h, thank goodness for the fine print.
You might not know about this, because it’s buried deep in a 138-page, 79,000-word board order, but the province’s Public Utilities Board is clipping the wings of Newfoundland and Labrador Hydro, ordering that an increase in salary costs not be passed on to ratepayers in Hydro’s request for a general rate increase.
Some of the numbers that the board found to be a concern? The fact that non-union salaries at Hydro have increased by 57 per cent between 2007 and 2015, and that the average full-time salary across the Crown corporation has risen in that same time period from $59,453 to $84,704.
This, at a time when the average increase in salaries in the province was 36 per cent.
As well, the board was asked to look at the dramatic growth in staff at Hydro — an increase from 813 positions in 2013 to 903 in 2015.
The board’s take? “While it is reasonable to expect that salaries and benefits will increase over time, the size of the increases reflected in the proposed salaries and benefits costs is concerning.”
It went on to point out that Hydro didn’t adequately control its staffing costs: “The board finds that Hydro failed to demonstrate that these costs were established in a rigorous process which involved a substantive review of requirements and consideration of the available opportunities to achieve savings and cost reductions. Hydro did not provide evidence demonstrating reasonable controls on salaries and benefits costs.” But that’s not all. The board also took issue with Hydro’s shortterm incentive program, suggesting that the plan focused too much on the financial performance of Newfoundland Hydro and its parent company, Nalcor Energy, and not enough on providing least-cost, reliable electrical power.
“Before the costs of any such plan are reflected in rates Hydro will have to demonstrate that the plan provides incentives for the provision of least-cost reliable power and provides a demonstrable benefit to ratepayers,” the board says in its Dec. 1 order. The result? “The board finds that the proposed 2015 salaries and benefits costs are not reasonable in the circumstances.”
Newfoundland Hydro will have to absorb $4.4 million in salary costs from somewhere else, and will not be able use them in the rate base that’s used to set power rates in this province.
The board has also put the utility on notice to start finding savings: “the board expects Hydro to implement improved processes in relation to identifying, establishing and documenting efficiency measures before the filing of its next general rate application. In the absence of such evidence the board may consider further disallowances ...”
Tough talk - but the proof of the pudding is in the eating. And in this case, on the numbers at the bottom of your electric bill.
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