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June 12, 1998
(Justice)

The following is being distributed at the request of the Consumer Advocate:

Economist states economy good for consumers and Newfoundland Power

Dr. James Feehan, an economist with Memorial University, told Commissioners at the Public Utilities Board today that "the prospects for the economy are positive and are the best that they have been in some years."

Professor Feehan was testifying on behalf of the Consumer Advocate in a hearing called by the Board of Commissioners of Public Utilities to review Newfoundland Power's rate of return. Currently Newfoundland Power is receiving a rate of return of 11.25 per cent and experts have stated that the rate of return should be lowered so that it does not exceed 9 per cent.

Today Dr. Feehan testified as to the economic forecast for the province. Dr. Feehan stated, "Economic forecasts are for income growth and increased employment in 1998. Medium term forecasts are for strong growth to continue for the following years. Events at the national level, as well as local developments, are both generally favourable to the economy."

Dr. Feehan concluded, "Every indication is for positive economic growth and employment growth for this year and the medium term. If Newfoundland Power could manage small increases in sales during the economic troubles of 1990 to 1997 then it is well positioned to see more sizeable increases in sales volume in a growing economy characterized by low inflation, low interest rates and a favourable medium term outlook."

Dr. Feehan was the last witness to testify on behalf of Consumer Advocate Dennis Browne. The hearing will conclude on Thursday when the board hears final submissions from the parties.

Contact:     Dennis M. Browne, Q.C.
                  Tel:   (709) 754-1800
                  Fax: (709) 754-2701
                  E-Mail: mgk@roadrunner.nf.net

1998 06 12 4:05 p.m.