N.S. Power files rate hike application
Increase could top nine per cent
Nova Scotia Power has filed an application for a rate hike of 7.3 per cent for January 2012 but customers should expect an increase that is closer to 9.2 per cent when the extra costs are added up.
"NS Power submitted its application to the Nova Scotia Utility and Review Board in order to start the regulatory process that would lead to a public hearing in September," the company said in news release on Friday.
The company is requesting an average rate increase of 7.3 per cent across all its customer classes. But, the company also said it expects to pay more for fuel and that could bring the average increase for all customers to 9.2 per cent.
Nova Scotia Power said residential consumers are facing a 7.1 per cent rate increase, which would add an extra $8 per month for a household that uses 810 kilowatt hours of electricity each month.
"Smaller increases are forecast for 2013 and 2014," said the statement, although the utility did not provide further details about rate increases in the future.
The utility revealed last month it's projecting electricity costs to increase 20 per cent by 2015 and proposed two scenarios to deal with the hike.
The original plan included an average residential rate increase of nine per cent next year, four per cent in 2013, two per cent in 2014 and five per cent in 2015.
The alternative, which the company discussed with customer representatives and regulators last week, is a 12 per cent increase spread evenly over the next three years. That scenario would not cover $139 million in fuel costs, which would be put off until 2015.
John Merrick, a consumer advocate, said a rate increase of four per cent in each of the next three years is a tempting scenario but not something he's ready to support.
"The difficulty with a four, four and four [per cent] proposal is that the four is, 'Here's the number, are you in agreement with it?' You don't really get to kick the tires, see what it's made up of," Merrick said.
"I think it could be said that a rate stabilization program has advantages but we want to be just as vigilant in ensuring that the increases are fully justified."
Merrick said he's worried the multi-year plan might be a take-it-or-leave-it proposition that will not require the same level of scrutiny by the Nova Scotia Utility and Review Board — the body that deals with rate increase applications.
The consumer advocate said he also doesn't like the fact that the multi-year plan includes a higher 9.6 per cent rate of return to Nova Scotia Power shareholders.
"What bothers us about that, it's continuing to shift risk to the ratepayer, away from the shareholders," Merrick told CBC News.
"Yet, at the same time, they're seeking in increase in their rate of return for whatever risk they are taking."
The utility has said power rates must increase to begin paying for investments in renewable energy and to cover the cost of trimming trees and making the grid less prone to power outages.
Industrial users concerned
Manufacturers and exporters in Nova Scotia are also concerned about the possibility of a steep rise in their power rates next year, estimated at between 10 and 13 per cent depending on the size and type of the business.
Ann Janega, the vice-president of the Nova Scotia branch of the Canadian Manufacturers and Exporters, said even the smallest increase will affect industrial users.
"That's a big issue for this year and whether you pay now or pay later over three years or four years, it's still a big cost. Even one per cent for industrial users means millions of dollars so it's a very serious issue for industry," she said.
The two paper mills in the province — NewPage and AbitibiBowater — pay the top rate.
Pierre Choquette, a spokesman for AbitibiBowater, said any increase in the price of electricity next year could affect whether the newsprint mill in Liverpool stays in business.
"We consider that any increase can have a direct impact on the viability of our mill," Choquette told CBC News.
"It's a question of trying to mitigate those increases and we are in a situation where we need to control our costs, lower our costs, even, so we have to take that into account."
Both AbitibiBowater and the NewPage mill in Port Hawkesbury are discussing their options before deciding whether to apply for a discount on their power bill.
The Utility and Review Board can give the power company's biggest customers a special rate, but only if they can show they will shut down without it.