N.B. Power faces resistance at hearing into 9.25 per cent interim rate increase request

N.B. Power's effort to win an interim rate increase of 9.25 per cent on April 1 — even though a full hearing into the request will not be held until May — ran into some resistance at an Energy and Utilities Board hearing Friday as it was being championed by its chief financial officer Darren Murphy.

"Mr. Murphy, you can appreciate that you are asking for an unprecedented rate increase on an interim basis prior to the evidence being fully tested," EUB lawyer Abigail Herrington said during an exchange with Murphy about whether an April 1 increase is reasonable.

Murphy said he did understand that but argued the utility needs to charge customers higher prices at the beginning of April to meet its financial targets and cannot wait until May, June or July for a decision from the board.

"We are seeing very exceptional circumstances that led to the situation that we're in," said Murphy.

"Otherwise we would not be sitting here asking for interim rates."

N.B. Power chief financial officer Darren Murphy spent two hours answering questions about the utility's request to raise rates 9.25 per cent on April 1, even though a hearing into the amount won't happen until May. (Robert Jones/CBC)

N.B. Power applied for this year's rate increase 10 weeks past a deadline established for it by the EUB, a circumstance the utility says was caused by the provincial government, not it.

N.B. Power claims that it was preparing to submit a rate application to the board early last October as required.

It was to include an increase of more than 12 per cent, an amount that would have become public right around the time Premier Blaine Higgs said he was seriously considering calling a fall election.

However, just days before the EUB application deadline, the New Brunswick government moved debt reduction targets the utility has to meet from 2027 to 2029.

That allowed N.B. Power to reduce the size of the rate increase it would need this coming year, but the utility said it required a reworking of corporate budgets so completely that it forced a delay in the application for new rates until Dec. 15 — 10 weeks late.

N.B. Power says if granted an interim rate increase of 9.25 per cent on April 1 it will refund any money it over collects should it later be found to be too much. (Michael Heenan/CBC)

That pushed the utility's rate hearing from February to May and a likely decision on what to award from the board from late March to late June.

N.B. Power contends its financial troubles require it to begin collecting higher rates at the beginning of its fiscal year on April 1, and it has promised to rebate customers any excess amount it collects in April, May and June if a full rate hearing eventually decides a 9.25 per cent increase is too high.

"It is essential we have those rate increases in place April 1 and not delay that for two or three or four months," said Murphy, who has estimated the utility will lose more than $30 million if an increase is delayed until July 1.

"We will ensure that customer bills are adjusted for whatever final decisions are rendered.  Customers will not be harmed."

But Herrington and public intervenor Alain Chiasson both raised questions about how much of a surprise the provincial government's decision to move the debt target really was.

Murphy acknowledged that moving the debt target was N.B. Power's idea and had been first suggested to government in the spring of 2023 as a way to help lower a 2024 rate increase. But he told Chiasson the utility did not know for sure that would happen until it received formal notice from the province.

Energy and Utilities Board lawyer Abigail Herrington (right) at N.B. Power's 2023 rate hearing. At a hearing Friday, Herrington pressed N.B. Power about how much of a surprise it was to the utility when the provincial government moved its debt targets and delayed its rate increase application. (Jonathan Collicott/CBC)

But Herrington dug deeper on that point and questioned the claim that N.B. Power was unprepared for the government's last-minute decision to extend the debt target since it was proposed as an option by the utility months earlier.

"Is it fair to say that N.B. Power would have been aware of the possibility of that extension as early as that date it originally proposed it," asked Herrington.

"We had no indication as to whether that was something the government would think was reasonable or not," said Murphy.

A decision from the EUB on whether to allow an interim increase of 9.25 per cent will come quickly.

If awarded, it will be added to an unrelated four per cent rate increase that is already scheduled for April 1.

That money is being charged to recover costs accumulated in previous years from unexpected events, most notably a mid-winter breakdown of the Point Lepreau nuclear generating station from December 2022.