NB Power's go-slow approach to fair commercial rates under fire

More than 25 years of unfair electricity pricing for small business in New Brunswick may finally be coming to an end — but NB Power has told its rate hearing it may take another decade to completely fix the problem.

Philippe Gauthier of the Canadian Federation of Independent Business says commercial power rates in New Brunswick have been such a long–running "injustice" he's not concerned about the timing of a solution — just that it happens.

"We're glad it's being done," Gauthier said. "For us, the important part is that it is being addressed."

Businesses pay more

Small businesses in New Brunswick are charged 22 per cent more for the electricity they consume than residential customers, even though they generally cost less to service and supply. As a result, commercial customers in New Brunswick will be overcharged for power this year by an estimated $37 million.

To address that, NB Power is proposing a smaller rate increase for many of its commercial customers this year of 0.9 per cent while suggesting 2.3 per cent hikes for residential customers and two per cent for all others, including large industry.

The utility has calculated that increases like that over the next 10 years should solve unfair pricing for small business, although at NB Power's rate hearing in Fredericton this week Energy and Utilities Board lawyer Ellen Desmond questioned the slow pace.

"How long [have commercial rates] been outside what would be considered a reasonable band?" Desmond asked a panel of senior NB Power executives.

"It's been a long time," acknowledged Lori Clark, NB Power vice–president.

Problem identified in 1992

Excessive commercial power rates in New Brunswick were first identified as a problem at a NB Power hearing in 1992. The former Public Utilities Board [PUB] found NB Power was overcharging commercial customers to keep rates to residential customers low and it ordered a fix.

"The board will expect NB Power at the time of its next general rate application to propose changes," the PUB instructed in a written decision in April 1992.

Some progress has been made since then, but 25 years later unfair pricing for commercial customers remains a multimillion dollar problem.

Last year NB Power was instructed by the Energy and Utilities Board to tackle the issue once and for all. The utility's proposed solution, which is being debated this week, is a gradual 10–year fix, where increases to commercial customers will be kept low.

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However, Desmond wanted to know why NB Power isn't moving faster to fix a problem it has had 25 years to deal with.

"How is it that [another] 10 years is a reasonable time frame?" she asked.

Clark said speeding up fair pricing is a problem for residential customers whose rates continue to be subsidized by business.

Offering affected commercial customers no increase this year would have required a 2.6 per cent increase in residential rates, and Clark said that was considered too much.

"It's a balancing act," Clark said.  "In this case it was an estimate of what was the rate increase residential customers could bear."