The deferred revenue hocus pocus

Allowing regulated utilities to book ‘deferred revenue’ in theory is not a bad concept.  There may be times such as a new market development phase or even for refurbishment of a large asset but I think using the term in New Brunswick has not only been misused but I think it can superficially cover up larger problems.

Despite what anyone – any politician – tells you, deferred revenue is not much different than any other kind of debt. It has to be repaid out of future revenues (just as if you had borrowed it).  Sure, in accounting terms it is balanced on the balance sheet but in reality it is not some pile of cash out there that will come in – it will come it but from the rate payer directly.

Deferred revenues are a challenge for both NB Power and Enbridge – Enbridge far more so as it will need to inflate rates for 30-40 years – just to meet its own ambitious targets.

Anyone who thinks there are not big decisions needed on the energy file are deluding themselves.

This entry was posted in Uncategorized. Bookmark the permalink.