Bold claim: Surcharges on your electricity bill may stick around for eight more years, and the numbers behind the claim are growing, not shrinking. But here's where it gets controversial: the very mechanism designed to protect consumers from financial swings is instead piling more debt on customers.
New Brunswick Power has a $236.1 million debt built up in its variance accounts, which customers have been paying a three per cent surcharge to retire. Alarmingly, that debt has increased by $118.7 million since the charges began two years ago. The company now says surcharges—or rate riders—will be necessary for another eight years to address a total variance-account debt of about $354.8 million, as forecast to the New Brunswick Energy and Utilities Board (N.B. EUB).
At a recent hearing, Abby Davidson, N.B. Power’s manager of financial reporting, told the EUB that the utility expects surcharges to continue until March 2034. She described the figure as a best estimate given the current data. Alain Chiasson, representing public interveners, warned that this could become a permanent burden on customers if the variance balances keep growing, and urged the utility to take action to restore control of the accounts.
How did we get here? The variance accounts were created three years ago to transfer annual business risk—positive or negative—from the company to customers. In good years, customers would receive rate rebates; in bad years, customers would subsidize heavy losses until the balances were paid off. Variances arise from events “beyond the control of management,” such as shifts in fuel prices, unexpected changes in export prices for electricity, and differences in planned versus actual nuclear and hydro output.
The trouble is Point Lepreau Nuclear Generating Station. In recent years, outages and underperformance at Lepreau have driven down good-year results and left the variance accounts deep in the red. By October 2023, the accounts showed a $236.1 million shortfall. Since April 2024, customers have paid nearly $100 million in surcharges, yet the deficit has grown to $354.8 million as new setbacks emerged.
At the hearing, Chiasson described Lepreau’s recent performance as “abysmal” and questioned whether improvements will be enough to stop the growth of the variance accounts and the associated customer liabilities. He expressed doubt about a rapid turnaround, though he did acknowledge the plant might improve to some degree.
Legislation currently caps the maximum surcharge at three per cent of a customer’s basic bill. N.B. Power projects that the maximum could yield about $60.3 million in the next fiscal year, but officials acknowledge that this may not meaningfully reduce the overall debt.
Forecasts note that the variance balances are measured annually at the end of October. With Lepreau’s extended shutdown in late 2025, the chair of the EUB, Christopher Stewart, suggested the situation may have worsened already, and he emphasized that what lies ahead for the next fiscal year remains uncertain.
Background on the author: Robert Jones has reported on New Brunswick energy issues since 1990, earning recognition for investigative work on petroleum pricing and contributing to regulatory reforms in 2006.
Question for readers: Do you think customers should bear ongoing charges to cover utility risk, or should the company be obligated to absorb more of the volatility itself and reduce reliance on rate riders? What reform measures would you propose to prevent surcharges from becoming a long-term, uncontrollable burden on households and small businesses?
