New Brunswick should negotiate a cap on long-term power rates with Hydro-Québec to protect residential customers before signing on the dotted line, says a public policy expert.

Under the proposed deal between NB Power and Hydro-Québec, residential rates in the province would be frozen for five years, and then be tied to the rate of inflation.

But if the inflation rate jumps, New Brunswickers would be in trouble, said Donald Savoie, an analyst at the Université de Moncton.

'Say we have a rate of inflation of ...12 per cent. Well a couple of years like that, we're doomed.'—Donald Savoie, public policy expert

"Say we have a rate of inflation of around, something remarkable like we've had in the past, late '70s, early '80s, we had inflation of a rate of 12 per cent. Well a couple of years like that, we're doomed," he said.

"When that happens, only New Brunswick will be asked to deal with it. The province of Quebec will be sheltered from it. And in terms of our private sector, it's not good in terms of residences, it's not good. We need protection."

Savoie said he is often consulted by governments in big economic decisions, but had no input on the proposed deal.

On the surface, he thinks the deal is a good one for New Brunswick.

Getting rid of NB Power's $5-billion debt, the promise of freezing rates for residents, and lowering rates for businesses adds up to good economic news for everyone, Savoie said.

It could also help the province's long-term economic growth if businesses can create more jobs.

But without some kind of further rate protection, the deal makes him nervous, he said.