The cost of electricity jumps 7% next week, and this advocate worries it will hurt the most vulnerable

Next Thursday, power rates in Newfoundland and Labrador are set to jump by seven per cent, and the head of a seniors' advocacy group says the increase will hurt the province's most vulnerable populations.

Connections for Seniors executive director Mohamed Abdallah said people are already grappling with a cost of living crisis, and the power increase will further hurt those who are already economically strained.

"Any cost of living increase right now is not in the favour of the population, seniors in large, but specifically the most vulnerable amongst them," Abdallah told CBC News.

The residential rate is going from over 13.2 cents per kilowatt hour up to 14.2 cents. Someone who currently pays $300 a month for power will now pay about $321.

Newfoundland Power had asked for a rate increase of 9.3 per cent, which was rejected by the Public Utilities Board in favour of the seven per cent increase.

Many people are already struggling to pay bills, said Abdallah, so any increase will mean other things in their budget will have to be cut, like food, rent and medication.

"They will just go in the cycle of poverty as they keep being in debt, being evicted, losing their housing arrangement and they are just set behind every time things go more expensive," said Abdallah.

It's particularly difficult for seniors who live on fixed incomes and don't have much money to spare, Abdallah added. He's concerned not only by the amount of the increase but by how much time consumers have been given before the increase shows up on bills.

"I know that there's some government programs that do subsidies, but not everybody is eligible for it," Abdallah said.

"A lot of the problems we see with homelessness and people being evicted comes with the power bill not being paid."

He'd like to see a discounted power rate for seniors and people on income support.

'Not good'

People CBC News spoke with outside the Avalon Mall in St. John's are calculating how the rate increase will affect them and what they will need to cut out in order to afford it.

Tracey Dangler said her two-bedroom apartment comes with a $300 power bill and the increase is going to hurt her and her family.

"Even going up by $15 or $20 a month — that's taking food off my table and off my grandchild's table. So no, it's not good," said Dangler.

"For all the resources we have in Newfoundland and Labrador, there's really no reason for any of the prices to go up, as far as I'm concerned."

Doug Copp said his home is heated with electricity so the increase will have a significant impact.

"That just hits to the bottom line right away," he said.

More increases could be coming

Consumer advocate Dennis Browne said Newfoundland Power has to be brought under control.

"They're overspending. They're looking for too much by way of the rate of return, and they think it's business as usual," he told CBC News.

"But ratepayers have to contend with Muskrat Falls and the cost of Muskrat Falls, and that seems to be oblivious to Newfoundland Power."

A request for a further increase of 1.5 per cent is before the Public Utilities Board for review. Consumers are also facing an additional hike of 12 per cent in 2025 — a 5.5 per cent rate increase under the 2025-26 general rate application and 6.5 per cent related to the recovery of a combination of power supply costs and Muskrat Falls costs.

He said the government announced 2.5 per cent annual increases to cover the cost of Muskrat Falls, as the government had earmarked $750 million for rate mitigation.

"And without that rate mitigation, the cost per kilowatt will be about $0.24 a kilowatt and not the 13.5 cents you're paying now."

Browne said Newfoundland Power is motivated by profits. Its expenses are paid for by its customers so the additional money brought in is going toward its shareholders.

"Newfoundland Power is looking for more profit right now. Newfoundland Power annually makes $48 million in profit, nearly $1 million a week in profit," said Browne.

"They're attempting to increase the profit from $48 million annually to $62 million. We brought experts in to oppose that increase, and we hope to have success there."

In a statement, Newfoundland Power disputed the characterization of its motivation as profit-driven. Michele Coughlan said the seven per cent increase is a combination of a 4.7 per cent increase related to recovering higher power supply costs that Newfoundland Power paid N.L. Hydro in 2023 and a 2.3 per cent increase by N.L. Hydro to recover Muskrat Falls costs.

"This rate increase has no financial benefit for Newfoundland Power. We purchase 93 per cent of the power we deliver to our customers from N.L. Hydro. The cost of purchasing power is our single largest expense and represents over two-thirds of all our costs," said Coughlan.

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