NB Power's gypsum deal raised concerns for province
Former deputy minister asked if contract committed NB Power to minimum.
In 2005, the then deputy minister of energy asked NB Power whether it was committing itself to providing a minimum amount of synthetic gypsum to the J.D. Irving-owned company Atlantic Wallboard, CBC News has learned
NB Power initially refused to answer, citing confidentiality reasons.
Gypsum is produced as a byproduct at oil-burning power plants, like Coleson Cove.
The payments relate to a contract clause requiring NB Power to provide a minimum amount of gypsum to Atlantic Wallboard on an annual basis until 2026. The existence of the clause has been included in NB Power's annual reports since the 2010/2011 financial year.
NB Power documents, obtained through a Right to Information request, show emails sent between the then deputy energy minister, Bill Thompson, and NB Power.
On July 11, 2005, five days after the deal was publicly announced, Thompson emailed NB Power's public relations manager Pamela McKay, asking: "Is NB Power [committed] to providing a [minimum] amount of gypsum on a monthly or annual [basis]?"
This contract continues to show benefit. The benefits are financial.- NB Power
McKay replied: "...as I expected the details of the contract are confidential and market sensitive and I am not able to release them."
Thompson wrote back: "I understand the terms need to be confidential but the question was not for a specific term or condition but rather if their was a minimum amount to provide. I will discuss it with David Hay [then CEO of NB Power] when I have the opportunity."
Bill Thompson told CBC News this week he remembers the issue, but it was too long ago to remember all the details. He says he was subsequently given assurances by NB Power the contract was sound.
Former NB Power CEO David Hay was not available for comment.
The statement continued "It is our understanding that the appropriate conversations took place at the time the information was requested."
Addressing the issue of the penalty payments, the statement said "This contract continues to show benefit. The benefits are financial, as the cost of disposing the thousands of tonnes of gypsum over this life of this contract is in the tens of millions of dollars, and environmental, as there is a benefit to using synthetic gypsum as a value added product rather than simply landfilling it."
NB Power has paid $5,334,004 in shortfall penalties since the 2009-10 fiscal year. It has also made two extra payments to Atlantic Wallboard Ltd. so that it could reduce the annual cap it is required to meet, thereby reducing the penalties it has to pay in the future. Those payments total $7 million.
NB Power has budgeted another $829,000 for a penalty payment for 2015-2016. The 21.5-year contract runs until 2026.
NB Power will not disclose how much Atlantic Wallboard pays for gypsum, or the minimum amount it is contracted to provide on an annual basis.
The corporation says it currently produces 20,000 to 30,000 tons of gypsum every year.
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