People in Labrador aren't impressed with a proposed increase on hydro rates in their area, saying 25 per cent is too steep.

Newfoundland and Labrador Hydro announced on Tuesday that it wants to increase rates in the Big Land but give the customers on the island of Newfoundland a break.

John Porter was looking at buying his first home, but was shocked to hear that the cost of power might be even higher than he estimated.

"We went to take a look at the market and prices and they were a little bit higher than what we were expecting," Porter said.

"25 per cent is a large number. 10, 15 per cent, things like that, that sounds a little more reasonable, but when you hear 25 it's relatively large."

Porter said people may not feel the impact right away, but once the cost starts rising there will be a lot of people struggling.

"For people with lower wages, it definitely makes a big, big difference and it's very visible," he said.

"To hear another 25 per cent — some of them don't notice it yet because it's not factored into the numbers, but for most people, they can see it coming — they can see that extra 25 per cent will make a big difference every month."

According to NL Hydro, the cost of hydro in Labrador is increasing because the population in the area is on the rise.

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Wabush Mayor Ron Barron says the increase will deter people from moving to western Labrador because the cost of living is already high. (CBC)

But Ron Barron, mayor of Wabush, said the cost of living in western Labrador is already relatively high, and the increase in hydro costs will deter people from setting up a permanent residence.

"What you're going to end up seeing here, because people aren’t going to afford to live here, is fly in and fly out," Barron said.

"I mean, we're into that now, and the [provincial] government and Nalcor are going to increase this even more now to take away from these communities because they just can't live here."

The rate change would take effect on January 1, 2014, but first have to be approved by the Public Utilities Board. Hearings are expected to begin this fall.