EUB approves NB Power method for setting differential rates

NB Power's proposed methodology for determining how much each class of customer should be paying for electricity has been accepted by the New Brunswick Energy and Utilities Board.

In a highly technical decision from the EUB, NB Power is instructed to use the methodology in its application to set electricity rates for the fiscal year beginning April 1, 2017.

"This is a significant step towards better allocating costs to different customer rate classes which will help promote greater fairness among the rate classes," said NB Power in a statement.

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Ideally, each class of customer would pay for the amount of electricity it requires from the Crown utility.

Historically in New Brunswick, the residential customers have underpaid for the amount of electricity used.

Information Morning - Fredericton11:08NB Power - Heather Black

Deciding who pays what for power. The public intervenor for the Energy and Utilities Board explains a decision that could affect power rates.

That has been essentially offset by the commercial/business class of customer overpaying for its electricity.

"That has to be corrected in order to be fair to those rate classes that are paying more than their fair share," said Heather Black, the lawyer appointed to represent the public's interest to the EUB.

In 2016, NB Power filed evidence with the EUB suggesting residential customers were paying 7.3 per cent, or $54.5 million, a year too little for the electricity they consume based on the cost of serving them.

To recoup that money, the province and municipalities were overcharged $10.8 million for streetlights while government and commercial businesses overpaid about $39 million for heat and lights.

In recent years, NB Power has applied to the EUB for across-the-board rate increases in which each class of customer — residential, general service, industrial — would see the same rate increase.

The methodology accepted by the EUB now allows NB Power to propose differential rates, where each of the rate classes would be treated individually and see its rate rise higher, or not as high, as the other classes.

"Some of these differential rate principles will come into play in setting rates and unfortunately, it looks like the result of that — at least to some extent — will be that the residential class will bear some of the burden of correcting for those inequities in the past," said Black on Information Morning Fredericton.