The Moncton Free Press   est. 2011

Public knowledge is the foundation of democracy.  Is the media in New Brunswick giving us the unbiased information that we require?  J.K. Irving owns virtually all of the English language newspapers in New Brunswick.  On the way to building this monopoly, Ken Langdon, owner of the Carleton Free Press, became the latest victim of the Irving machine.

Acadie Nouvelle, a French language daily is now under siege. The Irving owned L’Etoile is distributed for free to destabilize their finances.  How can an ordinary business compete against free?

Rod Allen’s T&T column of Oct 29 was a recent volley in the fight against L’Acadie Nouvelle.    Both English and French New Brunswickers will be the losers if this monopoly becomes absolute.  Where is the federal competition bureau?

Why does the Irving family want control of the media in New Brunswick?

• To control the message – Irving promotes stories that help Irving businesses.   Do you remember the sale of NB Power and the volume of promotion to try to close that deal?  That sale would have provided ~$60M a year to Irving companies by lowering power rates.  Unpleasant stories about the family avoiding taxes or pollution issues just don’t see the light of day.
• To control the political agenda – better control of politicians means laws can be changed, contracts awarded, or subsidies to the Irving Family remain intact.
• To influence you to accept their behaviour as normal – To promote the fiction that they are good corporate citizens.

What can you do?   Stop supporting Irving businesses.  Complain to advertisers who use the Irving newspapers.    Read more about the issue of media concentration. Let your local politician know that you want change.  http://journals.hil.unb.ca/index.php/JNBS/article/view/18192/19610

http://www.dominionpaper.ca/features/2003/11/10/freedom_of.html

Resources on facebook:  New Brunswick is NOT for sale    Occupy New Brunswick    Protesting the Times & Transcript’s Biased Views                       Occupy Moncton

It’s not so easy to be green.  A recent article suggesting that a high school replacement at Royal Oaks would be “green” lacks some perspective.  It is over 7 km distant from the existing Moncton High.  It is over 3 km to the nearest residential populations making it necessary to bus virtually all students for the lifetime of the school.  Extra-curricular activities will require that parents pick up their children with a car.  That’s the opposite of eco-friendly.

A recent Canadian military report Army 2040: First Look, suggests that “Global reserves of crude oil could become problematic by 2025.”   Others believe the problem is already here and that all of our major capital decisions, like this, should consider this fact.  In simple language – the world is going to change dramatically and the majority of students will be walking to schools in the future.  The Department of Education should be planning for schools on this basis.

Moncton has been consulting with its residents about the type of city that we want and need in the future.   “Plan Moncton” is the process.  (Sustainability, increased density, better urban transportation)  How will we transfer those ideas into reality if we accept proposals which are formulated primarily to meet the needs of a developer?    Moving the school away from the area that it serves promotes urban sprawl and a vehicle-centered life whose future is ending.

I’ve been told that a new school is considerably cheaper than a renovation project.  If that is a primary motivation, a new school could be built adjacent to the existing school on Church Street as the property is large enough.  A transfer of some architectural elements to the new building would preserve the memories of the past but permit an overall energy footprint that truly is green.

Roy MacMullin

Energy Advocate, Green Party of New Brunswick

English high schools with 2 km walking radius

A long term energy policy.

Our NG supply is presently coming from Sable Island.  By roughly 2017, it will be nearing depletion and unable to supply New Brunswick.   Western Canada gas is not connected to Atlantic Canada by pipeline.   One alternative is the use of LNG arriving from countries like Algeria and Qatar, which introduces questions about security of supply and prices in coming decades.  Our world will increasingly be defined by energy shortages, energy nationalism, resource wars, and competition for those dwindling supplies.  It is possible that we might import from the US, itself a large user of natural gas.                                                                                                                                                                                                                                 Note that 3% of Canada’s natural gas production is from Atlantic Canada and only a very small percentage of that is from New Brunswick – Corridor Resources.   As the conventional natural gas supplies in NB and NS play out, the size of unconventional reserves (shale gas) is still unclear.  Recent wells by Apache (a partner of Corridor), who drilled horizontally into the shale level, were unsuccessful.                                                                                                                                                                   The recent provincial Energy commission report suggests expanding the use of natural gas within the province, but makes no mention of restricting usage or export levels of New Brunswick gas to ensure adequate supply for our children and grandchildren.  We have no solid evidence of a viable in-province supply at this time.   There is plenty of hype surrounding the expectations of shale gas resources in North America.

