Auditor general raises concerns about NB Power’s growing balance of deferred electricity costs

Auditor general raises concerns about NB Power’s growing balance of deferred electricity costs

FREDERICTON (GNB) – A report from the Office of the Auditor General finds that NB Power has accumulated $384 million in deferred electricity costs that are to be recovered from customers. 

The utility’s “rate rider” allows differences between forecasted and actual electricity sales and energy supply costs to be collected from customers over time. While this helps to reduce the impact of cost overruns on NB Power’s financial results, it also means more of today's costs will be paid by future ratepayers.

Customers are already paying these deferred costs through a separate variance account charge on their monthly electricity bills. As the balance has grown, the approved recovery period has also increased from two years to eight years, extending how long these costs will remain on customer bills.

“The rate rider has helped protect NB Power’s reported financial results by spreading cost differences over future years,” said auditor general Paul Martin. “But as the balance grows and the recovery period gets longer, more of today’s costs are being left for future ratepayers.”

The report found that this approach has increased NB Power’s reported net earnings by about $384 million since it was introduced. Even with that improvement, the corporation has continued to fall short of its financial targets.

“NB Power must improve its operating performance and limit further growth in the balance,” Martin said. “Otherwise, future ratepayers could face added costs for many years.”