Residential electricity customers underpaying, NB Power says
Commercial customers making up the difference, utility says study shows
Residential electricity customers in New Brunswick have been freeloading at the expense of commercial customers, according to an NB Power study filed Friday with the province's Energy and Utilities Board (EUB).
The study, which was ordered by the EUB as part of its new responsibilities to set NB Power's rates beginning next year, attempts to sort out who should pay what for electricity in the province, based on the cost to service different customer groups.
"This kind of work isn't an exact science," said NB Power vice-president Darren Murphy.
"We think it’s really important we get a good fulsome discussion on this and get it approved and validated."
According to the study, direct residential customers of NB Power are expected to underpay for the electricity they use next year by $45 million, or about six per cent, with indirect residential customers served by municipal utilities like Saint John Energy undercharged by an additional $7 million.
The utility says that benefit enjoyed by homeowners is mostly paid for by commercial customers — everything from pizza joints to shopping malls to office buildings — which will be overcharged by about $39 million to make up the difference.
NB Power says it will also overcharge about $2 million for water heater rentals and $9 million for street light service under its current rate structure.
The EUB has been on record for more than 20 years saying it doesn't want one group of electricity customers subsidizing another, but NB Power has been slow to make changes as successive New Brunswick premiers, including Frank McKenna, Bernard Lord, Shawn Graham and David Alward bypassed the EUB to impose electricity rates directly by Cabinet order.
Legislative changes passed last spring put the EUB back in charge and the board ordered NB Power to produce a so-called Cost of Service Study to sort out which customers pay too little and which pay too much as a first step toward setting new rates.
The current study found NB Power's large industrial customers pay 99 per cent of what they should for power, but that has been a source of significant dispute at previous hearings and is likely to be looked at closely again.
The EUB's predecessor, the old Public Utilities Board, found large industrial customers were the most heavily subsidized group.