New Brunswick

NB Power cuts proposed rate hike to 1.5% after Point Lepreau settlement

NB Power is lowering this year's average rate increase from two per cent to 1.5 per cent, according to documents filed with the Energy and Utilities Board.

Most commercial customers would pay a smaller increase of 0.68%

The proposed rate cut will save NB Power customers an estimated $7.1 million a year in charges. (Google Street View)

NB Power is lowering this year's average rate increase from two per cent to 1.5 per cent, according to documents filed with the Energy and Utilities Board.

The utility officially applied to the Energy and Utilities Board on Thursday to lower its proposed increase to "reflect the impact of the settlement" it reached with insurance companies late last month over cost overruns during  the Lepreau nuclear refurbishment.

The utility now proposes most customers, including residential customers, pay increases of 1.64 per cent, with most commercial customers paying smaller increases of just 0.68 per cent. 

In a redacted filing explaining how the settlement money is being applied, NB Power indicated it has transferred the amount to debt owed on the Point Lepreau nuclear plant and will be sharing part of the subsequent savings in principal and interest payment with customers. 

"The cash received has reduced debt immediately, through a reduction in both short-term and long-term debt, which will reduce interest expense and the debt management portfolio fee," the utility wrote in a report explaining the proposed changes.

There are hints the insurance settlement is likely in excess of $100 million, given the size of the proposed rate reductions but the utility is withholding enough information to make a detailed estimate impossible to calculate.

Large savings

The proposed rate cut will save NB Power customers an estimated $7.1 million a year in charges. That's close to the annual interest and principal payments on $100 million of Lepreau-related debt, suggesting the settlement amount may have reduced debt by that amount.

However, there are other unknown financial elements in the settlement that make this assumption unreliable.

For example NB Power revealed it is not sharing all of the savings with customers, instead keeping an unknown amount for itself to boost profits.   

It also disclosed that some of the savings are not related to lower debt but are coming from an end to substantial annual legal fees it has been paying to pursue a settlement.

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