The existing royalty structure

New Brunswick has little rational incentive to exploit its natural gas given the return on energy supplies.   Any businessman would be reluctant to rent a property for 5% of its value, let alone sell off a non-renewable energy resource of strategic value in the future.

Our present royalty is 10% of the wellhead price.  Given the subsequent deduction of costs, we see in 2010, a recovery of 2% of the revenue of the production from Corridor.  The current glut on the Boston market and the structure of the royalty ensure that we receive a minimal return.

Public confidence in the government of New Brunswick.

The extensive development of natural gas proposed requires the consent of the people of New Brunswick.  The experience of about 60 families in the Penobsquis area with water problems and subsidence cracking basements and creating sinkholes in fields has caused a confidence gap between citizens and their government.  Based on government responses to the problems caused by the Potash mine, we can predict that anyone having water quality issues related to hydrofracking will be “on their own” in regards to seeking justice.

The government of New Brunswick has refused to release the data related to subsidence gathered by a consultant required as part of the mining process so that the families can defend their rights before the mining commissioner.   Will the same approach apply to water testing by shale gas companies?  How is it possible that we allow the socialization of the environmental problems of industrial activity to innocent citizens while the Potash Corp made $1.8 billion of profits in 2010?

The economics of natural gas.

Horizontal drilling and fracturing are necessary to get gas out of the shale rock and this costs more than conventional vertical drilling.  A shale gas well’s production will decline at significant rates of 65% per year or more, which means that constant drilling is necessary to maintain production levels.   Although the cost of a well in Arkansas may be as low as $3 Million, the Apache wells in Elgin cost about $12 million each.  The breakeven point for shale gas may vary from $5 to $8 /mmbtu.

The initial rush of drilling in the US has driven market prices for natural gas down to $4 per mmbtu or less.   This is below the cost of production leading to less drilling taking place now.   It is now 20% of US production, which has reduced the export volume and prices of Canadian natural gas sent to US markets.

The Energy Report by Thompson / Volpe suggests that natural gas prices will remain stable in New Brunswick for the next ten years.   This seems unlikely given that availability of gas is dependent on companies actually making a profit.   It is more likely that as depletion takes effect, oil prices rise and natural gas displaces some functions of oil, then NG prices will again rise.

The problem remains that New Brunswick is poorly positioned to compete against shale gas originating in the US.  One can see from the chart of prices, that although volatile, the price has rarely stayed over $8 / mmbtu for significant periods.  The cost of transport to market is about $1.40 per mmbtu or 20% of the market price.   Our prediction – Natural gas will remain a boom and bust industry with hardship for companies drilling in New Brunswick.   We might consider a different economic model for this industry.

The distribution of natural gas -Enbridge

Starting a new distribution network is an expensive business and building a customer base requires time.  Enbridge expected to lose some money in the initial years.  However, the conversion rate of customers has been slower than anticipated.  So far, Enbridge has lost about $170 million which would be paid back once they start to make money.  To attract customers, they have offered between 10 and 20% savings over oil and electric rates.  When oil prices went up, so did the delivery charge and this has caused some concern among the industrial customers, like Flakeboard.  The very large industrials get a bypass license so they get the very best price.  The government is presently renegotiating the terms of the 20 year agreement which ends in 2020.

Fracking, a questionable practice

Fracking is a complex process.  Without fracking, shale will not release natural gas.  To get large volumes of gas, many wells would need to be drilled each year.  How often does fracking result in cross – contamination of the water supply?  We know the answer is not zero.  Is it 1%, or is it 10%.  Is there an acceptable level of failure?  The people who are affected would say no.  They take the risks with no compensation or protection.   We are drilling without acceptable standards, and without adequate inspection.    Will the prior water testing be in the public domain?

