Higher rates could help pay for hydropower project upgrades, rehab in Newfoundland and Labrador

Newfoundland and Labrador map

Provincial energy corporation Nalcor Energy has filed an amended General Rate Application (GRA) via its subsidiary, Newfoundland and Labrador Hydro, that could increase the province's electricity rates to help pay for modernization and upgrade programs.

The GRA was submitted earlier this week to the province's Board of Commissioners of Public Utilities (PUB) and would be effective Feb. 1, 2015, if approved.

The plan would increase rates paid by customers on the Island Interconnected System by 2.8%, and 1.9% for customers on the Labrador Interconnected System.

The increased rates would help the utility rehabilitate and update its generating assets, transmission and distribution lines, terminal stations and substations.

"Hydro remains clearly focused on ensuring the delivery of reliable electricity to the people of this province now and in the long term," Hydro vice president Rob Henderson said. "Most of Hydro's assets are now more than 40 years old and require increasing refurbishment and replacement. This is one of the biggest challenges for the electricity system."

Much of the company's grid was built in the 1960s and 1970s, according to an informational website created by Hydro to explain the GRA, while the separation of Newfoundland from mainland Canadian grids further empahsizes the need for long-term reliability.

"To help meet our goal, our focus is to ensure our plan provides financial stability for Hydro as a regulated utility," the company said. "Hydro is in a solid financial position to make necessary investments and update our aging infrastructure across the electricty system."

Hydro last submitted a GRA in 2007. Since then, the company said, a number of factors, including fuel prices, capital expenditures and new energy sources, have made it necessary to increase its rates to reflect the current cost to provide service.

"Outside of the annual fuel cost adjustments, Hydro has worked to manage rates for customers despite rising costs during that time," Henderson said. "The focus contonies to be on managing our costs, while making the right capital investments in aging infrastructure to ensure we deliver safe, least-cost and reliable electrcity service for our customers."

Labrador and Newfoundland customers currently pay the lowest rates amongst all power consumers in Canada at about CAD$0.04 per kWh. Quebec customers are second, paying more than double at more than 8.5 cents per kWh.

Most notable amongst Nalcor Energy's hydroelectric assets is the Churchill Falls plant, which generates 5,428 MW of the utility's 6,700 MW of cumulative hydropower. The company is also working to develop the Lower Churchill project, which could add an additional 3,074 MW.

For more news from Canada, visit here.

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