Update on revised options for 2019 electricity rates filed with the PUB

On July 20, 2018, Hydro filed revised options for 2019 electricity rates with the Public Utilities Board (Board) as part of its current general rate application. At that time, Hydro put forward a rate smoothing option for consideration by the Board – a rate stability rider – that could be applied to current electricity rates to help smooth the transition to post-Muskrat Falls rates. Information included in the filing was intended for consideration only, and to help inform any decisions to further assess or pursue this option.

On August 3, the Board confirmed that information related to the rate stability rider will not be considered with respect to rate setting in Hydro’s 2017 General Rate Application. Additional information is available on the Board’s website.

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Previous:

July 23, 2018 – As part of our ongoing rate application and following negotiations with intervenors (Newfoundland Power, Industrial Customers and the Consumer Advocate), Newfoundland and Labrador Hydro (Hydro) has filed additional options with the Board of Commissioners of Public Utilities for 2019 electricity rates.

Key Points:

• To help offset future rate impacts of Muskrat Falls for customers, Hydro originally proposed that savings gained by bringing power to the island from Labrador or Nova Scotia, be set aside to help smooth future rates when Muskrat Falls comes into service.
• Negotiations have been ongoing between Hydro, the Consumer Advocate, Newfoundland Power and other intervening parties. On July 16th, all parties agreed that Hydro’s original rate smoothing option should not be considered as part of this application.
• The original proposal was expected to save approximately $170 million to put towards stepping in projected rate increases when Muskrat Falls is in service.
• Through settlement negotiations, there is a reduction in Hydro’s operating and depreciation costs originally requested in our general rate application, of over $15 million.
• As a result of the agreement, estimated electricity rate increases for most residential customers on the island effective January 1, 2019, are 1.2%. This would result in an average increase of 0.15 cents/kilowatt hour for residential customers.
• Hydro has put forward another rate smoothing option for consideration by the Board – a rate stability rider. The rate stability rider could be applied to current electricity rates to help smooth the transition to post-Muskrat Falls rates. Information included in the filing is intended for consideration only, and to help inform any decisions to further assess or pursue this option.
• For 2019, the approval of a rate stability rider could result in an additional rate increase of 6.5% (7.7% total) on January 1, 2019. Information filed by Hydro also identifies the potential stepped rate increases that would be required in future if such a rider was applied during the transition to post-Muskrat Falls rates, with assumptions made on the mitigated rate.
• A final decision on 2019 electricity rates is expected by the Public Utilities Board later this year.

Quote:

Dawn Dalley
Vice President, Corporate Affairs and Regulatory Services

“We hear the concerns being voiced by our customers today about electricity rates. While the estimated rate increase has been significantly reduced for 2019, we know customers cannot bear the steep increase predicted when Muskrat Falls comes in service. Hydro has been working hard to carefully manage our costs, however we still firmly believe that more measures are needed today to help customers manage the impact of future rates. We, however, also respect the input of the intervenors in our rate application and we have proposed another option for consideration by the Board of Commissioners of Public Utilities.”