Energy minister defends NB Power sale
Keir forced to explain unanswered questions over proposed pact
Last Updated: Thursday, November 5, 2009 | 12:23 PM AT
CBC News
Energy Minister Jack Keir is holding daily media interviews to explain the details of the NB Power sale. (CBC)Questions over the future of rates and New Brunswick's ability to set its own energy policy are continuing to swirl around the proposed sale of NB Power.
Energy Minister Jack Keir and other top Liberal cabinet ministers have been holding daily interviews with reporters around the province this week as more people are questioning aspects of the memorandum of understanding that will sell NB Power to Hydro-Québec.
Keir and Eric Marr, president of Saint John Energy, were forced to explain on Wednesday how power rates in New Brunswick's largest city would be affected by the sale.
Saint John Mayor Ivan Court said this week that his understanding of the power deal is that whatever reduction is going to industry will go to Saint John Energy and that rates for all power customers in his city would drop.
Keir said he told Court that all the rate freezes and large industrial rate decreases would be passed on to Saint John Energy.
The proposed deal lists utilities, such as Saint John Energy, as part of the wholesale customer group that will simply have its electricity rates frozen.
Marr said while the cost of electricity he buys from Hydro-Québec may be frozen, his salaries and other expenses will go up.
Would wipe out utility's debt
"We feel that we are harmed in that we are losing to inflation over that five-year period," he said.
Under the proposed agreement, Hydro-Québec would purchase the majority of NB Power's assets for $4.8 billion, a move that would wipe away the utility's debt.
Residential power rates would be frozen for five years and large industrial power rates would be reduced to current Quebec levels, but they would not be frozen.
The value of the proposed rate savings is estimated to be $5 billion.
Keir also spent the day reassuring people that New Brunswick will still have control of its energy policy if the deal goes through.
The memorandum of understanding states that New Brunswick is free to chart its own energy policy. However, a different section of the agreement states that New Brunswick's regulatory framework must be overhauled to conform with the same rules in Quebec.
Craig Leonard, a Progressive Conservative candidate in the 2010 election, is calling on the government to explain the inconsistency.
Looking for efficiencies
"I think every New Brunswicker wants to know what that means, in terms of the differences between the two frameworks, and what that's going to mean for our province, and our future energy requirements," he said.
Keir said that section deals with the mechanics of transmission. For example, Quebec wants the independent New Brunswick System Operator and its transmission company to be merged into a single entity as is the case in Quebec.
He said it's something the government was looking at doing anyway, and it makes sense.
"There's going to be efficiencies in terms of that we don't have to spend more money on duplicated effort, and you don't have to buy more equipment to monitor something that you already have," Keir said.
The former Progressive Conservative government created the independent system operator when it broke NB Power into competing subsidiaries in 2003. It had been bundled with NB Power's transmission company.
Point Lepreau
Meanwhile, Keir says a deal with Hydro-Québec would save New Brunswickers money on Point Lepreau, even if the nuclear generating station never runs again.
The controversial refurbishment is now 16 months behind schedule, with estimated cost overruns to top $1.6 billion.
Although the proposed deal with Hydro-Québec doesn't stipulate what would happen if the refurbishment project fails and Lepreau can't operate, Keir said the cost to the province would be the same, with or without the sale to Quebec.
The one advantage if the sale goes through, however, is that New Brunswick won't have to pay for replacement power, he said.
"With this deal, we're not going to have to find that electricity somewhere else. That's guaranteed to us, regardless of whether that's up and going again."
A permanent shutdown of Lepreau would, however, affect the sale price of NB Power. Hydro-Québec would pay significantly less than the $4.75 billion currently on the table because it's not obligated to take over Lepreau if it doesn't work.
"I wouldn't expect anybody to pay for a car with four wheels that didn't turn," said Keir.
"But if we keep status quo, there's a much, much larger impact to the ratepayers of New Brunswick if Lepreau doesn't get up and going," he said, adding that he's confident the refurbishment will succeed, despite the delays.
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.