Conclusions:

Our present approach to natural gas fails on many levels.  One senses the desire to export at any cost and with limited economic return.  We are at the end of the fossil fuel era, clearly evident by the costly development of a low quality resource – shale gas.    We are left with many questions and decisions to be made.  We need a moratorium on drilling to have time to answer many of these questions.

• What is the level of industrialization of the province that we are prepared to accept?
• How can we protect those citizens affected (Penobsquis) and rebuild the confidence of the people?
• Can we improve the royalty structure or should we have a totally different model.
• Should we use natural gas to produce electricity given its lower efficiency rating? Should we consider gas New Brunswick’s ‘transition’ fuel easing the difficult switch to renewable energy sources?
• Should we export the resource, or use it in-province over a century? Do we want the responsibility for US energy supplies as fossil fuel cost skyrocket?
• What are the standards, the inspections, the water quality testing and the insurance that provides the best protection possible?
• Might leaving shale gas underground be the best gift we could leave for our grandchildren?

True or False?   Our common heritage, the natural resources of the province, is being managed in a competent manner by the government.   Recently, I looked at the money being received by the province from natural gas production. Here are the results of my investigation.

A royalty is a payment to the owner of an asset for its use.  For example, if you pay rent of $900 per month on an apartment that is worth $80,000 per unit, that’s effectively a royalty of 13.5% per year that you pay for the use of that asset.

To develop a natural resource, governments often assign a block of land based on a bidding process, prospective sites are drilled by a company, connected to a pipeline and the gas produced is sold until the wells are empty.

So the valid questions seem to be – First, are we getting a fair price for our non renewable gas resource? Secondly, how fast is the resource being depleted and will there be any left for our children and grandchildren?  In other words, are we using the resource in the best possible manner?

In the years from 2003 to 2010, the major producer of natural gas in New Brunswick, Corridor Resources paid royalties of between .5% and 8.2% when expressed as a percentage of natural gas revenue.  The average over the period has been 5.3%.    Typically, one would compare royalty regimes with other jurisdictions as a basic sanity check.

For example, Alberta collected $5.8 billion in natural gas royalties in 2009 – that’s 17% on sales of $34 billion, with a sliding royalty scale of 5 to 36% depending on various factors.  Nova Scotia’s on-shore royalty is similar to New Brunswick.  Generally speaking, if you collect higher royalties, you are better off.

The New Brunswick regulation reads, “The royalty on natural gas shall be ten per cent of the actual selling price or fair market value at the time and place of production, whichever is the greater, free and clear of any deductions”

The key phase being “place of production” (being the wellhead), is interpreted to mean the company can deduct many things (amortization of processing equipment and connection pipeline, and transportation tariffs to Boston), prior to its 10% calculation.  10% of a reduced figure can be quite small.

Worse, the North American price is exceptionally low this year and will be into the future, due to a North American glut of gas caused by increased production by horizontal fracking of shale gas in many areas.  In 2010, the company expects to pay New Brunswick less than 2% of the value of sales as a royalty. (Roughly $500,000 on $26M).   In fact, the amount due to the province will be less than stock based compensation given to executives of the company.

Corridor certainly isn’t complaining about its royalty conditions.  A report entitled “Global Petroleum Survey 2010” by the business-friendly Fraser Institute surveyed the differing investment climates based on corporate responses to royalties and other factors.   New Brunswick isn’t even mentioned, unlike NS, NFLD, Que, Man, Sask, AB, BC and the rest of the world.

The nature of the natural gas exploration business means that once you have committed many millions of dollars to drilling, you almost have to sell no matter what the price.  Selling at a loss at least gives some cash to hold on for better times.

The 3^rd quarter results of Corridor Resources shows each unit of gas (1 million Btu’s) sent through a pipeline all the way to Boston for a $1.46 tariff, the gas sold for $3.50 per unit.  The company lost $2.17  on each unit of energy delivered, and New Brunswick received a 3 cent royalty.   Put another way, the typical home uses 100 million Btu’s to heat it, so Corridor is selling the energy wholesale for $350 per home in Boston and losing $217. The New Brunswick government received the princely sum of $3 per home as a royalty.   Can it get any worse for the government or Corridor?

