NB Power rate-hike holiday not an election gimmick, PCs insist

A multimillion-dollar decision by NB Power not to activate a pending 1.9 per cent rate increase in August saved the Higgs government a potential election irritant with voters.

But Mike Holland,who agreed to the plan last month as the province's natural resources and energy development minister, said deferring the rate hike had nothing to do with politics.

"No, no, no, no, no, no. Absolutely not," Holland said on Tuesday.

It has been common practice in previous elections for political parties to ignore NB Power's financial well-being in favour of courting votes, but Holland is adamantthat is not happeningthis year.

Liberals promised rate freeze in 2018

In 2010, the Progressive Conservatives promised a three-year rate freeze at the utility if elected and made it stick when they formed government, even as NB Power was going $1 billion over budget on the refurbishment of the PointLepreau nuclear generating station.

In 2018, Liberals promised their own rate freeze on NB Power residential and small business customers, despite significant financial problems at the utility, but they were defeated before being able to implement it.

Holland, who is runningfor re-election in the riding of Albert said this year's deferred rate hike, which amounts to a rate freeze, is a sensible response by NB Power to the economicdamage caused to its customers by the COVID-19 pandemic, not an election gimmick.

Utility sought rate increase before pandemic

"I would say it was born of their initiative, but it was received well because we were all looking to find waysto make sure we could keep the ship steady as it relates to the average New Brunswicker getting through this," Holland said.

Prior to the COVID-19 health crisis, NB Power had been seeking approval from its regulator, the New Brunswick Energy and Utilities Board, to impose a 1.9 percent rate increase on customers beginning April 1.

A hearing was held over seven days in February but with a decision from the EUB "imminent" on March 19, the province declared a state of emergency to deal with the emerging pandemic.

Former NB Power president Gaetan Thomas responded by writing to the EUBasking for the rate increase application to be suspended indefinitely while theutility and the province decided how to proceed.

"NB Power will, in consultationwith the government of New Brunswick, determine an appropriate time for a decision on this matter," said the letter.

No increase until March

Last month on Aug.5,the utility made contact with the EUB again, saying it needed to know for planning purposes if it would receive all or part of the rate increase and asked for a final ruling on it.

However, it also requested if it were to win,the increase not be imposed on customers until next March

"Despite the progress made in New Brunswick in minimizing the spread of the virus NB Power recognizes the economic impacts continue," wrote utility lawyer John Furey.

The utility acknowledges it talked thematter over with the Higgs governmentprior to the election call but insists its request to forgo the rate hike until next spring, which could cost it up to $18 million in lost revenue between August and next March, was its idea alone.

"We discuss with our shareholder many issues related to the utility regularly, so in this case we would have assured [ourselves] the government was comfortable with our direction before we filed with the EUB," utility spokesperson Marc Belliveausaid in an email to CBC News about the plan to win the rate hike now, but put off collection until next year.

At the time of NB Power's Aug. 5proposal, election talk in New Brunswick was already well advanced.

Premier Blaine Higgs told reporters on Aug. 4 that he was seriously pondering a general election call to avoid three October byelections. On Aug. 8, Progressive Conservatives nominated five key candidates, including Higgs, in case the decisioncame quickly.

The actual election call, following failed negotiationswith oppositionparties to avoid one, was made Aug. 17 for a Sept.14 vote.

It was in those politically charged days NB Power raised its desire with the Higgs government to obtain a rate increase ruling from the EUB.But Belliveau said theproposal notto charge customers with any increase it might be awarded until next year was not pushed by the province.

"The decision to defer the 2020/21 rate increase until March 31, 2021, was an NB Power management initiative to support customers, which was approved by the NB Power board of directors," wrote Belliveau.

"NB Power then notified the shareholder of its decision before submitting the motion to the EUB."

Solution still needed, says Holland

Deferring a rate increase would appear contrary to instructions delivered to NB Power last November by Holland to get its financial affairs in order and pay down a significant portion of its $4.9 billion debt load by 2027.

"This target should come first and foremost in utility planning," Holland wrote in a mandate letter to the utility.

NB Power executives, including new president Keith Cronkhite, told the Februaryrate hearing the utility took Holland's letter seriously and considered itself on a deadline to retire debt, with annual rate hikes a critical part of that solution.

Instead, after COVID-19 struck late last winter, NB Power posted a loss for the fiscal year endedin March for the first time in a decade and watched the prospect for an April 1 rate increase evaporate.

Holland said he still wants to see NB Power solve its financial problems but not by raising rates this particular year.

"We're going through a situation that is, I guess, uncharted territory I think nobody would disagree we would hope we could come through the other side of that in the relatively near future," said Holland.

"I am pleased theutilitywas able to read and react and put measures in place to limit the stress and the burden on the ratepayers."

The EUB has scheduleda hearing for Sept. 10 into NB Power's request to receive its rate decision but defer implementing it.