Rate re­jec­tion

The Southern Gazette - - EDITORIAL -

The pub­lic util­i­ties board just re­jected a pro­posed rate in­crease for elec­tric­ity. The prob­lem is, it was the Man­i­toba pub­lic util­i­ties board that re­jected a Man­i­toba Hy­dro rate in­crease.

But the rea­sons be­hind the re­jec­tion are worth think­ing about here — and it has to do with in­terim rate in­creases.

Man­i­toba Hy­dro, just like New­found­land and Labrador Hy­dro, is faced with bal­loon­ing con­struc­tion costs on new projects, lower than ex­pected de­mand and de­clin­ing val­ues for elec­tric­ity in ex­port mar­kets.

As a re­sult, the Man­i­toba util­ity has said that it plans to ask for rate in­creases of 7.9 per cent in each of the next five years. But the first rate in­crease has run into — at least as far as Man­i­toba Hy­dro is con­cerned — an un­ex­pected hic­cup.

The PUB in that prov­ince re­jected the first 7.9 rate in­crease, al­low­ing the util­ity only a 3.36 per cent in­crease, with all of that money go­ing to mit­i­gate cost over­runs on a sin­gle transmission project. Man­i­toba Hy­dro had asked for the 7.9 per cent to be im­posed on an in­terim ba­sis, while the util­ity went through the full gen­eral rate ap­pli­ca­tion.

The Man­i­toba util­i­ties board made a sim­ple ar­gu­ment in re­ject­ing Man­i­toba Hy­dro’s re­quest for in­terim rate re­lief: that the process for ob­tain­ing in­terim rates and the ev­i­dence pro­vided for those rates, are far less rig­or­ous than a full re­view.

They put their con­cern con­cisely. “A Gen­eral Rate Ap­pli­ca­tion process in­volves a ful­some pub­lic re­view, in­clud­ing no­tice of the process to in­ter­ested par­ties; the test­ing of Man­i­toba Hy­dro’s case through an ev­i­den­tiary writ­ten in­for­ma­tion re­quest process and a pub­lic oral hear­ing in­volv­ing di­rect ev­i­dence and cross-ex­am­i­na­tion; and the fil­ing of ex­pert ev­i­dence by ap­proved In­ter­ven­ers and/or Board-re­tained In­de­pen­dent Ex­pert Con­sul­tants and the tes­ti­mony and cross-ex­am­i­na­tion of ex­perts in the oral hear­ing. Through this process, which takes place over a num­ber of months, the Board scru­ti­nizes the ev­i­dence be­fore it on the range of is­sues that are rel­e­vant and in scope and ar­rives at a fi­nal de­ci­sion with re­spect to the rates that the Util­ity can charge for its elec­tric­ity ser­vices. In con­trast, in­terim rates are or­dered on a pro­vi­sional or tem­po­rary ba­sis, pend­ing full and fi­nal ad­ju­di­ca­tion in a Gen­eral Rate Ap­pli­ca­tion process.”

The Man­i­toba PUB sim­ply wasn’t pre­pared to rub­ber-stamp an in­terim in­crease.

If any­thing, it’s a shot over the bow by Man­i­toba’s reg­u­la­tor that as costs rise, so will the level of scru­tiny.

What makes that in­ter­est­ing here is that New­found­land and Labrador Hy­dro is ask­ing for a roughly 13 per cent in­crease across two years, 2018 and 2019. Of that, the 2018 por­tion, which would be a 6.6 per cent in­crease, is, like Man­i­toba Hy­dro’s, also an in­terim in­crease while the util­ity’s full rate in­crease goes through the PUB process.

Let’s see if our PUB is pay­ing at­ten­tion to what’s hap­pen­ing in other ju­ris­dic­tions.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.