New Brunswick has the downside of extremely low royalties when the market price is low or production is low, and just plain low royalties when prices are high.

When a tenant can’t pay the rent, he gets thrown out.  Here in New Brunswick, we’ve designed the royalty of natural gas to go so low that nobody gets evicted.   We seem to be happy to give the resource away, just to have a few truckers hauling fill for roads or water for fracking the well.

We don’t seem to realize that we can have both – a decent royalty and jobs.  Horizontal drilling of shale gas is the last hurrah before the end of natural gas.  We can set the terms and companies will eventually come to a viable resource. But it will take creative thinking to devise a win/win situation.

The story of natural gas continues in the next installment of this series.

Roy MacMullin is the energy critic for the Green Party of New Brunswick and a writer on energy topics.

“The Liberal government of Shawn Graham has proposed a transmission tie project between New Brunswick and Nova Scotia, which will provide little benefit to New Brunswick.  It’s a magic trick to distract voters from the failed Liberal attempt to sell NB Power” according to the Green Party energy critic, Roy MacMullin.  “With their credibility gone, they can’t do the right thing, what Vermont did – Just buy energy from Quebec.”

An SNC Lavalin report on the Nova Scotia electrical system suggests that “another intertie with New Brunswick would be very desirable to assure reliability and continuity of the supply.”  But the cost for New Brunswick may be as high as $250 million depending on the level of reinforcement required within the province.  We could see an increase in power rates of 2%.

NS Power’s system is presently susceptible to outages if the NB Power line disconnects during a time in which power flow is in the direction of Nova Scotia.  The proposed line would provide a parallel path that corrects the weakness of their system.

All three Maritime Provinces are increasing their wind power portfolios and while a stronger connection may allow easier balancing of wind power variability, these short-term load transfers do not make a business case for this line.

The Green Party instead believes that the first priority for New Brunswick, PEI, and Nova Scotia must be to jointly negotiate a power purchase deal with Quebec, and to support the associated strengthening of transmission capacity from the Quebec / NB border eastward into Nova Scotia and PEI.

This Atlantic Canada link could be part of a national “East-West” program of High Voltage Direct Current (HVDC) transmission links to move hydro power from areas of surplus to provinces trying to reduce their carbon footprint.

“Ideally, the federal government would show leadership in this area by providing green loans to provinces for the construction of renewable energy generation and transmission initiatives like this.  We would see significant reduction in Greenhouse gases, and provide an alternative for some of the nearly 400,000 homes in Atlantic Canada that are heated by fuel oil, using 1.4 billion liters a year.”

MacMullin warns that “our dependence on fossil fuels is a national security issue.  We require urgent action to retrofit our homes, to build renewable energy, to transmit hydro and many other initiatives.  We will see increased oil prices by 2012 and into the future.  If we do nothing, it will cost Canadians annually billions of dollars above today’s costs.”

This HVDC electrical transmission line would allow Newfoundland to connect its Lower Churchill project and send power to the Maritime Provinces when its project is completed.

Reference documents:

http://www.nbso.ca/Public/_private/10-Year%20Outlook%202010.pdf

http://www.gov.ns.ca/energy/resources/EM/renewable/NS-Transmission-SO-Options.pdf

http://www.acad-eng-gen.ca/documents/VolumeI-Eng.pdf

http://www.acad-eng-gen.ca/documents/VolumeII.pdf

http://www.nrcan-rncan.gc.ca/eneene/sources/petpet/reprap/2008-11/supoff-eng.php

Pour publication immédiate – le 28 juillet 2010

Pour des renseignements -

Roy MacMullin, critique en matière d’énergie – Parti Vert NB

506-962-3500 (cell)

La coopération est merveilleuse, mais ceci est le mauvais projet.

« Le gouvernement Libéral de Shawn Graham a proposé un lien de transmission entre Nouveau Brunswick et Nouvelle-Ecosse, qui fourniront peu d’avantage au Nouveau Brunswick. C’est un tour magique pour égarer des électeurs le plan Libérale ratée pour vendre l’EnergieNB » selon le critique d’énergie de Parti Vert, Roy MacMullin. « Avec leur crédibilité fini, ils ne peuvent pas faire la chose intelligente, que Vermont a fait – l’achat de l’énergie du Québec ».

