When the "expert witness" for Newfoundland Power
gave testimony to the PUB on April 4, 2016, in support of Newfoundland Power's
(NP) General Rate Application, one part of the evidence was disturbing in its
clarity. NP is seeking a rate increase with effect from July 1, 2016 of 3.1%.
If granted, the increase will up NP's return on equity to 9.5%.
This piece will not deal with whether NP's Application is
reasonable in its entirety. Of interest, here, is the Utility's claim to a risk
premium and its rationale justifying the higher return. Roughly a third (0.9%)
of the proposed 3.1% relates to this demand.
Readers may recall that prior to Muskrat Falls sanction
some people, including this Blogger, suggested the Province's electrical
distributor should weigh in on the debate over Muskrat. Newfoundland Power
stayed mum. But since DARKNL, NP has expressed a flood of concern, and with an
urgency larger even than a Spring freshet on the Lower Churchill.
