1. Electricity Regulation and the Small
Consumer: The View from Main Street,
in Saint John’s North End
A presentation by
Kurt Peacock
2007/08 Crabtree Scholar in
NB Public Policy
UNBSJ

2. A challenge rooted in history: how does
regulation balance the needs of the small
consumer against the regulated entity?
“…The specialists who were to staff a regulatory commission would be
restrained by the data they commanded. Unhappily this need not be the
case. Emanating in large degree from the organizations to be
controlled, the data explored by administrative commissions can often
capture them. In such a pass, regulation may approach consent, and
stability becomes stultification. Nor do experts, any more than other men,
live by data alone. Besides common colds and ulcers, they develop
loyalties and habits. In government, as in business or in education,
administrators become to some extent the victims of their institutions…
[they develop] a fatal disinclination to innovation, sometimes to
formalized action beyond the shuffling of bureaucratic dust.”
- historian John Morton Blum, writing on the challenge of effective
regulation in The Republican Roosevelt

3. Some Views of NB Power, both
within and outside the Boardroom
• “New Brunswickers in all walks of life seem to agree that ‘electric power pioneers
prosperity’ – that its greater use goes hand in hand with higher productivity, earning
power, and a better standard of living for all its citizens.” - from a 1954 Annual
Report
• “…We continue to make decisions that consider all options to build and sustain a power
grid for the province that is safe, reliable, and fairly-priced for all New Brunswickers.”
- from a 2005 Annual Report
• “With the last increase to the power rates in New Brunswick…we will not be able to
heat our home…with our home being heated totally be electricity we will be in the
position this coming winter to either heat our home or feed our bodies.” - signed
Starving and Freezing in Saint John, a letter sent to the regulator in Fall 2006
• “It is simply morally wrong to manage a company in such a manner as to cause it to
be in debt all the time and not make more meaningful action towards those who make
the decisions to become more inwardly fiscally responsible. Any more hikes over the
next 5 years is simply out of the question for those who barely stay warm now.” - a letter
from the former director of the Fredericton Emergency Shelter, sent to the regulator in
December 2007

4. The tension between small consumers and the public
utility is one of the most pressing issues facing the
provincial regulator
• 1/3 of province’s public debt is owed by the NB power group.
These billions, combined with escalating fuel costs, are creating
significant rate pressures on the utility...
• 60% of low income quintiles rent, according to Statistics
Canada. This population, which includes a number of seniors,
lone parent families, and other demographic groups, is often
vulnerable to rate shock…
• While major users routinely take part in the regulatory process,
the vast majority of the population is far removed from the
public hearings. This usually means that hard questions
surrounding rate equity - not to mention less-defined issues
related to customer service (disconnects, interest penalties) - are
often under-examined at rate hearings

5. This report was
developed through
partnerships with:

6. In Saint John’s very high poverty neighbourhoods,
the majority of dwellings are rented. These
neighbourhoods are more dependent on government
institutions like the Rentalsman, and they are more
vulnerable to issues like energy poverty.
90.0%
80.0%
70.0%
Percentage of
60.0%
dwellings that
50.0%
are rented
40.0%
30.0%
20.0%
10.0%
0.0%
CMA City G.B.- Rothesay Quis pam s is Very High Fredericton Moncton NB Canada
Wes tfield Poverty DAs

8. The Energy Challenge is especially pressing on low-
income households, whose incomes are not keeping
pace with expenses
NB Minimum Wage in Constant 2008 $
$10.00
$9.01
$9.00 $8.70 $8.66
$7.90 $7.75
$8.00
$7.29 $7.24
$6.94 $6.99 $6.86 $7.02 $6.95 $6.87
$6.70 $6.59 $6.77 $6.84
$7.00 $6.48
$6.00 $5.69
$5.13
$5.00
$4.00
$3.00
$2.00
$1.00
$-
1965 1967 1970 1972 1975 1978 1980 1982 1985 1987 1990 1992 1995 1997 2000 2002 2005 2006 2007 2008

9. The Energy Challenge is seen in the number
of NB households whose power is
disconnected

10. A question of equity: NB Power charges its
consumers a much higher monthly service charge
than its provincial counterparts
This represents an
effective toll on the right
to use electricity

11. A question of equity: under its current rate design,
NB Power charges a higher rate per kWh to its
smallest customers than to its largest
The declining block rate represents an income redistribution
from poor NB residents to large consumers of energy

12. If we can have a consumer advocate for car
insurance, why not energy?
•The current provincial government
pledged a more activist role in energy,
but so far has been principally focused
on energy generation, promoting an
‘energy hub’
•New Brunswick residents need a full-
time consumer watchdog on the
energy file, to ensure that the
decisions being made by NB Power
and at the EUB are in the best interests
of small consumers
•An ‘energy hub’ should not simply
benefit those involved in production,
but should also extend its benefits to
the small energy consumer

13. How can we ensure that electricity regulation
benefits Main Street? Some Ideas…
• The level of co-operation between Efficiency NB and energy
utilities should be examined by the regulator. Low-income
households are often found in older, drafty units, yet they are
arguably more likely to face disconnection than participate in a
residential efficiency upgrade.
• The regulatory process must ensure that the rate design is not
discriminatory toward small consumers (i.e. no declining block
rate, lower monthly service charges)
• Pressure should be put on utilities to lower their interest penalty
from credit card levels, and disconnections should be closely
monitored
• Non-traditional interventions, including public comment days,
should be welcomed by the regulator
• Stronger oversight on the energy file should be encouraged,
including the establishment of a consumer advocate
• The idea of a provincial ‘energy hub’ should recognize that the
energy consumer comes first

14. A final word from Ms. Christina Payne, who
participated in the 2006 PUB rate hearing
• “…[being disconnected] was not a pleasant experience.
This could have been life-threatening for my daughter…In
Manitoba they have a law that prevents disconnections in
the winter. Why can’t we have the same law?…We need
more rules, regulations and laws to prevent my situation
from happening again…The point is fairness. Think about
families that are struggling to get by, especially in the
winter…This rate increase is something I can’t afford and
neither can other residents in New Brunswick. My
daughter needs power to live. Power is not only for the
wealthy, but for low income families as well.”