Un rapport de SNC-Lavalin sur le système électrique de Nouvelle-Ecosse suggère que « un autre intertie avec Nouveau Brunswick sera très désirable pour assurer la fiabilité ». Mais le coût pour Nouveau Brunswick peut être aussi haut que $250 millions qui dépend du niveau de renforcement necessaire dans la province.  Nous pourrions voir une augmentation dans les taux de l’électricité de 2%.

Le système du NS Power est susceptible aux interruptions de courant si la ligne à haute tension du N-B débranche pendant un temps dans lequel N-B alimente le N-E.  La ligne proposée fournirait un circuit parallèle qui corrige cet faiblesse de leur système.

Toutes les trois Provinces Maritimes augmentent leurs portefeuilles d’énergie éolienne et pendant qu’une plus forte connexion peut permettre la balance plus facile de variabilité d’énergie éolienne, ces transferts de chargement à court terme ne font pas un cas d’affaires pour cette ligne.

Le Parti Vert plutôt croit que la première priorité pour le Nouveau Brunswick, L’IPE et la Nouvelle-Ecosse doit être conjointement négocier un achat d’énergie avec le Québec et fortifier la capacité des lignes de transmission de la frontière du Québec jusqu’a la Nouvelle-Ecosse et L’IPE.

Le lien entre les provinces Atlantique et le Québec pourrait faire partie d’un programme national Est-Ouest des lignes de transport. Ces lignes utiliseraient courant continue haute tension (CCHT) pour déplacer hydro-électricité des secteurs de surplus aux provinces qui essaie de réduire leur bilan carbone.

Idéalement, le gouvernement fédéral montrerait la direction dans ce secteur en fournissant des emprunts verts aux provinces pour la génération d’énergie renouvelables et d’initiatives de transmission comme ceci. Nous verrions la réduction significative dans les gaz à effet de serre, et fournir une alternative pour certains de presque 400,000 maisons dans les provinces Atlantique qui sont chauffé par le pétrole, utilisant 1,4 milliard de litres par an.

MacMullin avertit que « notre dépendance sur les carburants de fossile est un problème de sécurité national. Nous exigeons l’action urgente pour rééquiper nos maisons, construire de l’énergie renouvelable, transmettre l’hydro et beaucoup d’autres initiatives. Nous verrons des prix du pétrole augmentés par 2012 et dans l’avenir. Sans actions, les Canadiens payeront annuellement des milliards de plus qu’aujourd’hui ».

Avec la nouvelle ligne CCHT, Terre-Neuve pourrait brancher son projet de bas Churchill et envoyer l’énergie aux Provinces Maritimes dès que son projet est complété.

I sent this article to my opinion page editor on March 8, 2010.  Some communication followed.  On the 15th, I wrote indicating that I would interpret no response as a negative to publication.  I included my thanks for the opportunity to have published articles in the past (more than 80, I think) but will not be writing again for the TJ under these conditions.

I have not heard back that they would or would not publish.   Sadly, we have a problem of media concentration that is unparalleled in the free world, when virtually all of the print media in New Brunswick is owned by one industrialist family, the Irvings.  This concentration affects the politics of the province and the level of democratic communication.

To be fair to the paper, they have published letters  and op-ed pieces against the deal.  However, that doesn’t really compare to the constant barrage of editorials and front page news articles that trumpeted the public relations framework of the government.  One can expect a newspaper to exhibit a bias at times, but where it becomes problematic to society is when the owners of the papers are the beneficiaries of the government deal they are promoting through their media.   That’s what we call a conflict of interest that is beyond acceptable levels to our democracy.    On Wednesday, the 24th of March, Premier Graham announce the end of the deal.

Is the NB Power–HQ deal a little clearer now that four months have slipped by?   Are we getting answers?  A parallel might be drawn between the changing reasons given for the Iraq war and this humble deal.

Initial spin suggested that the Iraq war was about weapons of mass destruction, or bringing democracy to people formerly living under a dictator.  That changed as journalists woke up and realized the inconsistencies.  Actually, the Iraq war was about oil, the geopolitics of the Middle East – control of which countries get a share of the diminishing oil supply in coming years.  American soldiers aren’t leaving the Middle East in the near future.

