Oil and troubled waters
Last year, when the Public Utilities Board (PUB) announced that electrical rates were going up by seven per cent — when the average yearly increase for the last 20 years was less than two per cent per year — I went to the PUB website to find out why.
This is why: “The price of oil has increased and therefore electricity rates are increasing as well,” said Jim Haynes, Hydro’s vice president of regulated operations.
“The fuel price projection used for setting electricity rates has climbed from $84 per barrel to $103 per barrel — almost $20 more per barrel over the last 12 months — and electricity rates will rise by approximately seven per cent effective July 1, 2011. The cost of oil is a direct pass through to consumers and neither utility receives any profits or benefits financially from changes in oil prices.” Reasonable enough. Then I read the item “Holyrood fuel costs hitting ratepayers” on June 29.
In the article it has the average price for No. 6 Fuel at $91.92, not $103. As Texas crude has been down below $90, you would think that our rates would go down, not up.
So I Googled “Rate stabilization plan Newfoundland” and this is what I found: “Rising oil prices cause increase in Rate Stabilization Plan adjustment for electricity consumers,” April 24, 2012: “Newfoundland and Labrador Hydro (Hydro) filed an updated fuel price projection for the Rate Stabilization Plan (RSP) with the Newfoundland and Labrador Board of Commissioners of Public Utilities (PUB) today. This will result in an increase in electricity rates to Newfoundland Power and therefore most electricity consumers. The fuel price projection used for setting electricity rates has climbed from $103 per barrel to $119 per barrel — $16 more per barrel over the next 12 months. As a result, the wholesale rate for electricity will increase by approximately eight per cent resulting in an RSP adjustment to consumers of an estimated 5.4 per cent effective July 1, 2012.”
How can the PUB justify this increase? Gerry Goodman St. John’s