ELECTRICITY: Premier says NB Power planning to hike its rates this spring - Power rates to be raised

canadaeast.com Lord BY KATHY KAUFIELD Telegraph-Journal

New Brunswickers will pay more for electricity starting this spring, but ratepayers will have to wait a little longer to find out how much power rates will increase.

Premier Bernard Lord confirmed Wednesday that NB Power plans to hike its rates.

"Sure the rates will go up next (fiscal) year, but it will be a very reasonable increase next (fiscal) year," Mr. Lord said. "That's what we expect. That's what we've been informed of the plans being put in place by NB Power."

NB Power spokesman Jeffrey Carleton wouldn't confirm the rate hike, but he said the corporation will make an announcement as early as this week about its rates.

He also suggested that if there is an increase, it won't be more than a 3-per-cent hike, a move that would require NB Power to appear before the Public Utilities Board for approval.

"When we look at rates, the model in the past certainly has been modest, minimal rate increases that have a minimal impact on our customers, especially our industrial customers," he said.

He said previous rate increases in recent years haven't been high enough to require an application to the PUB.

"That's been our model in the past and remember our objective is to keep our rates competitive within this region," he said.

But he added that NB Power is facing significant cost increases. "NB Power is certainly facing significant cost pressures in our operations, specifically with regards to fuels, heavy fuel oil, converting Dalhousie to heavy fuel oil from Orimulsion," Mr. Carleton said. "Our water resources are significantly lower because of the lack of rainfall and that causes you to use more heavy fuel oil which has gone up in price."

He said typically rate increases come into effect at the beginning of the fiscal year.

"We are certainly aware that our industrial customers and our business customers as they do their business planning and their cost planning need to know what their energy costs are going to be," he said. In the legislature Wednesday, Opposition Leader Shawn Graham questioned Premier Lord on the government's plans to restructure NB Power and to seek private investment in Coleson Cove and Point Lepreau.

Next week, the government will finally introduce long-awaited changes to the Electricity Act that will set out the legislative framework governing any private sector investment in Coleson Cove and Point Lepreau. The act will restructure NB Power into a central holding company with four subsidiaries - generation, distribution, nuclear and transmission. Legislative changes will also allow large industrial users and municipal utilities such as Saint John Energy to purchase power directly from outside sources by April.

Mr. Graham said he's concerned the changes to NB Power will result in rate shock for New Brunswick's electricity consumers.

He said once NB Power is restructured, the province will no longer guarantee its loans and will charge the corporation taxes. As well, any private companies that invest in Coleson Cove or Point Lepreau will want a "maximum" rate of return on their investments. "All these factors combined mean that rates are going up," Mr. Graham said after Question Period.

He said New Brunswickers should be concerned about it, especially since they are also facing high gas prices, skyrocketing auto insurance rates and rising inflation rates.

"Our current Conservative government under Bernard Lord just doesn't seem to realize how difficult it is for New Brunswickers to get by day to day," Mr. Graham said. "The premier is trying to downplay the fact that rates are going up but for anyone living on limited income in this province, any increase will have an impact on their daily ability to survive."

Mr. Graham said some experts predict rates could increase as much as 20 per cent once NB Power restructures. Mr. Lord said that is "completely ridiculous."

The premier described the increase as "reasonable and fair." He pointed out that the average power rate increase since his government took office is 50 per cent less than the average rate increase when the Liberals were in office.

Mr. Graham pressed the premier for details about possible private sector investment in Coleson Cove and Point Lepreau. He wanted to know how much private control the government will accept in those two generating stations.

As far as Coleson Cove, the province wants to share the risk of the $750-million project to convert the 1,000-megawatt plant to burn Orimulsion, a cheap fuel from Venezuela.

"Are you prepared to give up on Coleson Cove, our largest generator, to big business?" Mr. Graham asked the premier.

Mr. Lord said the legislation introduced next week will clearly define what private sector investment the government will accept in NB Power.

"It will be clear the limits that are set as to what the government can do and how much equity participation we can seek in NB Power, precisely on the generation side because we have been clear that there is no plans with regards to transmission and distribution," Mr. Lord said outside the House.

The premier said negotiations are on-going with the private sector over Coleson Cove. He said it's too early to say how close the government is to hammering out a deal on that project, but if one does come together, it will happen in a matter of "weeks."

"We want a deal that works for the people of New Brunswick and we want a deal that's good for the ratepayers and the taxpayer, so our standard is quite high," Mr. Lord said. "We don't want a deal at all costs. We want an investment where there's shared risk, where the private sector assumes a fair share of the risk, that will help us reduce the risk to the taxpayers of the province. If we get that situation, we will have an agreement and if we don't, we won't."

Mr. Lord said the changes coming to NB Power will help ensure New Brunswickers pay competitive and fair power rates and the government will only accept the private sector equity participation in NB Power "if it makes sense for the people of New Brunswick."

Reach our reporter kaufield.kathy@nbpub.com