Logically, the NB Power sale was never about the debt of NB Power, and it wasn’t about reducing carbon based electricity and its pollution.  The Premier is selectively worried about debt, abandoning the debt reduction work of Bernard Lord, and becoming the deficit king of New Brunswick.  Further deficits are promised until 2014 including Mr. Graham’s plan to waste a billion dollars twinning Route 11 in the twilight of the petroleum age.

If the goal was to reduce our use of carbon fuel in our electricity mix and stabilize the volatility of fuel in our expenses, then a simple power purchase agreement with Quebec for roughly 7 TWh per year would have sufficed.  But that isn’t what happened.  The deal was exceptionally complicated, and to make matters worse, the public relations campaign purposely did not release much information or answer questions leading to a frenzy of concern among a large number of New Brunswick residents.

The government’s handling of the deal isn’t getting much better but the newspapers of the province are ensuring that proponents of the deal are given excellent coverage in all papers.  A quick guess is that 9 out of 10 stories covering the deal have been favourable.

The Irving family owns virtually all of the daily and weekly newspapers in the province and most of the largest industries.  They will benefit the most from this deal, to the tune of roughly $40 million a year.  Is the favourable media coverage given related to the benefits obtained from this deal?  Perhaps this is just a coincidence.

Many are questioning the independence of the media and searching for ways to create an independent media who ask the right questions.  Are the interests of the Irvings aligned with the interests of the province? On a recent CBC panel on media concentration, three political parties acknowledged the problem, calling for a review and changes to the ownership of media in New Brunswick.  According to host Terry Seguin, “The Liberal party declined our invitation to participate”.

The media campaign has had some success in promoting panic about NB Power’s debt.  As well, the tactic of the PR campaign has been to always compare the proposed deal to doing nothing.  Alternative ideas aren’t to be discussed.

Some of the basic questions that are not being asked or answered are:  Why is there no cap on inflation in this deal?  After all, HQ’s costs are largely immune to inflation, being largely long-term debt on power dams.   Does the lesson that Newfoundland is painfully learning with their contract until 2041 mean nothing to us?  Professor Donald Savoie is worried about inflation, but Jack Keir isn’t concerned.  In fact, why would we use a CPI based price adjustment mechanism at all?  Cost based regulation plus a profit is a much more responsible method.

Why are large industries being given a permanent untargeted subsidy on rates without EUB consideration and approval?  For example, why do profitable businesses like Molson-Coors, among others, require lower rates?

What will be the role of the public regulator who can’t examine 80% of the cost structure of the utility and can’t address industrial rates?  I suppose that they will still be able to calculate the rate for gas and fuel oil each week, so it may keep someone busy.

When changes are made to the deal but benefits to industry remain, it indicates clearly what is the central part of the deal.  The size of the bailout is close to two Atcons per year.  The 41 industrials get the savings up front and when the deal goes sour, they are given an exit ramp to find other sources, while the citizens of New Brunswick are on the hook forever.

Based on public opposition, legislative hearings are now scheduled but no changes in the deal are planned.   We should remember that although Quebec has ten times our population, it has 100 times the political clout in Ottawa.  As Newfoundland found out, there will be no political salvation for New Brunswick if any error exists in the deal.

“The grain grown to produce fuel in the U.S. (in 2009) was enough to feed 330 million people for one year at average world consumption levels,” Lester Brown, the director of the Earth Policy Institute, told the Guardian newspaper, underlining the level of folly related to our world food system.

When the economy contracts like in 2008, it affects people. More people are unemployed, but still need food. We can view “the food system” as an economic issue — it costs us $152 on average each month to retain our weight and not starve. Given the population of New Brunswick, that’s $1.4 billion per year we spend. For a family of 2.2 persons, that is $4,012 per year out of your budget. Of course, these are averages and can vary.

For farmers, the business is changing. The 2006 census figures show 2,776 farms in New Brunswick, down more than eight per cent from 2001. Farmers say that the average age of those feeding the people is becoming critical. We know it’s important to look at demographics, and especially the farm scene, before it’s too late. Across Canada, statistics also tell us that the size of farms is growing, becoming more focused on the industrial agriculture export model. Even with this productive model, there are a billion people in the world who are food insecure.

