There's two sides to the coin when it comes to three per cent rate increase.

A6

Diane Henry

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NB Power officials have failed to convince interveners at the recent Energy and Utilities Board hearing that the three per cent April 1 rate increase was justified. Delegates gathered at the Delta Brunswick Hotel in Saint John for two days at the end of May to present arguments on both sides of the coin.

Saint John lawyer Gary Lawson says the utility could have avoided higher fuel costs, which have been largely blamed for the need to raise electricity rates. He says NB Power should have adjusted its method of buying fuel 18 months in advance when officials saw the prices spike last summer.

NB Power's Vice President of Transmission, Distribution and Customer Service, Darren Murphy says they did not have the advantage of hindsight at the time.

"Looking back one could have made those kinds of decisions; the difficulty is we don't have the benefit of hindsight when we're looking at purchasing fuel for future years or the current year."

Murphy says there was some consideration given about the different alternatives for purchasing fuel at the time, but no definite action was taken.

NB Power is forecasting a loss of $94 million by the end of the current fiscal year, even with the three per cent rate hike. The utility wanted to raise rates by six per cent but spokesperson Heather MacLean says they are being sympathetic to customers who are also experiencing difficult times and they prefer to keep costs low.

The decision to raise rates at all, according to NB Power, was made in the context of the global economic crisis. The utility is facing higher fuel prices, some of its major users went out of business, and many smaller customers are making late payments; all of which costs the utility more money.

"As we emerge from this situation and the New Brunswick economy recovers and DISCO's fuel costs decline we will be able to return to an acceptable positive net earnings," says Murphy.

The tough economy is exactly why JD Irving is concerned about the impact increased power rates will have on its competitiveness.

"It makes it harder to do business because it makes your paper more expensive," says Wayne Wolfe, Vice President of Operations at JDI. "We're the only one (paper mill) left in the province. Everyone else is gone, essentially, because of the high price of power and things like that. The only local competition is in the United States and they don't get these big power increases like we get up here."

Wolfe questions NB Power's justification for a three per cent rate increase when the utility has experienced a 16 per cent increase in expenses over the last two years for travel, vehicle expenses, labour and hired services.

Murphy says they are doing their best to cut costs and have already eliminated $2.4 million in expenses, but the utility has an obligation to serve the community.

"There is a fine line for us between cost cutting and impacting reliability and service to our customers, and we are very mindful not to cross that line."

The Moncton-based group Voice of Real Poverty is up in arms over the recent rise in electricity prices. President Bethany Thorne-Dakstra says three per cent is a tough pill to swallow for many New Brunswick residents, especially those living in poverty. At a time when most companies are cutting back, she says the utility is busy handing out gifts to its employees.

"We are wondering how NB Power can cry hard times and yet give bonuses and salary increases going as far back as 2006."

The salary increases are part of a union contract, says MacLean. She also says there were no bonuses for senior executives because they chose not to accept them during the economic downturn. NB Power is not, however, considering a wage freeze and gave no indication it will forgo its automatic three per cent annual salary increase for employees.

A report will be submitted to the Energy Minister sometime this summer for a final decision on whether NB Power will be allowed to keep its price hike.