Information for customers about the annual July 1 electricity rate adjustment for fuel costs

Update:

Annual electricity rate adjustments related to fuel costs were approved for Hydro customers by the Public Utilities Board on June 30, 2021. Effective July 1, 2021, rates are increasing for most customers by 2.4% (or an extra $2.40 for every $100 on a customer’s bill). The average rate increase for all residential and business customers as a result of this year’s adjustment is 2.5%.

For more information about why rates are changing, click here.

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Previous:

June 11, 2021 – Hydro has filed its yearly, required application with the Newfoundland and Labrador Board of Commissioners of Public Utilities (PUB) for the annual July 1 electricity rate adjustment related to fuel costs. Due to the impacts of fuel, rates are projected to increase by 2.5% (or $2.50 for every $100 on a customer’s bill), effective July 1, 2021. This filing is currently being reviewed by the PUB.

Our electricity system continues to rely heavily on oil to provide customers with the electricity they need. Because the price and quantity of fuel used is constantly changing, each year Hydro is required to file an application with the PUB to adjust rates – this ensures that customer rates reflect the actual cost of electricity generation from year to year.

This routine, annual adjustment is called the Rate Stabilization Plan (RSP). It is based on the amount of fuel used at our Holyrood plant to produce electricity over the past year, and the forecast price of fuel we expect to pay over the coming year. Any rate changes resulting from the RSP directly cover the cost of fuel to generate electricity; Hydro does not earn any profit from these changes or charge any markup on its cost of oil.

Although the forecasted fuel price continues to be lower than recent years, over the past 12 months Hydro used more fuel than expected at the Holyrood plant to reliably serve customers. As a result, we estimate most customers on the island and in L’Anse au Loup will see rates increase by 2.5% effective July 1, 2021. This average rate increase includes the effect of both Hydro’s and Newfoundland Power’s rate stabilization adjustments.

“We make every effort to minimize the amount of fuel used to generate electricity while maintaining reliable service. I want to assure customers that this increase strictly recovers only Hydro’s changes in fuel cost to provide reliable electricity on the island” said Jennifer Williams, President of Hydro. “As a Crown corporation we’re committed to our shareholders, the people of Newfoundland and Labrador; our priority is to provide safe, reliable service at the lowest possible cost to customers as we manage the provincial electricity system.”

A final decision on the filing is expected from the PUB later this month and we will communicate final rate changes to customers at that time.

For more information about the RSP and how oil prices impact electricity rates, visit our FAQ section.