NB Power deal could save Edmundston mill
The CEO of Fraser Papers Inc. says the decision to sell NB Power's assets to Hydro-Québec will help the company's Edmundston mill survive.
The pulp and paper company will see a 30 per cent reduction in its power bill when New Brunswick's industrial rates even out with Quebec's rates, as proposed under the deal, Peter Gordon said.
"Our power rate in Edmundston will drop from about $65 a megawatt hour to about $45 a megawatt hour," he said.
Fraser is currently in bankruptcy protection. It employs about 350 people at the Edmundston mill.
The anticipated rate cut will go a long way in helping the company to survive, Gordon said.
"So that rebate that we had been expecting from the provincial government is no longer necessary," he said.
New Brunswick offers a special power subsidy, a high energy-use tax rebate, for paper mills. The program, announced in 2007, is designed to help keep high-paying forestry jobs from leaving the province.
Fraser Paper's Edmundston mill has received $4.1 million through the program during the past two years.
The NB Power sale was announced Thursday, but a final agreement isn't expected until the end of March.
Under the proposed deal, Hydro-Québec would buy the majority of NB Power's assets for $4.8 billion, industrial rates would be lowered to the same prices Quebec customers pay and residential rates would be frozen for five years.
Fraser, based in Toronto, operates mills in New Brunswick, Quebec and New England.
The company reported a loss of $16.7 million US on sales of $156.1 million for the first quarter. It hasn't made a quarterly profit since the third quarter of 2007, according to regulatory filings.
Fraser filed for bankruptcy protection in Canada and the United States in June.