The provincial government is going to soften the blow from an increase in electricity rates this summer.

The Public Utilities Board granted Newfoundland Power a seven per cent increase as of July 1st but government is tapping into a fund used to subsidize power rates for rural customers.

Premier Tony Wakeham has asked Newfoundland and Labrador Hydro to move $45-milion from the Rural Rate Alteration account to reduce the rate increase to 2.25 per cent for all island customers.

The premier says the fund has built up a larger-than-expected credit – about $45-million – due to delays in NL Hydro in filing its General Rate Application during the implementation of the Rate Mitigation exercise.

He has asked the two utilities and the regulator to work together to apply the surplus in a “clear and transparent” way.