The Nova Scotia Utility and Review Board has approved power rate increases of three per cent for each of the next two years for residential customers.

The rate hike is expected to translate into about $3.50 a month per house the first year, and an additional $3.50 in 2014.

The increase is effective Jan. 1.

"With the new increases it's getting worse. We're soon retiring and when you don't have a pension it's going to be a little bit difficult," said Lucille McCluskey, a Nova Scotia Power customer.

Neighbour Hortensia Fay feels squeezed too.

"No matter what I do, I try to cut down on lights and laundry and stuff like that, still the amount is high," Fay said.

In a decision released Friday, the board also criticized Nova Scotia Power for its opposition to a consultant's report.

The review board ruled that the utility overspent $4.5 million buying coal and natural gas which it burns to generate electricity.

The board penalized Nova Scotia Power for its conduct in the case, accusing the company of "wasting scarce resources, in terms of time, money and human resources" in its campaign against Liberty Consulting Group, which conducted the audit.


The new prices kick in Jan. 1. (CBC)

The utility and review board said the power company's conduct was "inexplicable and inexcusable."

That penalty will take the form of a $2-million drop in profits for shareholders.

The board told the utility it wants a different approach to answering some questions in the future.

In a news release, Nova Scotia Power says it could have done a better job replying to the audit.

With files from Paul Withers