Looking forward, can an industry that relies on cheap oil to plant, harvest and transport food large distances to market be really sustainable when oil production declines?

I just read a report from Kuwaiti professors who indicate peak oil will happen in 2014. Some say we’re already there. When the cost of oil rises again, what will it mean for farmers who are already financially stressed? What will the industrial agriculture export model do? Will sending food around the world be practical? Where will our lettuce and tomatoes come from? If the world’s population cannot be supported by the present model without oil, is there an alternative that will enable us to adapt?

There are groups who are resisting the commodification of food. Henry Saragih, General co-ordinator of La Via Campesina, a group that represents small farmers around the world, says “in our model human beings work the land to produce food to satisfy the needs of local communities and at the same time protect our common goods like land, water, native seeds, and also our local culture and our history.”

All over the world, conflicts between the industrialization of food and the family farm are playing out. So far, industrialization is winning.

Against this backdrop is the local food concept. Can we have a stronger and more resilient local economy when we produce more food for a local market? Can we encourage urban dwellers to produce some of their own food either on their own land or in community gardens? How can municipalities help? Can we strengthen our local food systems so farming is chosen by more young people? In addition to the resilience that such a change would bring to our communities, the partnerships of farmers and eaters builds community links, something lacking in our society that identifies us only as consumers.

Some of the partnerships possible are CSAs (Community Supported Agriculture) where citizens contract with local farmers to buy produce, taking on some of the risks but also some of the benefits. A second type of partnership might be governments using creative financing or leasing land to young farmers to reduce the entry barriers for them.

There’s a local food forum planned this Sunday 12:30-4:30 p.m. at the University of Moncton’s Student Center, free admission. The purpose is to share information and build strategies on local food and issues related to food security. It will be of interest to farmers, restaurant and tourism operators, NGOs, and local interest groups. The general public is also welcome.

The food forum was a great success bringing together a diverse group to talk about the problems and solutions that are possible. / RRM

Well… maybe not. We’re still in the dark when it comes to the case of NB Power’s proposed deal with Hydro-Québec.

Reading a story from journalist Hélène Baril in the newspaper La Presse helps out a little. She suggests that the complaints of Quebec’s large industries, which wanted to keep a competitive advantage, forced a reduction in the discount to New Brunswick large industries. It seems Quebec has already more influence on New Brunswick rates than our own Energy and Utilities Board.

Reports were released last week by two different citizen panels. One was from the advisory panel appointed by the Liberal government with the mandate to examine “whether the proposal would represent the best interests of New Brunswickers.” We should thank the six members of the panel for their participation while working under some major handicaps. The mandate that they were given was extremely narrow, the witnesses appearing before the panel were generally proponents of the deal, and the testimony of the experts was not released to the public. As with other parts of this deal, the process was flawed.

Despite this, some of the positive aspects were its recommendations in favour of a provincial energy policy, that energy conservation measures be greatly augmented, that rates not be frozen for five years to absorb the cost of the deferral account from Lepreau replacement electricity, and that the EUB be strengthened.

What is particularly ironic is the rates of a power purchase agreement being arbitrarily set in the back room by the crudest power politics we have seen in this province. Has the government purposely avoided the EUB because they understand that the 23-per-cent rate subsidy to large industrials is unjust public policy? The EUB has historically pushed for rate equity among differing classes of customers. But luckily, we are told that the EUB will be strengthened (after this stab in the back). It’s just too funny for words.

The idea of a long-term power purchase agreement from Quebec is certainly a win-win situation for both parties. The major benefits to New Brunswick in the areas of carbon emission mitigation, fuel risk, pollution control and financial stability all flow from the power purchase agreement.

We should be considering a 7 TWh block of power, as Point Lepreau Nuclear Generating Station and the hydroelectric plants (in our hands) would provide close to 8 TWh. One concept that might be interesting to discuss with Quebec is a wholesale contract with time-of-use pricing. Customers using off-peak power would benefit from even lower rates.

