The deferred revenue hocus pocus

Allowing regulated utilities to book ‘deferred revenue’ in theory is not a bad concept. ┬áThere 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). ┬áSure, 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.