Newfoundland Power Inc. has reported that its electrical rates to customers will decrease in 2002.

"The application of the automatic adjustment formula in 2001 will result in an electrical rate decrease of approximately 0.6 per cent in 2002," says Barry V. Perry, Vice President, Finance and Chief Financial Officer, Newfoundland Power Inc.

The automatic adjustment formula, which was adopted in 1998 by the Newfoundland and Labrador Board of Commissioners of Public Utilities (PUB), is tied to long-term Canada bond yields and Newfoundland Power's invested capital and regulated assets. The formula is applied on an annual basis in November to determine Newfoundland Power's electrical rates for the coming year.

Newfoundland Power submitted the results of the operation of the automatic adjustment formula for 2002 to the PUB yesterday for its review. This year's application of the formula will reduce Newfoundland Power's annual revenue in 2002 by $1.9 million and reduce the company's mid-point for its rate of return on rate base from 10.28 per cent to 10.06 per cent.

"The automatic adjustment formula was adopted to reflect the impact of current market conditions on electrical rates without the expense of associated hearings," explains Perry.