N.B. Auditor General Mike Ferguson says the province needs to provide more information about the proposed deal. (CBC)New Brunswick industry would get about $200 million more than residents during the first five years of the proposed deal between NB Power and Hydro-Québec, CBC has learned.
The province's Liberal government has repeatedly asserted that the deal would benefit big business and ordinary ratepayers equally.
Now the province's auditor general has weighed in on the issue, calling on the government to provide more information.
"I would hope the government would provide as much information as they can about what the financial impact of the transaction is going to be and also provide some clear information about what the impact on rates is going to be after Year 5," Mike Ferguson said Thursday.
Under the proposed deal, Hydro-Québec would take over most of New Brunswick's generating stations for $4.8 billion, which represents the equivalent of NB Power's debt, Premier Shawn Graham has said.
Hydro-Québec would also freeze residential power rates in New Brunswick for five years. During the same period, large industrial rates would be lowered to the power prices offered to the same customers in Quebec, but they would not be frozen.
That component of the deal is worth an estimated $5 billion to NB Power customers, according to Graham.
Industry a clear winner
Figures released to CBC show industry would be the clear winner of the deal early on, with the benefits to residents taking years, perhaps even decades, to catch up.
In the first year, for example, industry would save $91.6 million — 79 per cent of the first year's total, the figures show.
That's 5½ times the $16 million that residential customers save in the first year, and 11 times the $8 million that small business saves.
New Brunswick Energy Minister Jack Keir says residential customers could eventually save even more than industrial ratepayers. (CBC)In fact, the numbers are so heavily tilted toward industry that Energy Minister Jack Keir didn't believe them at first, even though they came from his own department.
"I don't know where you get your numbers.... I don't agree with them, frankly," he said Wednesday.
On Thursday, Keir acknowledged the numbers are correct. But he said residents would eventually save just as much as industry, if not more.
Between 2015 and 2020, residential savings will be close to large industrial savings, according to Keir's office. After 2020, residential savings will exceed industrial savings on a consistent basis.
But the auditor general, who has read the memorandum of understanding on the deal, says it's unclear what the impact on rates would be after the first five years.
"I think the government needs to provide some more information on what's going to happen to the residential rates after the five-year freeze period," said Ferguson.
"Maybe 'rates' isn't quite the right word. It's the total amount that a homeowner will have to pay, because that seems to include rates and it includes some other charges, such as distribution charges.
"And the distribution charge looks like, starting in Year 5, it's going to include an amount to recover some extra costs that were incurred during the Point Lepreau [nuclear plant] shutdown" for refurbishment, he said.
"So those costs will be added into the distribution charges and will start to be recovered after Year 5, so what's the increase in those going to be? And how does that relate to the portion of rates that are indexed to CPI [inflation]?"
Financial impact unclear
Ferguson also said there isn't enough information available to determine what the financial impact of the deal would be, and "whether the province will have received enough money to do everything it needs to do, including decommissioning some plants, paying off the debt. And it looks to me like they're taking on some pension liability potentially as well."
Part of the problem, he suggested, are some of the unknowns, such as whether the province will decide to continue to operate the Coleson Cove generating station for its remaining useful life, or shut it down sooner.
Still, the province could provide the current accounting value of the assets and liabilities that would be transferred to Hydro-Québec to help people make informed decisions about the deal, Ferguson said.
At the unveiling of the deal on Oct. 29, the premier said the majority of savings from selling NB Power to Hydro-Québec would go to residential and small business customers.
"Sixty per cent of the reductions [go] to residential and small business customers … and 40 per cent to industry," he said.
But the province has refused to release the document and calculations to back up that claim.
The proposed sale of NB Power needs legislative approval before it can go ahead. The Progressive Conservatives have demanded an election over the issue and have promised to stall the legislation if there is no immediate campaign.
The Liberal government has said if the deal is delayed past March 31, NB Power's planned three per cent rate hike will go forward, instead of the rate freeze promised in the Hydro-Québec agreement.
