Proposed agreement better protects ratepayers: analysis (09/11/18)

NB 1835

Nov. 18, 2009

FREDERICTON (CNB) - Ratepayers would receive about $5.6 billion in rate savings under the proposed energy agreement with Hydro-Québec, a consultant's report released today concludes.

The report also confirms that residential and other small business ratepayers will reap close to two-thirds of the savings under the proposal.

In the report, the consultants note that customers would be better protected against a variety of risks, including inflation.

The report, tabled today in the legislature by Energy Minister Jack Keir, was prepared by the international economic consulting firm NERA. It outlines the $5.6 billion in approximate savings that New Brunswickers would realize under the proposal. Hydro-Québec would acquire most of NB Power's assets for $4.8 billion.

The consultants examined the potential affect on rate savings for New Brunswickers if inflation were to increase beyond the Conference Board of Canada's forecast of about 1.8 per cent annually.

In the report, the consultants highlight the fact that New Brunswickers face larger rate increases due to higher-than-expected inflation under the current model than they would under the proposal.

"What is significant is that substantially higher inflation does not reduce, and, in fact, appears to slightly increase, the estimated rate savings," the consultants state.

The consultants also indicate that 62 per cent of the $5.6 billion in rate savings would reach residential and commercial customers.

"The share of benefits going to residential and commercial customers is forecast to increase over the next five years as industrial rates rise along with Hydro-Québec's rates while New Brunswick residential and commercial rates remain frozen for five years," the consultants state.

The consultants state that the rate savings would come from three readily identifiable sources: savings from freezing rates for residential customers and matching industrial rates to those in Québec; savings from future capital expenditures; and savings from avoiding rising fuel prices.


MEDIA CONTACT: Bonnie Doyle Creber, communications, Department of Energy, 506- 658-2410.