News Release

FREDERICTON (GNB) – NB Power has posted positive financial results for the third consecutive year as it confirmed today net earnings of $69 million for the year ended March 31, 2013.

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 NB 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 Energy and Mines Minister Craig Leonard, who is also minister responsible for NB Power. "With these results, we see once again that NB Power is doing an excellent job at managing its 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 reached a five-year high of $254 million, 10.3 per cent 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 per cent from the previous 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, board chair, NB Power. "Our strategy is for this revenue to continue to grow in years to come for the benefit of our ratepayers."

Total expenses 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 was down from 2,729 positions in 2008-09 as efforts continue to streamline operations and pursue more efficient processes in the company. With total customers increasing to 394,585, up one per cent from the year before, the staff-to-customer ratio 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 per cent in just a five-year period.
●    Hydro flows were the worst in 10 years, coming in at 95 per cent of the long-term average. This followed nine consecutive years of exceeding the long-term average and after generating 132 per cent 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 terawatt (one million 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 per cent 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 the Point Lepreau Generating Station on Nov. 23, 2012.

While labour costs decreased by$6 million, 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, both of which have 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, president and chief executive officer, NB Power. "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 the company’s 2012-13 annual report.