Newfoundland Power is an investor-owned, regulated utility. Our regulator is the Newfoundland and Labrador Board of Commissioners of Public Utilities (PUB). We operate under cost of service regulation which is the most common form of regulation for investor-owned gas and electric utilities in Canada. A government appointed consumer advocate represents the interests of consumers in matters before the PUB.
As part of the normal regulatory process, we are required to file a General Rate Application (GRA) with the PUB approximately every three years to review our costs and operations. During a GRA we “open our books” for a full review by the PUB. This process allows us to recover the cost of providing service to our customers, including a fair return on our long-term capital investments. This process includes the active participation of the Consumer Advocate and other interested stakeholders.
A public rate hearing is held where sworn testimony is given by representatives of the Company and expert witnesses. A cost of capital expert evaluates and recommends a fair and reasonable return on shareholder investment based on financial and business risk. The PUB then approves an allowed return, along with customer electricity rates.
Our ability to provide reliable service to our customers is largely dependent upon the quality and condition of our assets. Providing dependable service means we must continuously invest in the maintenance and modernization of our electricity system. Our capital budget application is subject to extensive regulatory oversight.
The application is filed with the PUB annually, and outlines expenditures that allow us to upgrade and replace aged and deteriorated parts of our electricity system, increase capacity to accommodate new customers, add new technologies to increase operational effectiveness and improve overall customer service.