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The rising cost of oil and the refurbishment of the Point Lepreau Nuclear Generating Station has sent NB Power's fuel and purchased power costs skyrocketing.

Enlarge Photo

Noel Chenier/Telegraph-Journal

NB Power is deferring $221 million of the hefty bill to a special account that will enable it to spread the increased costs to ratepayers.

The Crown Utility is expecting to pay $759 million for fuel and replacement power through the 2008-2009 fiscal year.

That's up from $523 million last year.

But ratepayers won't get hit with the entire $236 million increase all at once.

Instead, NB Power is deferring $221 million of the hefty bill to a special account that will enable it to spread the increased costs to ratepayers over the extended life of the nuclear power plant, which is expected to last until 2034.

But spreading the bill out over time means the utility will incur $5 million in interest charges for 2008-2009.

In a document to the New Brunswick Energy and Utilities Board, NB Power says that the remaining $15 million in increased fuel and purchased power costs, along with declines in out-of-province electricity sales, results in a requirement for it to raise rates by three per cent this year.

The three-per-cent increase, which equals roughly $37 million, combined with cost reductions, will leave the utility with a profit of roughly $69 million, NB Power states.

That's down from $85 million forecast for last year.

That rate increase is being investigated by the board on the request of the provincial government.

While the board can investigate NB Power's costs and the rationale behind the rate increase, it has no authority to rescind the rate, which took effect April 1.

Daniel Theriault, the public intervener during the 2007-2008 NB Power rate hike hearing, said he hopes details of the $221 million cost deferral and how it will be managed will come out during the Energy and Utility Board session on May 28.

Theriault said ratepayers should be concerned about NB Power's declining out-of-province sales.

Electricity sales to Canadian and American customers slid from $215 million two years ago to $176 million last year.

Sales are projected to drop to $84 million in the current 2008-2009 fiscal year.

"Is this solely due to the outage of Lepreau or is there some other reason for that?" he asked. "Obviously there are a lot of questions here that should be asked."

Kurt Peacock, a public policy visiting scholar at the University of New Brunswick Saint John, said the province should appoint someone to represent the public at the review of the three per cent increase.

Peacock said because rate hearings involve detailed analysis of NB Power's expenses and income, it's essential to have the public represented professionally.

"I wish we could have a fair and frank debate about those kinds of issues at the hearing but I don't know if that will come out if the province doesn't have a public intervener."

Like Theriault, Peacock said he's concerned about NB Power's declining out-of-province electricity sales.

Such sales decrease costs for in-province customers, he said.

"If those sales aren't happening, it's going to hurt."