supporting the rate hike

Still, JDI did not directly oppose NB Power's request for a rate increase with Stewart saying only the company would be "more supportive" if it saw evidence of serious cost cutting at the utility.

Three hearing participants supported the rate hike, including NB Power, public intervener Heather Black and Scott Stoll, a lawyer representing the province's three municipal utilities.

Anti-nuclear intervener Chris Rouse said he supported all but $50,000 of the increase which he calculated would be used to finance pay raises for NB Power executives.

Taking no position for or against the rate hike was Enbridge Gas New Brunswick and the New Brunswick Green Party.

Citizen intervener Greg Hickey gave his summation on Thursday and opposed the rate increase.