NB Power's proposed rate increase is based on stale data, lawyer tells EUB
Energy and Utilities Board is expected to decide on rates next month, with new rates taking effect July 1
NB Power's case for raising rates on residential customers 2.9 per cent while other other customers get smaller increases is based on stale and unreliable data and should be rejected, the Energy and Utilities Board was told Tuesday.
The EUB concluded six days of hearings into NB Power's request for an average 2.5 per cent rate increase this year.
The proposed increase includes a 2.9 per cent hike for residential customers offset by lesser 1.7 per cent increases for others, including commercial, institutional and small industrial customers.
Scott Stoll, a lawyer representing municipal electric utilities in Saint John, Edmundston and Perth-Andover, told the hearing the "differential" was unfair to residential customers because the rationale behind it is untrustworthy.
"We have some fundamental basic issues of where we are," said Stoll.
"Given the level of comfort we have in the accuracy of the data, how can this board be assured it is fixing the real problem?"
In previous hearings, the EUB has ruled customers should be paying rates high enough to cover at least 95 per cent of the costs they cause NB Power. The utility's current estimate is that residential customers pay only 93 per cent.
But Stoll argued the estimate is based on limited and unreliable five-year-old information that has not been adjusted to incorporate recent changes residential customers have made in their consumption patterns, including the installation of thousands of residential heat pumps across New Brunswick.
"Known errors are added on known errors," Stoll said. "Are we to have confidence that we have the appropriate remedy?"
The EUB has an entire hearing scheduled for later this year to sort through who should be paying what for electricity sold by NB Power.
Wants issue investigated
Stoll recommended giving every customer group the same 2.5 per cent rate increase now and re-evaluating whether residential customers should pay more after the issue is investigated more thoroughly.
Also questioning the size of the residential rate increase was Heather Black, the public intervener
She told the hearing if NB Power had used a different cost evaluation method and residential customers got credit for what they spend on water heater rentals, they would already be paying more than 95 per cent of their costs.
"I submit the board should consider adopting a method of applying differential rate increases that's less punishing to residential ratepayers," said Black.
She endorsed a proposal that would see NB Power get an average increase of 2.5 per cent but with slightly less of that coming from residential and commercial customers than NB Power proposes and more coming from industrial, small industrial, wholesale and other customers.
"As a matter of fairness to residential ratepayers, who will be subject to a higher than average rate increase, in my view the board should consider applying its own judgment in setting differential rates to accomplish a more fair distribution of the burden," said Black.
Raymond Gorman, the EUB chair, asked whether the board could make a change that would impose higher rate increases on some customers than NB Power had asked for without first notifying those customers and giving them an opportunity to respond.
Stoll and Black both suggested the EUB could set rates at any level it considered "fair and reasonable," while J.D. Irving Ltd. lawyer Christopher Stewart and NB Power lawyer John Furey both said notice would likely be required.
A decision from the EUB is expected next month with new rates likely to take effect July 1.