Close

Frequently Asked Questions

Why are rates changing?

The July 1st rate change is primarily related to fuel costs from previous years that have not yet been collected through existing customer rates. The Rate Stabilization Plan (RSP) was created to ensure that customer rates reflect the actual cost of electricity generation from year to year, including fuel costs.

The increase in customer rates is not related to the commissioning of Muskrat Falls or the Labrador Island link.

We know customers continue to be concerned about electricity rates. Our priority is to provide safe, cost-conscious and reliable services while meeting our commitment to a net-zero electricity system.

How much are rates changing?

Rates for Newfoundland and Labrador Hydro’s (Hydro) Island Interconnected, L’Anse au Loup and Isolated Rural customer rates will increase July 1, 2023.

Residential
• Island Interconnected Customers – 6.7% average increase
• Island Diesel Customers – 6.2% average increase
• Labrador Isolated Customers – 3.4% average increase*
• L’Anse au Loup Customers – 4.4% average increase*
• There is no change to rates for Labrador Interconnected customers

*Rates for customers in Hydro’s L’Anse au Loup and Labrador Diesel Systems are adjusted for the Northern Strategic Plan.

Commercial
• Increasing from 7.0% to 8.4% depending on rate class and electricity usage

How were the new rates determined?

Changes in Hydro’s retail customer electricity rates are implemented in accordance with Hydro’s Rules and Regulations, Policies for Automatic Rate Changes. Changes in rates must be approved by the Board of Commissioners of Public Utilities. When Newfoundland Power changes its electricity rates, Hydro is required to automatically adjust rates for many of its customer classes. This means either matching our rates to those of Newfoundland Power customers or adjusting rates by the comparable average rate change.

An increase to the wholesale rate we charge to Newfoundland Power was approved effective July 1. This required a 3.9% increase to the average customer bill charged by Newfoundland Power. Newfoundland Power also required an additional 3.0% average customer bill increase, reflecting its Rate Stabilization Clause and Municipal Tax Adjustment. The average rate increase varies by customer class.

Is the rate increase a result of Muskrat Falls being commissioned?

The increase in customer rates is not related to the commissioning of Muskrat Falls or the Labrador Island link. With the Labrador Island Link now commissioned, we are now working with Government to finalize how rates will be managed.

Why are customers paying more when government just gave Hydro $190M?

Both costs and the savings resulting from having Muskrat Falls online and displacing fuel from Holyrood have been captured in a deferral account since November 2021. The Provincial Government has paid the account balance owing from customers as of the end of 2022, equal to $190.4 million. While this payment does not affect 2023 rates, payment of this account by the provincial government limits future customer rate increases as customers will not be required to pay this balance – that is, the $190.4 million will not be factored into future rate calculations. The payment also reduces financing costs accumulating in the account, which further reduces the amount to be recovered from customers.

For 2023, the deferral account will continue to accumulate the difference between the costs to supply the Island Interconnected System and the costs currently collected from customers in electricity rates. Addressing future balances in the account will be addressed in the rate mitigation plan currently under development.

Why are customers paying more when Hydro reported a profit?

Electricity rates are established to recover the cost of providing electrical service to customers. The use of profits from other lines of business, such as oil and gas, is at the direction of the provincial government. Such profits may be used for rate mitigation or to support other government responsibilities such as health care, improved transportation, etc. Profit from other lines of business does not directly impact rates charges for customers. However, our continued financial success will bring more value for the Province and customers in future years.

What is the Rate Stabilization Plan (“RSP”)?

The RSP was created to ensure that customer rates reflect the actual cost of electricity generation from year to year. Our electricity system has historically relied heavily on fuel used at Holyrood and our isolated rural systems rely primarily on diesel fuel. The cost of fuel to Hydro, and ultimately our customers, has been volatile.

Each year, Hydro is required to file an application with the Newfoundland and Labrador Board of Commissioners of Public Utilities (PUB) related to the RSP which has ensured customers are paying electricity rates that accurately reflect the cost of generation.

As the energy system evolves and incorporates more renewable energy sources, we will continue to ensure rates reflect the actual cost of electricity generation year to year.

Labrador interconnected customers are not impacted by the RSP.

What happens if costs are higher or lower than expected?

Every month, we compare our actual costs to the cost customers paid. If customers pay more than the cost of electricity, these extra funds are set aside with interest and returned to customers the following year through the Rate Stabilization Plan, usually on July 1. Hydro does not make any profit off the price of fuel.

Here are the average RSP rate adjustments we’ve seen over the past last several years:

2023 – increase of 6.9%
2022 – decrease of 0.3%
2021 – increase of 2.5%
2020 – no change (due to pandemic, one-time bill credit applied on customers’ bills – see below)
2019 – increase of 7.6% (includes rate change resulting from most recent General Rate Application)
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%

 

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