Nfld. & Labrador

Time to look for other solutions to 'ugly problem' of Hydro prices, says consumer advocate

Consumer advocate Dennis Browne objected to Hydro's proposal for a 6.5 per cent hike in January 2019.

Dennis Browne objected to Hydro's proposed 6.5 per cent hike, which was yanked last month

Consumer Advocate Dennis Browne says Newfoundland and Labrador Hydro can't justify a rate increase right now. (Gary Quigley/CBC)

When it comes to figuring out what to do with rate increases for power in Newfoundland and Labrador, it's time to let the Public Utilities Board look for solutions, says the province's consumers advocate.

Newfoundland and Labrador Hydro recently yanked its proposal for a 6.5 per cent increase for ratepayers in January 2019. That would be on top of an increase already brought in this summer.

It's in all the utilities' interests … to come up with sensible solutions to a very, very ugly problem.- Dennis Browne

Crown corporation Hydro wanted the increase in order to set aside money to ease the rate shock when the massive Muskrat Falls hydroelectric project comes online in 2020.

Consumer advocate Dennis Browne objected Hydro's proposal, saying it came down to "intergenerational integrity."

"Someone was going to be paying now for electricity that they weren't using," Browne said.

During last week's hearing, the PUB heard from protesters, as well as the provincial seniors' advocate, who Browne said presented a clear argument that seniors already need every penny they have.

Protesters set up outside PUB offices in St. John's this summer to oppose N.L. Hydro's proposed 6.5 per cent rate increase. ((Bruce Tilley/CBC))

"And furthermore, seniors, given their longevity, down the road — there may be no down the road," Browne told CBC's On The Go.

Browne referred to a report prepared for his office by MUN economist James Feehan, which outlined a "negative feedback cycle" in which people see their rates go up, and then seek other forms of electricity, leaving the grid.

That means fewer users on the system, and therefore less money coming in to the utility, which will again mean higher rates, resulting in more people leaving, and so on, Browne said.

'These entities don't have the answers'

The other side of the coin, Browne said, is that if rates remain stable, more people, like oil customers, may opt to sign on for electricity, meaning more customers, more money and, therefore, lower rates.

"There are rate design experts worldwide who could come in and design rates for us that would help alleviate the problems we're about to experience. That's what has to be done," Browne said.

Crown-owned Nalcor Energy has taken its proposed increase off the table. (CBC)

"There's really no answer there. Nalcor, Hydro, the department of Natural Resources, these entities don't have the answers. But there is a means to get the answers."

According to Browne, he's been proposing "for a long time" to put the matters before the PUB itself, which could then make recommendations to the provincial government.

"It's in everyone's interest, in particular Newfoundland Power, because Newfoundland Power can lose a lot of customers," Browne said.

"It's in all the utilities' interests and the industrial customers, and indeed consumers, to come up with sensible solutions to a very, very ugly problem."

Read more articles from CBC Newfoundland and Labrador

With files from On The Go