Hydro allowed to generate more revenue
The Provincial Government is implementing measures to improve Newfoundland and Labrador Hydro’s (Hydro) financial position.
The move will bring the company in line with other Canadian regulated utilities and enable it to make appropriate ongoing investments in infrastructure to ensure reliable service.
Natural Resources Minister Kathy Dunderdale announced Wednesday the corporation Hydro will be permitted to earn profits equal to Newfoundland Power over the next two years so it can improve infrastructure and its financial position.
To accomplish this objective, the Public Utilities Board (PUB) is being directed to permit Hydro to earn a return on equity equal to that of Newfoundland Power. The government has also agreed to waive its annual debt-guarantee fee (valued at approximately $13 million a year) until 2010, at which point the full effect of these measures will be implemented. A $100-mil- lion equity injection into Hydro’s capital structure allocated in Budget 2008 is also assisting in retiring debt.
Ms. Dunderdale said “It is important that all parts of Nalcor are strong and financially sound to enable our energy corporation to meet its mandate, which includes being a reliable supplier of leastcost electricity through its regulated line of business, Hydro.”
“These measures are necessary to ensure Hydro is able to service its own debts and maintain a stable financial structure, thereby allowing it to weather unexpected fluctuations in its business. This will support the financial viability and stability of Hydro and its ability to make necessary capital investments and upgrades in providing reliable service to its customers.”
Ms. Dunderdale suggested Hydro will now be provided with an appropriate return on regulated equity comparable to other Canadian regulated utilities and its debt will be lessened through the $100 million equity injection.
As a result of these measures, Hydro will not file a general rate application for 2010.