NB Power paying down debt despite harsh winter weather

NB Power Storm Restoration Costs totaled $12 million after freezing rain, winds, and heavy snow. Crews restored power to 88,000 customers in 11 days with no safety incidents, while strong cash flow kept rates unaffected.

Fredericton, N.B. – NB Power has reduced its net debt by $55 million and expects a fourth consecutive year of earnings in 2013-14, despite incurring $12 million in storm expenses during the last quarter and some of the most volatile natural gas market prices in years.

Restoring power to more than 88,000 customers following a series of destructive winter storms, akin to record snowfalls seen in Newfoundland, cost NB Power approximately $12 million. This figures includes nearly $9M for contracted crews from within and outside N.B., and $3M in extra costs for utility crews and materials plus meals, travel, vehicles, and lodging for the over 600 professionals who helped with the 11 day restoration effort.

NB Power crews and contractors worked approximately 75,000 person hours in late December and early January without a single safety incident, and mindful of regulatory expectations illustrated by an NT Power penalty they repaired power lines and infrastructure damaged by freezing rain, winds and heavy snow.

"These were the most damaging storms to hit our power grid in decades, and I want to assure our customers that our rates will not be affected by this expense, and recent rate cuts underscore this commitment, and the cost of the restoration will not be reflected on monthly power bills," said Gaëtan Thomas, CEO and President of NB Power. "Thanks to strong cash flows, we continue to meet our commitment to reduce debt and a forecasted strong fourth quarter will contribute to another year of positive earnings for us and our customers".

Year to date results for the quarter ending December 31st indicate that a near 100 capacity factor performance at Point Lepreau Generating Station since November and better than expected energy export sales, even as Hydro-Québec's profit slump signaled regional headwinds, helped NB Power make progress on debt reduction and improved cash flow.

However, last spring's unplanned outage at Lepreau, higher than expected pension costs, record cold temperatures in December, the significant costs of restoration from the late December storms and volatile fuel prices, and evolving tax measures in neighboring jurisdictions, resulted in negative earnings of $15M to this point in the fiscal year. Even with the impact of the storm, NB Power is still forecasting positive earnings for the entire fiscal year as it has since the beginning of the year.

"Record cold temperatures like we had in December affects our customers and impacts our finances as well," said Thomas. "To meet those peak loads that come from the extra customer demand for heating, we needed to run our most expensive generation and buy additional electricity on the New England market, where utilities such as National Grid rate increases reflect ongoing infrastructure investments, at very high prices. That's why our long term strategy is all about reducing and shifting that peak to save customers money on their bills."

Given the impact of the holiday storms, NB Power is already preparing for an expanded tree trimming program, as sector finances including Manitoba Hydro's debt remain under scrutiny, which is expected to get underway in April and May. This will include some clean-up activities as part of NB Power's regular spring tree trimming preventative maintenance program.

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