Residential, commercial customers could bear the brunt of NB Power's 'weather tax'

The lawyer for New Brunswick's municipal utilities suggestedMonday that if NB Power wins the right to charge customers extra for storm damage, the bills may fall mostly on residential and commercial customers, asinfrastructure serving those groups tends to suffer the most in weather events.

Scott Stoll represents New Brunswick municipal utilities in Saint John, Edmundston and Perth Andover and asked if NB Power plans to charge groups according to whothe damaged equipment serves if it wins the right to recover storm expenses.

"NB Power is looking to implement a rate adjustment mechanism," said Brad Crawford,NB Power's manager of regulatory affairs, telling Stoll"cost causation principles" would likely be used to sort out who pays what.

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Residential and commercial customers of NB Power are mostly served by the smaller wooden poles and wires of the utility's distribution system that often buckle and give way during heavy storms.

That's generally not the case for industrial and municipal customers, who take their electricity from NB Power's larger and more robust transmission system.

"The vast majority of storm-related damage is distribution system, I believe that's over 90 per cent?" asked Stoll.

"In view of the last series of storms we've had that would be roughly accurate,"said Crawford.

That's potentially bad news for NB Power's commercial and residential customers.They account for just two-thirds of NB Power's in-province salesbut as distribution customers could be made to pay almost all storm-recovery expenses.

NB Powersays threemajor storms in the last four years drained it of $63.8 million in unbudgeted expenses. In this year's rate application, it has asked for the abilityto pass those kind of unexpected costs onto customers in the future, but has provided only broad outlines of how the scheme might work.

"This application is speaking to the implementation of [the mechanism]," said Crawford.

"Further downstream there are a series of different decision gates around how we handle the rate adjustment mechanism and that has yet to be determined."

More detailed review of the idea at the hearingis expected next week.