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Electricity Rates

Update on ongoing General Rate Application
Increasing fuel costs resulting in higher cost of power for 2019

July 12, 2019 – Hydro has filed its 2019 electricity rate proposal with the regulator – this is a compliance filing, based on the GRA Order received in May.  Read the News Release here.

There have been several updates as the General Rate Application has progressed since filing in 2017. You can view all information here.

What is causing electricity rates to increase on the island in 2019?

The rate change is driven primarily by increased fuel costs. While there are many factors that contribute to the cost of generating and delivering electricity, the majority of the proposed rate increase for customers in 2019 on the island is related to the cost of fuel. Today we rely heavily on oil to generate electricity for customers at our Holyrood plant.

The forecast price of oil has increased significantly since rates last changed in 2018, from $86 CDN/barrel in 2018 to $106 CDN/barrel for 2019.

As requested by the Board, the proposed rate changes also include costs from the annual Rate Stabilization Plan (RSP) adjustment, which is normally implemented on July 1 each year, but this year will be combined with the GRA rate adjustment. The RSP is used to adjust rates to reflect the actual price and amount of oil used each year at the Holyrood Thermal Generating Station. This further adds to the fuel costs included in the current proposed rate adjustment.

How much are rates changing for customers?

The proposed rate changes will apply to residential and commercial customers of Newfoundland Power, as well as Hydro’s island interconnected, L’Anse Au Loup, and isolated rural customers on the island and in Labrador.  The following are the rate changes proposed for customers effective October 1, 2019:

Customer Class Rate Change                  
Percentage Increase ¢/kWh Change
Island Interconnected 7.6% 0.9
Island Isolated (Diesel) 7.6% 1.1
L’Anse au Loup 4.2% (with Northern Strategic Plan applied) 0.3
Labrador Isolated 2.1% (with Northern Strategic Plan applied) 0.1
Labrador Interconnected 3.1% decrease – 0.1

 

What does this mean for my monthly bill?

Island Customers:

For most residential customers on the island, the proposed rate change represents an increase of approximately $7.60 for every $100 on your electricity bill.

Labrador Interconnected Customers:

In Labrador, most residential customers on the interconnected system (Upper Lake Melville and Labrador West) will see rates decrease. The proposed decrease will result in a reduction of approximately $3.10 for every $100 on a customer’s electricity bill.

Why is Hydro forecasting a fuel price of $106?

Hydro uses a long-standing approach, approved by the PUB, to forecast the price of No. 6 fuel. It is important to note that the most recent fuel price forecast of $106 is for the period from July 1, 2019 through June 30, 2020. In order to ensure Holyrood operates reliably for our customers, Hydro has a very specific fuel requirement which commands a premium on the open market. In addition, fuel prices are typically traded in US Dollars which much be converted to Canadian when Hydro pays its fuel bill.

Hydro is forecasting a price of $106, but how much is fuel costing you today?

In June, 2019 Hydro’s cost of No. 6 fuel was more than $94 Canadian per barrel.

Is Hydro increasing its fuel price forecast to make more money?

No. Hydro does not make any profit on the cost of fuel to serve customers. These costs are a direct flow-through, with no mark-up.

What happens if actual fuel prices are lower than Hydro’s forecast?

Every month, the Rate Stabilization Plan compares Hydro’s actual cost of fuel to what cost customers paid. If customers pay more than the cost of No. 6 fuel, these extra funds are set aside with interest and returned to customers the following year through the RSP, usually on July 1.  Here are the RSP rate adjustments we’ve seen the last several years:

2018 – increase of 4.2%
2017 – increase of 8.1%
2016 – decrease of 9.5%
2015 – decrease of 9.7%
2014 – increase of 4.0%
2013 – decrease of 8.0%

How do our Electricity Rates Compare to Other Provinces?

According to a 2018 survey of electricity rates published by Hydro Quebec, domestic electricity rates in Canada range from 7 to 17 cents per kWh.

The average rate in Canada is approximately 13 cents per kWh.

Domestic electricity rates on the island of Newfoundland currently average approximately 12 cent per kWh.

 

 

 

 

 

To get information on how to be more energy efficient and save money on your electricity bill each month, visit takechargenl.com

 

 

More Links:

Regulatory Process

July 1, 2018 Rate Adjustment

Current Rates