Hydro receives approval from Public Utilities Board for proposed 2019 electricity rates

Increasing fuel costs a significant factor for higher cost of power in 2019

We know that customers count on us to provide reliable electricity while keeping costs as low as possible, and we understand that customers are concerned about electricity rates. We rely heavily on fuel to operate our electricity system for customers, and the high cost of that fuel is having a significant impact on rates for 2019.”
– Jennifer Williams, President

On September 11, 2019, Hydro received an order from the Newfoundland and Labrador Board of Commissioners of Public Utilities (Board) approving electricity rate changes for customers, effective October 1, 2019.

The estimated electricity rate changes for 2019 were first proposed in a filing to the Board earlier this summer as part of our ongoing General Rate Application (GRA). For 2019, increasing fuel costs to reliably operate the province’s electricity system are having a significant impact on customer electricity rates. Hydro is forecasting an increase in both the amount of fuel that we use as well as a significant increase in the forecast price of fuel since rates last changed in 2018. Fuel cost adjustments occur annually as part of the Rate Stabilization Plan.

As one of the final stages in the rate setting process, the filing was also reviewed by intervenors like the Consumer Advocate, Newfoundland Power and industrial customers. Final electricity rates for most customers are expected in the coming weeks, following final applications by both Hydro and Newfoundland Power to the Board, to approve and implement the rate changes.

Key Points for our Customers:

We estimate the following rate changes for customers will be implemented October 1, 2019, pending final approval by the Board:

  • Island Customers:  We estimate that most residential customers on the island will see rates increase by approximately 0.8 cents/kilowatt hour (6.4%). This equals about $6.40 for every $100 on an electricity bill.
  • Labrador Customers: We estimate that most residential customers on the interconnected system (Upper Lake Melville and Labrador West) would see electricity rates decrease by approximately 0.1 cents/kilowatt hour (3.1%) or a reduction of $3.10 for every $100 on an electricity bill. The average rate for these customers today is 3.1 cents/kilowatt hour. The proposed decrease is largely the result of increased customer usage and customer growth in the region.
  • Final electricity rate changes may differ from the estimates provided. We expect to be able to provide final electricity rates (effective October 1, 2019) in the coming weeks. We will provide a further update to customers at that time.
  • The rate change on the island is driven primarily by increased fuel costs. Today we rely heavily on oil to generate electricity for customers at our Holyrood plant and 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.
  • Hydro uses a long-standing approach, approved by the Board, to forecast the price of No. 6 fuel. If Hydro’s fuel cost forecast (both the amount we use and the price) does not materialize, rates will be adjusted. Any difference between the forecast and actual fuel cost is set aside, with interest, and customer rates are then adjusted through the Rate Stabilization plan each year (typically in July).
  • 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.

You can view more information about fuel costs, how fuel price is forecasted, and historical rate adjustments from the Rate Stabilization Plan here.