ST. JOHN'S, NEWFOUNDLAND AND LABRADOR--(CCNMatthews - May 10, 2007) - Newfoundland Power Inc. (TSX:FTS) today filed two applications with the Newfoundland and Labrador Board of Commissioners of Public Utilities (the "PUB") proposing changes to electricity rates for its customers on July 1, 2007 and January 1, 2008. If approved by the PUB, the net impact of the proposed rate changes will be an overall average increase to current electricity rates of approximately 2.4%.
Proposed July 1, 2007 rate decrease
For July 1, 2007, the Company is proposing an overall average decrease to current electricity rates of 2.9%.
This proposed decrease results from the annual review of the Rate Stabilization Account (the "RSA"). The RSA provides for adjustment to electricity rates each year on July 1 to reflect the price and amount of oil used by Newfoundland and Labrador Hydro in the generation of electricity.
"The price and amount of oil required for generation over the past year were lower than forecast, which results in a 2.9% rate decrease for our customers this coming July," said Earl Ludlow, President and Chief Executive Officer, Newfoundland Power Inc. "Rising oil costs have been placing upward pressure on electricity rates, so a rate decrease this July is positive news for our customers."
Newfoundland Power expects that the PUB will consider and rule on this application in the next month or so to allow an appropriate rate adjustment to be implemented on July 1, 2007.
Proposed January 1, 2008 rate increase
For January 1, 2008, the Company is proposing an overall average increase to current electricity rates of 5.3%.
This proposed increase results from a full review of Newfoundland Power's costs and customer rates which has been filed as part of its 2008 General Rate Application ("GRA"). As a regulated utility, Newfoundland Power periodically files GRAs with the PUB. It has been five years since the Company last filed a GRA.
"Newfoundland Power works hard to manage its controllable operating costs, and as a result, we have reduced our operating cost per customer by 13% over the past five years on an inflation adjusted basis," indicated Ludlow. "There are, however, several cost drivers behind the proposed rate increase, one of the main ones being depreciation costs.
"Over the past five years alone, we have invested approximately $290 million in capital projects. Our investments have benefited customers through a 39% decrease in the number of outages per customer over the same period."
The other principal cost drivers of this GRA relate to changes in accounting practices for retirement costs and the Company's return on equity.
Based on a detailed review of costs and customer usage patterns, Newfoundland Power is proposing in this GRA that the rate increase vary across each of its customer categories. The proposed increase ranges from 1.3% to 5.3% for commercial categories and will average 6.4% for residential customers.
"When setting electricity rates, it is important that the cost of providing service is fairly allocated and reflects the actual cost of providing electricity to customers in each category," added Ludlow.
Newfoundland Power expects that its GRA will be subject to a thorough public review by the PUB over the coming months.
"We recognize that any rate increase is significant for our customers," concluded Ludlow. "However, even after the proposed rate changes, our electricity rates for residential customers will remain the lowest in Atlantic Canada. We will continue to help all of our customers manage their energy usage and provide easy, practical tips on how to reduce their electricity bills through our Bright Ideas campaign."
Visit www.newfoundlandpower.com for more information on ways to reduce your energy usage in an effort to better manage your electricity bill, or to review Newfoundland Power's 2008 GRA.
With a customer base of over 230,000 accounts, Newfoundland Power is dedicated to providing the highest level of customer service and reliability in the most cost-efficient manner possible. All the common shares of Newfoundland Power are owned by Fortis Inc., a diversified, international distribution utility holding company with assets of approximately $5.5 billion and annual revenues of $1.5 billion. The Common Shares, First Preference Shares, Series C; First Preference Shares, Series E; First Preference Shares, Series F and Subscription Receipts of Fortis Inc. are listed on the Toronto Stock Exchange under the symbols FTS, FTS.PR.C, FTS.PR.E, FTS.PR.F and FTS.R, respectively. Fortis information can be accessed at www.fortisinc.com. For more information on Newfoundland Power's programs and services, visit www.newfoundlandpower.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
Newfoundland Power Inc.
Manager, Corporate Services
709-737-5674 / Cellular: 709-685-4242