N.B. Power has won approval to keep charging rates that it increased on customers by an average of 9.25 per cent on April 1, and to repeat the increase next April, with only minor modifications.

In an oral decision released Friday morning, the New Brunswick Energy and Utilities Board granted N.B. Power almost everything it asked for in an application the company launched late last year to raise its rates significantly over two years.

The two increases ruled on by the board include the retroactive approval of rate increases awarded to the utility on an interim basis last April of an average 9.25 per cent, including 9.8 per cent for residential customers.

A second identical increase, to take effect on April 1, 2025, was lowered marginally but only by a fraction of one per cent.

Board member Christopher Stewart presided over a three-person panel that sat on and off all summer to review N.B. Power's rate request. Stewart delivered a final decision Friday. (Ian Bonnell / CBC)

The board's ruling was delivered orally by utilities board member Christopher Stewart, who presided over hearings on the application during the summer.  He said more detailed written reasons will be issued later. 

"The Board is issuing this decision on an expedited basis to give ratepayers certainty about their electricity costs and to provide N.B. Power information necessary to plan its business and operational activities," said Stewart.

N.B. Power president Lori Clark, and vice-presidents Darren Murphy (left) and Brad Coady (right), testified in support of the utility's rate increase request in June. The company has been awarded most of what it asked for. (Pat Richard/CBC)

Although broadly granting N.B. Power most of the $320-million rate increase the utility requested over two years, Stewart noted a couple of exceptions.   

He said a request by the company to unify monthly service charges between rural, urban and seasonal residential customers has been rejected.  

N.B. Power tried to merge its cheaper urban, and more expensive rural and seasonal monthly service charges, into one category but the EUB has rejected the idea. (N.B. Power/Facebook)

"The board orders N.B. Power to maintain the distinction between rural and urban residential customers," said Stewart.

That does not affect the overall value of the increase to the utility but it will require raising the current $28.27 per month charge on rural and seasonal customers by about $1.33 per month. That will be offset by urban residential customers having their monthly service charge lowered by $1.29.

Stewart said the board will consider merging the three groups in a future "rate design" hearing.

In a second variance from N.B. Power's application, Stewart said the board had decided to approve 3.7 fewer "forced loss," or breakdown days, at the Point Lepreau nuclear generating station next year than the utility had requested.

Stewart said N.B. Power will have to calculate how much that change reduces the April 1, 2025, rate increase but it is unlikely to move it more than just tenths of one per cent.

Residential customers may not feel that increase, however. Premier Susan Holt has pledged to try and drop the province's 10 per cent sales tax on residential electricity bills by April 1, close to the same amount residential rates are set to increase on the same day.

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N.B. Power instead wants the EUB to endorse the cost allocation method currently in use for its six customer groups.  

Those include residential customers, municipal utilities, general service (commercial and government) customers, streetlight accounts and two industrial customer groups, divided into large and small.

N.B. Power's Coleson Cove generating station burns oil and is so expensive to operate it is used mostly as a last resort in winter, when homeowners engage electric heat. (Roger Cosman/CBC)

Also endorsing the status quo on Thursday were New Brunswick's three municipal utilities, which serve large numbers of residential customers 

However, JDI lawyer Glen Zacher argued the current division of the utility's expenses among groups is antiquated and does not properly assign the cost of large swings in electricity demand caused by issues such as the use of winter heating by residential customers.   

Demand for electricity from N.B. Power by large mills is relatively constant daily, and year round, but demand among other groups, especially residential customers, rises and falls dramatically between winter and non-winter months and from daytime to nighttime.   

 The EUB heard final arguments on Thursday about whether N.B. Power fairly calculates the cost of serving each of its six customer groups. (Robert Jones/CBC)

In JDI's submission, Zacher argued industrial customers are wrongly charged for some of those swings in demand, including for the elevated cost of supplying expensive winter heating electricity to homes and apartments.

 "N.B. Power is a strongly winter-peaking system," said Zacher who argued that the costs of daily and seasonal demand swings need to be better "allocated to the [customer] classes that cause them."  

"It is our position that the board should accord very little weight to the evidence and the recommendation of N.B. Power that the status quo be maintained without any changes," Zacher said.

A decision from the Energy and Utilities Board will not be rendered for several weeks.  Adopting JDI's position would not automatically lead to a change in electricity rates for any group, but it would be a major factor considered in future rate hearings.

- Gregory Hickey

He was especially curious about NB Power's Large Industrial Renewable Energy Purchase Program which was unveiled by the Alward government in 2011.

It requires NB Power to buy renewable electricity generated by paper mills at a high price - mostly hydro and biomass - and then sell it back to the companies at a low price to help bring their power costs down.

NB Power says in the first 27 months of the program it bought 858.9 thousand megawatt hours (mwh) of electricity from the mills for $81.6 million and then sold it back to the mills at $57.2 million.

NB Power lost $24.2 million on those transactions and Hickey told the hearing if the utility is rich enough to subsidize industry, it should be denied a rate increase. 

Forestry company JD Irving Ltd. is one of the biggest users of the program and its lawyer at the hearing Gary Lawson tried to argue the $95 per mw/h mills are paid for power is the going rate - and a fair price - for renewable energy.

But NB Power has already disclosed in the hearing it only pays $84 for wind energy and NB Power's director of strategic planning and regulatory affairs, Neil Larlee, hinted current renewable prices are much lower than that.  

"The price has actually come down in the last couple of years," said Larlee.