Things go better with “Coke”?

Recently NB Power came to Saint John to talk about the use of petroleum coke as a way to reduce the cost of heavy fuel oil for Coleson Cove now that Hugo Chavez of Venezuela has said no to an Orimulsion contract. A recent $750 million refit was based on the cheaper Orimulsion fuel paying for the upgrade. A significant part of the cost was to install environmental controls and according to the annual report that I picked up: SO2, NOx, and particulate rates have decreased greatly, by roughly 75% since 2005.

NB Power indicated to the assembled group that by using a mixture containing 20% petroleum coke, the savings could be in the vicinity of $60 million per year. This would tend to moderate upcoming increases in power rates. On the negative side, the “pet coke” has more carbon content and CO2 emissions would rise by 5% but would be offset by the introduction of wind power and reduced generation by oil at Coleson Cove.

Almost no one in the audience was receptive to a fuel that wasn’t clean and environmentally friendly. To tell the truth, Saint John is renowned for the large number of emitters of contaminants and CO2. Recent talk of an energy hub means that a proposed new refinery, an LNG plant and other possible projects has those who consider the environment to be of primary concern going into “sensory overload.” The number of people on the environmental side of the argument is increasing every day and the existing dynamic is changing.

When it was indicated that Coleson Cove would be reduced in output as a result of wind power, it was surprising to hear that shutting down Grand Lake plant, which has limited environmental controls and burns low quality coal, wouldn’t be the first choice. The answer is twofold, as Grand Lake supplies a cheaper production cost and the unspoken reason – retention of jobs in the Minto area.

Certainly it is a good idea to put the finances of NB Power in order and a less expensive fuel would seem to be a good way to do this. However, when reading the annual report of NB Power, I was left with some questions regarding environmental and financial items: For example, what is the present day and proposed corporate CO2 output in the coming years? Are there any reasonable possibilities for co-generation with existing plants to raise efficiency? These are issues that concern many people. 2005/06 was the first year in a while where export sales actually started to make money with higher revenue of $74 million. Better hydro production brought in an extra $54 million. This being the case, one would expect a good year but government withdrew an extra $50 million for Electric Finance Corporation. There may be a good reason for this. There are also the questions about the contracts with third party power supply agreements that cost $150 million in natural gas. The old PUB was not allowed to examine those contracts in the last hearings.

The annual report seems to skip over many important details or prevents the direct calculation of fuel costs for certain plants. The division of the company adds to the confusion with little apparent benefit. The debt jettisoned onto Electric Finance Corporation, an arm of the government allows the government to put its hand into NB Power’s pocket without a clear accounting for the results. The sooner the real debt of NB Power is returned, the sooner we can really see how the company is doing. A banker once told me that it doesn’t matter how many horses you own if you leave the barn door open. All things considered, there is a considerable lack of transparence in the financial operations of NB Power.

Our electric company could save money by using “pet coke” and this would help them financially in the future. However, unless the new government is willing to shine a bright light onto NB Power and it may plan to do so with the new Energy and Utilities Board, then it will become an accomplice to the political games of the past and the money saved may be squandered.

NB Power should be congratulated for their clear presentation of what they plan to do with “pet coke” and the improved environmental controls at Coleson Cove. However, we have come to a moment where we are jaded by “spin” that is out of control, coming at us from all directions. Wouldn’t it be unique to hear the absolute truth from an organization like NB Power? (The good and the bad) How can there be confidence instilled in the people of Saint John and the rest of the province until environmental concerns and the structural deficiencies of the organization are clearly examined?

Recently, Robert Gates sailed through confirmation hearings to become the new US Defence secretary. People were astounded that he actually voiced the truth when asked about the Iraq war. In a similar vein, the recently elected Liberal government has a window of opportunity of less than a year to clear up the problems of NB Power. Insisting that NB Power cooperate transparently in all areas with the EUB would be a good start.


Steven Harper’s Maginot Line

                                                                                          First Published TJ March 12, 2007 

It is too bad that Steven Harper is an economist and not a historian. A quote that comes to mind: “Those who cannot learn from history are doomed to repeat it.” The Maginot line was the expensive fortifications that the French government built after the First World War to prevent a second invasion by Germany. When the second war came, the German offensive passed through the “impenetrable” Ardennes forest and bypassed the strong defenses of the Maginot line. What a politician with an historical sense might know is that the battles of yesterday may not be fought again in the same way and the challenges of tomorrow may be entirely different that those of the past.

Give Steven some credit for being a moderately smart politician, benching Rona Ambrose and sending in the loyal replacement John Baird oozing all the right phrases to reassure the electorate that action is imminent. However, when baited by the opposition bill to come up with a real plan, their real agenda surfaced. No, the Government wouldn’t produce a plan. Several days later there is a change of heart. Yes, the government will produce a plan to implement Kyoto, but there is no money allocated by the bill to actually do anything. Does this mean that his government can’t find money for something legislated by the majority of M.P.’s but he can find $1.5 billion for a national climate change program that the provinces know nothing about?

It could be that the Prime Minister is spending too much time in his Maginot defenses, let’s call it “Fortress Alberta” for fun. When his polling numbers look bad on environment, he reacts superficially and with a minimum of enthusiasm. Is it a case of too little, too late?

Some of the qualities that Stephen Harper has demonstrated are his consistency in philosophical approach, loyalty to friends and considerable interest in exporting oil and gas. This is not surprising considering his time living in Alberta. His approach of short-term strategic thinking is underestimating the ability of Canadians to read between the lines of his policies.

One can only imagine the real positive impact towards a federal government that provided leadership and for example tells Manitoba “We want your 5000 MW of hydro projects to come on line sooner and we are prepared to supply the funds or guarantee the loan. It will reduce the use of oil, coal and natural gas for power generation and tarsands.” Manitoba repays the $20 or $30 billion dollars over the years through electricity sales to Alberta, Saskatchewan and Ontario. What does it cost Ottawa to reduce by 8% its 270-megaton CO2 emissions targets? Perhaps several billion dollars if it decides to contribute a 10% incentive. What if Ottawa said the same thing to Newfoundland for Churchill Falls? The project reduces coal and oil emissions by 4% in the Atlantic Provinces. Cost to the federal treasury? At 10% participation level, it is $1 billion dollars.

And what if Canada was to follow Australia’s lead and ban the incandescent bulb by 2010. This would reduce our emissions by 4% of the required amount for virtually no money.

So three simple items result in a total of 16% reduction of emissions when the projects are complete. Side benefits are mega projects spread across the country. The cost to Ottawa is $4 billion at the most.

This is only the beginning of the ideas that are possible. But the message that has been spun is that we can’t succeed because we don’t have enough time before 2012 so we can’t do anything. Is this coming from the same Stephen Harper who accused the Atlantic Provinces of having a “culture of defeat?”

Stephen Harper could succeed at preparing Canada for declining world oil production and global warming. He just doesn’t understand the necessity. For an economist, supply and demand is the mantra. He is still building his Maginot line for the last war to be fought again.