Utility predicts power rates could rise 20% by 2015
Nova Scotia Power is proposing to increase rates by an average of nine per cent in 2012, and the utility predicts a 20 per cent hike by 2015.
Rising costs for coal and imported electricity and higher customer use are to blame for the proposed increases, Nova Scotia Power says.
Residential power rates would jump 7.1 per cent — the seventh increase in a decade — if approved by the provincial regulator, the Utility and Review Board. Homeowners could face an increase of as much as 8.8 per cent after adding Efficiency Nova Scotia charges and after Nova Scotia Power’s fuel adjustment mechanism comes into play.
That mechanism periodically moves rates up or down to reflect the difference between estimated and actual fuel costs.
Rene Gallant, general manager and regulatory counsel for Nova Scotia Power, said the utility’s costs are higher than recoveries, and that would suggest a higher rate increase.
Higher coal costs in 2012 are expected to account for about $21 million more in expenses for Nova Scotia Power, while increased power use will cost about $17 million more and the predicted price of imported power will add about $16 million in costs.
"We have the rest of the year to try and turn that around, (but) I can’t sit here and say we’re going to be able to," Gallant said at the presentation Wednesday.
Incurred in those increases is a request to boost Nova Scotia Power’s return on equity to 9.6 per cent from 9.35 per cent.
"Our analysts are telling us that we are below where other utilities’ return on equity is set," Gallant said.
The increase in return on equity is a mechanism to keep the company competitive with other utilities when it comes to gaining investment dollars, he said.
John Merrick, a lawyer and consumer advocate, said he will be scrutinizing Nova Scotia Power’s proposed increases carefully.
"If anything, we think the rate of return should be reduced, because they tend to try and shift all the risk of their operation over to the ratepayer," Merrick said in a telephone interview.
The review board hasn’t approved the request for rate hikes but Nova Scotia Power plans to file an application next month to complete the hearing process for an effective rate change next Jan. 1.
Premier Darrell Dexter said he was disappointed when he heard of the pending application.
"My hope is that they’re able to find a way to lessen the burden on ratepayers."
The government will ask for justification of the proposed rate hike at the review board hearing, Dexter said.
Last summer, NSP’s short-term emission targets for mercury were reduced in order to lower rate hikes, but Dexter said he’s not aware of a similar measure the government could take now.
Progressive Conservative Leader Jamie Baillie said Nova Scotia Power should first re-evaluate its operating and administrative costs before proposing an increase of that size.
"Nova Scotians are suffering from rate-hike fatigue at this point," he said.
Industrial customers could see rates increase 10 per cent, while commercial rates could rise by 6.1 per cent. With the fuel adjustments, industrial and commercial rates could increase by 13.5 and 7.4 per cent respectively.
Nova Scotia Power’s two largest industrial customers, AbitibiBowater and NewPage Corp., would be hit with a rate hike of 13.5 per cent, with a possible increase to 16.8 per cent with the fuel adjustments.
Lawyers representing both plants said they will be asking Nova Scotia Power to modify their load retention tariff in order to protect their business.
"Our clients need stable, competitive rates over the long term," one lawyer said.
The municipal rate, which applies to Antigonish, Berwick, Canso, Lunenburg, Mahone Bay and Riverport, would experience a 7.02 per cent increase that could become a 9.1 per cent increase with the adjustments.
"We have proposed investments in reliability (and) we firmly believe they are in the best interests of customers both in the short term and long run," Gallant said, "but if people are not willing to pay and they’re willing to take that trade-off of less of an improvement of reliability in order to have a lower price, we can talk about that."
With David Jackson, provincial reporterhttp://thechronicleherald.ca/NovaScotia/1239410.html
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