NB Power's profits diminished by ice storm, gas prices
Cost of December storm that left thousands without electricty pegged at $12M
December's ice storm and runaway natural gas prices are forcing NB Power to cut its profit target for the second time this year, further worsening the provincial government's deficit.
"We're looking at somewhere in the vicinity of probably $40 (million) or $50 million positive earning by year end," said NB Power vice-president Darren Murphy in a conference call with reporters Thursday.
The new profit target is below the $57-million estimate used by Finance Minister Blaine Higgs as part of his budget three weeks ago, and well below the $112-million target the utility originally set for itself at the beginning of the year.
Because NB Power's earnings are recorded on the province's financial statements, utility profit levels affect the provincial deficit dollar for dollar.
NB Power president Gaetan Thomas said December's ice storm cost the utility an extra $12 million as crews worked around the clock for more than a week to restore widespread power outages. He said another $1 million in cleanup costs are likely after snow and ice melts this spring.
"These were the most damaging storms to hit our power grid in decades," said Thomas.
On top of that, a deep December cold snap forced NB Power to import power at premium prices and switch on uneconomic generators, principally the uneconomic Coleson Cove oil-fired generating station.
Frigid temperatures also sent natural gas prices to record highs, adding further expense. NB Power is required by contract to buy 100 per cent of the electricity produced by two natural gas generators operated by Irving Oil at its Saint John refinery and 100 per cent of the winter production of Emera's natural gas generating plant, also in Saint John, no matter the price being charged.
Murphy said those natural gas plant contracts will ultimately determine if NB Power's latest profit targets are met.
"The biggest variable in that is natural gas prices," said Murphy "There are some variables in there that I can't give you certainty with."