The Ganong panel did not address whether annual increases to the contract tied to the Consumer Price Index should have a cap to protect against times of high inflation, which is a real possibility.

The sale of power plants adds considerable complexity to this deal but little benefit.

Without the release of documents that support the fairness of the sale prices, doubts will remain.

For example, a rebuilt Point Lepreau will have cost us close to $2 billion to refurbish. We have a special discount on today for $1.4 billion, and we will be giving Quebec the $400 million decommissioning fund, so the net gain to us from the sale will be just $1 billion. The cost of a kWh from Hydro-Québec-owned Lepreau would be roughly 5 cents, given synergies with Gentilly, their nuclear plant. They will sell it back to us at 7.35 cents.

There could be an argument made for the sale of Lepreau, given its size related to our power system, but only if the price is right.

The second report released last week was from a coalition of 20 prominent New Brunswickers of varying professions. This group believes that a power purchase agreement is necessary but rejects the transfer of generation facilities to Hydro-Québec and the subsequent lack of control over our power system. We should also thank this group for adding to the quality of discussion on the deal.

Many believe there is an alternative path instead of the memorandum of understanding or the status quo that will solve the problems that the government has highlighted. These New Brunswickers are not prepared to follow Premier Shawn Graham beyond a simple power purchase agreement.

While Premier Graham is free to choose his destiny, perhaps this deal should be referred to the EUB for analysis and recommendations prior to signing?

We all want to find the best solution, so asking the right questions may ensure that our future is indeed bright.

So, it’s pay down debt and then incur larger debt? What doesn’t make sense here? What most people may not understand is that replacing a funded debt with an unfunded debt is a small distinction that will cost them dearly.

Higher debt means higher taxes at some point. Paying for the new $3.8 billion debt will take about $300 million in additional revenue or service cuts by 2014. That could mean a tax increase of $400 for every resident of New Brunswick or, for a family of 2.2 persons, $880 per year.

Now, are the savings from foregone power rate increases significant enough to counteract the new provincial debt being incurred? Well, the full debt arranged by Premier Graham and the full savings implied by the sale won’t be in place until 2014, so let’s examine at that date. Energy savings for the typical household are 15.92 per cent in year five, or $473, but the additional tax burden for the average family of 2.2 people is $880. So, the net effect of government policy will be an increased tax burden of approximately $407 a year. Not so good an idea. The effect on apartment dwellers is worse, as their energy savings are minimal.

Perhaps you think that large industry, the big winner in the 2010 rate sweepstakes, might contribute towards these taxes. Based on historical precedents, we probably won’t see them at the front of the line to pay any portion.

A previous column mentioned another inconvenient fact – lost revenue streams that could reach as high as $200 million dollars per year would erase the value of this deal, such as NB Power’s “in lieu of taxes” disappearing, reduced jobs at NB Power and related tax revenue. Expressed as dollars per year, that’s another $266 per person ($585 per family).

Politics is the fine art of kicking a problem down the road to the next guy. It is also the art of misdirecting the audience. Lower energy rates here, and nobody notices the higher taxes there.

We have a bad habit of giving a leader two terms. The present occupant plans to get finances under control by 2014, when his second four-year term ends. Any new premier will inherit a fiscal mess to deal with either in 2010 or 2014.

A recent Telegraph-Journal commentary by Toby Couture made an important distinction between energy politics and the larger framework of energy policy. Lacking a rational energy policy, we might be tempted to embrace this deal, and there are indeed attractive elements. However, the numbers don’t support the framing of this deal as a “money saving” experience for residential and commercial customers.

What will likely happen is that the loss of revenue streams will negate the benefits, at least for residential customers. And quite co-incidentally, the premier’s lack of fiscal control will increase net costs to New Brunswickers for taxes and electric energy.

The idea of lowering the cost of energy is fundamentally flawed. Conservation and innovation happens with higher energy prices, and waste occurs with low prices. By choosing this approach, we ignore reducing energy usage for homes, make renewable energy policy next to impossible, and we risk losing control of our energy costs in the long term.

There’s a real alternative out there, and perhaps we can save the best aspect of Shawn’s initiative. More to come..