Newfoundland’s consumer advocate Tom Johnson says he will be challenging Newfoundland Power’s latest application for a rate increase in 2013.
The company has filed an application with the Newfoundland and Labrador Public Utilities Board for an average rate increase of six per cent effective March 1, 2013.
The utility is proposing that the rate increase vary across each of its customer categories. The proposed average increase ranges from 0.6 to six per cent for commercial categories and 7.2 per cent for residential customers.
Johnson said in an interview, he’s also concerned about another aspect of the application in which Newfoundland Power is seeking a higher return on equity above the 8.8 per cent it now receives.
“One of the things that’s disappointing about the proposal, and I don’t think they’ll get away with it, is an increase to their return on equity which is one of the contributors to the overall rate increase that they’re seeking. There is no way, shape or form that it will be sensible to grant them what they’re seeking, something in the vicinity of 10-1/2 per cent on equity. They are a very well protected, stable monopoly. It just never ceases to amaze me how Newfoundland Power thinks that it should be getting a return like companies earn in the competitive marketplace,” Johnson said.
In due course, he said, the entire application will be put to scrutiny.
“There’s no escaping the fact that there are cost drivers any utility faces, I get that, but all those items have to be closely scrutinized,” he said.
Johnson said it’s unfortunate that this is all coming out in a week when Newfoundland Power employees have been getting a lot of credit for their work to restore power knocked out by high winds from tropical storm Leslie, which has been deserved credit.
He said hopefully people realize that the front-line workers, wearing the hard hats and doing the work, are not the people who are advocating for these rate hikes and higher returns on equity.
Newfoundland Power defended its application in a news release.
“We work hard to minimize the impact of rate increases on our customers while balancing the need to maintain and extend the electricity system to provide our customers with safe, reliable service,” said Earl Ludlow, president and chief executive office, Newfoundland Power Inc. “We remain committed to investing in rural areas of the province while at the same time investing in urban areas where demand for new services continue to grow.”
Newfoundland Power says a primary driver behind the proposed rate change relates to energy supply costs. It says about 93 per cent of the electricity the company delivers to its customers is purchased from Newfoundland and Labrador Hydro. Increases in energy supply costs substantially reflect increased purchases from Hydro to meet increased usage of electricity by Newfoundland Power’s customers.
“Over the past five years alone, we have invested over $350 million in our provincial electricity system,” Ludlow said. “Establishing a fair and reasonable future return on this investment is another component of this rate increase.”
The power company says various other costs associated with the delivery of electricity also impact this rate change, including depreciation, a significant portion of which is the result of connecting a growing number of new homes to the electricity system in recent years and retirement costs.
“When setting electricity rates,” Newfoundland Power said, “it is important that the cost of providing service is fairly allocated and reflects the actual cost of providing electricity to customers in each category.”
“We recognize that any rate increase is significant for our customers,” said Ludlow. “However, even after the proposed rate changes, our electricity rates for residential customers will still remain among the lowest in Atlantic Canada. We are committed to helping all of our customers use energy wisely with enhanced programs and practical tips on how to save energy and save money with our energy efficiency partnership with Hydro, ‘takeCHARGE – Saving Energy Starts Here.’”
Newfoundland Power said it expects its application will be subject to a thorough public review over the coming months.
The company has a customer base of about 250,000 accounts.
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Earlier story
Newfoundland Power has filed an application with the Newfoundland and Labrador Public Utilities Board for an average rate increase of six per cent effective March 1, 2013.
The utility company is proposing that the rate increase vary across each of its customer categories. The proposed average increase ranges from 0.6 to six per cent for commercial categories and 7.2 per cent for residential customers.
“We work hard to minimize the impact of rate increases on our customers while balancing the need to maintain and extend the electricity system to provide our customers with safe, reliable service,” said Earl Ludlow, president and chief excutive office, Newfoundland Power Inc. “We remain committed to investing in rural areas of the province while at the same time investing in urban areas where demand for new services continue to grow.”
Newfoundlland Power says a primary driver behind the proposed rate change relates to energy supply costs. It says about 93 per cent of the electricity the company delivers to its customers is purchased from Newfoundland and Labrador Hydro. Increases in energy supply costs substantially reflect increased purchases from Hydro to meet increased usage of electricity by Newfoundland Power’s customers.
“Over the past five years alone, we have invested over $350 million in our provincial electricity system,” Ludlow said. “Establishing a fair and reasonable future return on this investment is another component of this rate increase.”
The power company says various other costs associated with the delivery of electricity also impact this rate change, including depreciation, a significant portion of which is the result of connecting a growing number of new homes to the electricity system in recent years and retirement costs.
In a news release issued today, Newfoundland Power said “when setting electricity rates, it is important that the cost of providing service is fairly allocated and reflects the actual cost of providing electricity to customers in each category.”
“We recognize that any rate increase is significant for our customers,” said Ludlow. “However, even after the proposed rate changes, our electricity rates for residential customers will still remain among the lowest in Atlantic Canada. We are committed to helping all of our customers use energy wisely with enhanced programs and practical tips on how to save energy and save money with our energy efficiency partnership with Hydro, ‘takeCHARGE – Saving Energy Starts Here.’”
Newfoundland Power said it expects that its application will be subject to a thorough public review over the coming months.
The company has a customer base of about 250,000 accounts.
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