There’s a better deal out there

Locked in the grasp of winter, the snow is crisp underfoot and the cold air concentrates our minds. And with the sun reflecting off the pure white snow, there’s enough light to clarify any problem.

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.

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