Frequently Asked Questions

What is the Rate Stabilization Plan?

The Rate Stabilization Plan was created to ensure that customer rates reflect the actual cost of electricity generation from year to year. Our electricity system has relied heavily on fuel used at Holyrood. The cost of that 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 related to the Rate Stabilization Plan, which has ensured customers are paying electricity rates that accurately reflect the cost of generation and to smooth the day-to-day impact of fluctuating oil prices.

Why are rates decreasing July 1, 2022?

As Newfoundland Power changes its rates, Hydro is required to automatically adjust rates for some customers so they pay the same rates as Newfoundland Power customers or their existing rates are adjusted by the average rate of change granted Newfoundland Power. Labrador interconnected customers are not impacted by the change in rates for Newfoundland Power customers.

The Public Utilities Board approved Newfoundland Power’s Utility Rate Adjustments Application for July 1, 2022, followed by Hydro’s Application, on an interim basis, which resulted in an average decrease of 0.3% in electricity rates for residential and commercial customers effective July 1, 2022.

Does the price of fuel impact still impact electricity rates?

Historically rates changes on July 1 reflected changes in supply costs on the Island Interconnected System primarily related to fuel consumption at the Holyrood Thermal Generating Station. Because the amount and price of oil is constantly changing, Hydro is required to adjust rates each year based on fuel costs. In 2021, we used much less fuel, since Muskrat Falls energy was used to displace energy from Holyrood.

Under the normal regulatory process, some customers were expected to receive an average decrease of 6.4% in July, primarily as a result of fuel costs being offset by electricity supplied by the Muskrat Falls Project and the subsequent reduced production at the Holyrood Thermal Generating Station.

This rate adjustment includes the effect of both Hydro’s and Newfoundland Power’s rate stabilization adjustments, and was approved by the Public Utilities Board.

Am I paying for energy from Muskrat Falls?

On July 1, 2022, rates for Island Interconnected customers will include supply costs related to Muskrat Falls to reflect a change in the source of energy supplied to the Island Interconnected System.

Although island customers have received power from Muskrat Falls since November 2021, costs have not been passed along. Since November, the cost of supplying this energy has been accumulating in a deferral account as approved by the Public Utilities Board. Consistent with its policy that electricity rates be maintained at a manageable level, the Provincial Government requested that Hydro file its Rate Stabilization Plan to keep retail electricity rates as close to current levels as possible for this year’s July 1, adjustment. Therefore, Hydro is beginning to recover some costs to ensure electricity rates remain stable.

I heard there was supposed to be an increase in rates?

There are no increases to residential customer rates.

At the time Hydro filed its Application for July 1, 2022 Utility Rate Adjustment with the Newfoundland and Labrador Board of Commissioners of Public Utilities, a Project Cost Recovery Rider was also filed to recover some of the costs incurred to date related to completion of the Muskrat Falls Generating Plant and Labrador Transmission Assets.

In the application, Hydro proposed to increase the wholesale rate to Newfoundland Power to recover some of the Muskrat Falls costs to ensure customer rates remain stable.

Subsequently, Newfoundland Power, followed by Hydro submitted their customer rate applications, resulting in most rates decreasing between 0.1% and 0.3%, effective July 1, 2022.

What is the forecasted fuel price for 2022?

Hydro provides the provincial regulator, the Board of Commissioners of Public Utilities (or PUB), with two fuel price forecasts each year – one for March and another for September. The most recent fuel price forecast for January 2022 to December 2022 (prepared in September 2021) is $90.30 CDN/barrel.

What happens if fuel 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 RSP rate adjustments we’ve seen over the past last several years:

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%

Why didn’t rates change on July 1, 2020?

As a result of the pandemic’s impact on the province last year, residential and business customers who would normally see their electricity rates adjusted on July 1st each year, instead received a one-time credit on their electricity bill for 2020.

The credit was based on Hydro’s expected fuel savings at the Holyrood thermal generating plant. The decrease in oil prices worldwide in 2020 meant it would cost us less to produce electricity – those savings were passed directly onto our customers.

For 2020, the one-time bill credit replaced the annual July 1st electricity rate adjustment that normally occurs through the Rate Stabilization Plan. The credit provided customers with our expected savings upfront – providing relief on electricity bills at the time, rather than spreading out the forecasted fuel savings over the usual 12 month-period.

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