Energy Plan - Government of Newfoundland and Labrador

Power to identify synergies to ensure that all consumers are being served
appropriately. Newfoundland Power, and its parent company Fortis, are strong
and committed Newfoundland and Labrador based companies that manage their
assets efficiently and effectively. Urban electricity distribution activities are not
critical to the mandate and strategic priorities of NLH and will continue to be
managed by Newfoundland Power. In summary, the Provincial Government is not
contemplating changes to the current industry structure within the province.
The Provincial Government will continue to monitor the development of standards
of practices in the North American electricity industry, particularly market
rules, transmission access rules and reliability oversight. This will ensure we
are prepared to appropriately adopt these practices when we become more
electrically integrated.
The Fortis Corporation
Fortis Inc. has been a generator and distributor of energy for more than 120 years through its
operating companies. On December 29, 1987, the Corporation was created as the holding
company of Newfoundland Power to pursue profitable growth and diversification. Today, Fortis
is the largest investor-owned distribution utility in Canada with its head office based in St.
John’s, Newfoundland and Labrador. Since 1987, the Fortis Group has grown to ten companies
with approximately 5,600 employees. Fortis utilities serve approximately two million gas and
electric customers in five Canadian provinces and three Caribbean countries.
With assets approaching $10 billion, Fortis has holdings in regulated and non-regulated
businesses. Its regulated holdings include a natural gas utility in British Columbia and electric
utilities in Newfoundland, Prince Edward Island, Ontario, Alberta and British Columbia. Its
Caribbean electric utilities are located in Belize, Cayman Islands and the Turks and Caicos
Islands. The Corporation’s non-regulated businesses include hydroelectric generation assets
in Newfoundland, Belize, British Columbia, Ontario and upper New York State. Fortis also owns
hotels across Canada and commercial real estate primarily in Atlantic Canada.
Regulatory Process
With a couple of exceptions, electricity rates in Newfoundland and Labrador are set
through a regulatory process governed by the PUB. This process has focused on
maintaining low cost, reliable electricity service to customers, while balancing the
financial requirements of the electrical utilities, NLH and Newfoundland Power.
Over the past number of years, this process has become increasingly complex and
time-consuming. For example, between 2000 and 2004, NLH and Newfoundland
Power incurred approximately $20 million in costs in the process; these costs
were passed on to electricity consumers. It is generally recognized that a more
streamlined, timely and less costly regulatory model would significantly benefit
the rate payers of the province. The regulatory process must continue to protect
consumers by ensuring that electricity supply is adequately planned and is
provided on a reliable basis at the most reasonable cost. The process should
also incorporate broader considerations such as conservation and environmental
protection, in addition to cost and reliability. These important additions will
ensure that the electricity industry can address their responsibilities in a more
comprehensive way.
POLICY
ACTIONS
Regulatory Process
The Government of
Newfoundland and Labrador will:
• Streamline the regulatory
process governing the
electricity sector.
• Maintain the fundamental
regulatory principles
that currently exist, but
incorporate broader
considerations such
as conservation and
environmental protection.
• Affirm the lead role of NLH as
the long-term planning entity
for the electricity sector.
• Ensure that the regulatory
process can appropriately
accommodate Lower Churchill
and other power for use in
both domestic and export
markets.
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