NB Power posts $69 m in earnings for 2012-13 fiscal year
Fredericton, N.B. - NB Power has posted positive financial results for the third consecutive year as it confirmed net earnings of $69 million for the year ended March 31, 2013 today. This follows earnings of $173 million in 2011/12 and $67 million in 2010/11. This period of consecutive earnings occurred during a three-year rate freeze for New Brunswick Power customers.
"Our government's ongoing transformation of NB Power continues to produce the right financial results for this province while, more importantly, keeping bills as low as possible for New Brunswickers," said Craig Leonard, Minister of Energy and Mines. "With these results, we see once again that NB Power is doing an excellent job at managing its own costs, while pursuing a smaller, more efficient and more sustainable company for the long term benefit of this province."
Total revenues for the company during the year increased to $1.697 billion from $1.646 billion in the previous four years. Highlights on the revenue side include:
- Out of province sales hit a five-year high of $254 million, 10.3 percent above the average of the previous four years. This was due to higher market prices for electricity and higher volumes of sales due to securing new contracts to sell energy.
- In-province revenue was relatively stable at $1.282 billion; an increase of 1.2 percent over last year, largely due to colder temperatures this winter compared to last year.
"Selling excess energy brings in important revenues that keep rates lower for our people and our businesses right here in New Brunswick," said Ed Barrett, Chairman of NB Power's Board of Directors. "Our strategy is for this revenue to continue to grow in years to come for the benefit of our rate payers."
Total expenses for the company increased to $1.577 billion from $1.495 billion in the previous year. Expenses were impacted by the following factors:
- Labour costs decreased by $6 million as staffing fell to 2,361 positions. This is down from 2,729 positions in 2008/2009 as efforts continue to streamline operations and pursue more efficient processes in the company. With total customers increasing to 394,585, up one percent from the year before, this meant that the staff-to-customer ratio has improved from one staff per 139 customers in 2008/09 to one staff per 167 customers in 2012/13. This represents an efficiency improvement of 20 percent in just a five-year period.
- Hydro flows were the worst in 10 years, coming in at 95 percent of the long-term average. This follows nine years in a row of exceeding the long term average and after generating 132 percent of the long-term average in 2011/12. The impact of the drop in hydro generation can be explained as follows: for the year, there was one Tera Watt, or 1,000,000 Megawatts, less generation from the hydro system than last year. This factor alone represented an impact of $49 million year-over-year.
- The cost of fuel and purchased power was $819 million in 2012/13, an increase of $77 million or 10 percent from 2011/12. This was due to lower hydro flows, and higher generating costs impacted by price increases caused by low supply of natural gas in the region, lower capacity from Point Lepreau than planned and overall higher fuel volume purchases due to additional peak energy required during the January to February cold spell. These factors were offset by a decrease in generating costs from last year due to the return to service of Point Lepreau on November 23, 2012.
While labour costs dropped by $6 million, OM&A (operations, maintenance and administration) costs were up $37 million overall. This included the following key factors:
- Costs of $15 million in extra labour, services and materials due to start up challenges at Point Lepreau. This was as a result of the requirement for boiler water chemistry adjustments and fuelling challenges which have both now been resolved.
- Costs of $11 million in hired services and materials related to the outages at the Coleson Cove and Belledune generating stations.
- $9 million in higher future employee benefits (pension benefits) due to a lower return on plan assets and a lower discount rate.
"This was a tremendous year for our company as we managed our own operations and resources very well for the benefit of our customers while dealing with this significant drop in hydro flows, the restart of Point Lepreau after more than four years off-line and a colder winter," said Gaëtan Thomas, NB Power President and CEO. "During the year, we also entered into our new strategic Smart Grid partnership with Siemens and this is the kind of long term investment that will pay off for future generations of New Brunswickers".
The complete financial statements will be released later in the summer as part of our 2012/13 Annual Report.