Nova Scotia's consumer advocate for electrical rates says Nova Scotia Power's latest application to increase the price of power includes a plan for more increases in future years.

Earlier this week, the utility announced it was asking the Nova Scotia Utility and Review Board for a rate hike of three per cent in each of the next two years for residential customers.

John Merrick, a consumer advocate, said most Nova Scotians don't realize the rate increase application also talks about taking several years to pass on higher costs for renewable power.

"They're not focusing on the fact that what they're really asking for is a bigger increase than that, with the balance to be paid out on a deferred basis in the years 2015 and beyond," said consumer advocate John Merrick.

Nova Scotia Power has filed an application for a rate hike of three per cent in each of the next two years. (CBC)

"That hasn't been completely disclosed."

Nova Scotia Power said the proposed increase in the next two years will add about $3.50 a month to an average household's power bill in both 2013 and 2014.

If the increase is approved, residential customers will pay Nova Scotia Power an additional $37.6 million over the next two years — $18.6 million in 2013 and about $19 million in 2014.

A public hearing into the latest rate increase application will begin in September.

"One of the things that is the most troubling is that if this were a competitive marketplace, the president of the company would call his senior people in and say, 'Listen, we've got increasing costs but we can't pass them all on. Cut 20 per cent, I don't care where or how, cut 20 per cent.' We don't have that in this environment," said Merrick.

"What we've got to do is push Nova Scotia Power to a mentality where they will be looking to cut as much as add to rates."

Nova Scotia Power blamed the need for the increase on troubles in the pulp and paper industry and the fact that NewPage Port Hawkesbury and Bowater Mersey Paper Company Ltd. — their two biggest customers — have reduced payments to the utility.

The company's forecast of a $197.8-million revenue shortfall is also blamed on rising infrastructure costs in the transition from coal to renewable energy.

"If there are legitimate increases in costs of producing electricity so you and I can have light when we switch the switch on, then those increases have to be passed on," said Merrick.

"Having said that, I think there's still a tremendous area that has to be watched as far as the justification for increased costs."