New Brunswick·Analysis

Saint John and Edmundston initially left out of power rate freeze

New Brunswick Liberals scrambled to fix a major campaign promise to freeze power rates for residential and some commercial customers Tuesday after the initial announcement appeared to leave residents of Saint John and Edmundston out of the plan.

Liberals deny the municipal utilities were an afterthought, but answers don't come easily

Following the initial announcement, Liberals acknowledged their plan would require additional freezes to part of NB Power's wholesale rates so that municipal utilities in Saint John and Edmundston can afford to keep rates from going up. (Shane Magee/CBC)

New Brunswick Liberals scrambled to fix a major campaign promise to freeze power rates for residential and some commercial customers Tuesday after the initial announcement appeared to leave residents of Saint John and Edmundston out of the plan.

And the party was slow to explain why it was claiming the rate freeze promise would have no financial impact on the province even though NB Power's earnings are recorded on the province's books as income and will likely suffer significantly under any revenue freeze.

Brian Gallant said a re-elected Liberal government would introduce legislation to freeze power rates over the next four years for residential customers and small businesses. (Shane Magee/CBC)

"There's no cost," Liberal Leader Brian Gallant told reporters in response to a question about the price of the promise to freeze rates even though it will cost NB Power at least $130 million in lost revenue over the next four years, including $13 million in year one, $26 million in year two, $39 million in year three and $52 million in year four..

Gallant said he would order deep cuts in NB Power's executive ranks and other changes to save money, but it was unclear whether he meant that would be enough to pay for the entire freeze.

At NB Power's last rate hearing the utility reported it was planning to earn $376 million in profit over the next four years with two percent rate hikes on its entire customer base in each year.   

The province has already incorporated those amounts in its own long range budgeting and any reduction in NB Power profit levels caused by a rate freeze will cost the province an equal amount in its own expected revenue.

A request to the party to explain why it considers there to be no financial impact to the province from the freeze was not immediately answered.

But losses to NB Power and the province could be higher than $130 million. 

Following the initial announcement, Liberals acknowledged their plan would require additional freezes to part of NB Power's wholesale rates so that municipal utilities in Saint John and Edmundston can afford to keep rates in their own communities from going up.

Gallant left out commercial customers in Saint John and Edmundston in the promise to freeze rate hikes. (Paul Poirier/CBC)

In a tweet two hours after the initial announcement, the Liberal party clarified that most of the power purchased by the two municipal utilities at wholesale rates would also have to be subject to the freeze.

"The freeze will apply for municipal utilities on the portion of power they purchase from NB Power that is for either residential or small business customers," read the tweet.

That will add between $10 million and  $20 million to the four-year cost of the freeze to NB Power and will reduce income to the province by an equivalent amount if the utility's profit sinks further.

Liberal party spokesman Jonathan Tower said the treatment of customers in Saint John and Edmundston was not an afterthought, but Saint John Energy CEO Ray Robinson said when he first asked the party how it intended to treat the two municipal utilities he was told that had not been worked out.

"When I asked him about the other rate classes, like wholesale, he wasn't certain," Robinson said of a conversation he had with a party official briefing him on the plan.   

"He went back and talked to whoever and got back and said that hadn't even been discussed."

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