'No need to panic': Talk of selling popular electric utility in Saint John sparks concern
S.J. Energy is one of North America's highest-rated electric utilities, making its potential sale a tough sell
An unsolicited offer from an unnamed party to buy Saint John Energy is being treated gingerly by city officials trying to weigh the financial and political implications of unloading what may be one of Canada's most popular electric utilities.
"No need to panic," wrote Saint John Mayor Don Darling on Twitter last week in response to rumblings of concern that the city might accept the surprise offer at its next meeting.
"Saint John Energy is a high performing and innovative electric utility. There will be no decision on May 4th regarding a sale."
There's not a lot of detail about the offer being made for the city's 98-year-old electric company, or who it is from.
Based on information released so far along with other city financial information, it appears to be worth approximately $150 million according to UNB accounting professor Matthew Wegener, who has reviewed the limited available material. He cautions that is a rough, ballpark estimate.
"To say it is around $150 million with confidence would require more precise information," he said.
Looking at possibilities
Saint John city manager John Collin insists the purchase offer, whatever the amount, will not be accepted if further analysis shows retaining ownership of Saint John Energy carries more benefit to the city or if public consultation reveals substantial opposition.
Saint John energy is a high performing and innovative energy utility. There will be no decision on may 4th, regarding a sale. In fact the only decision will be, to continue exploring three options to maximize value for taxpayers. No need to panic. <a href="https://t.co/Y3qWXK7YDM">pic.twitter.com/Y3qWXK7YDM</a>—@dondarlingSJ
According to information released by Collins' office and presented at a city council meeting last week, placing the proceeds of a sale of Saint John Energy into a permanent endowment would create an ongoing inflation-protected revenue stream to the city of between $2 million and $5 million per year depending on investment returns, plus an additional $2 million per year to replace benefits the city receives from owning the company.
But like the mayor, Collin is downplaying the likelihood that will happen.
He said the city, which is struggling with significant financial problems, is also investigating the option of keeping ownership of the utility and leaving things as they are, or retaining ownership and having Saint John Energy raise its rates equal to levels charged by NB Power, to generate income for the city or to support lower tax rates.
"Please understand and recognize that the sale of the utility is only one of three possible options for Saint John Energy," wrote Collin in an email response to CBC News about the mysterious offer.
"No decisions have been made and much more analysis and stakeholder engagement is required before any decision would be made."
Talk of selling Saint John Energy, even without details being available, has been enough to start opposition bubbling inside the city. Online petitions against the idea have flared up.
It has also stirred up comparisons to the failed attempt by former New Brunswick premier Shawn Graham a decade ago to sell the provincial utility, NB Power, to Hydro Quebec. Widely unpopular at the time, the attempted transaction led to Graham's government being swept from office during the 2010 provincial election.
Complicating matters for politicians in Saint John is that Saint John Energy is one of the most highly-rated utilities in North America, according to customer surveys — much more popular than NB Power, which the public rallied to save.
Established in 1922, Saint John Energy is New Brunswick's second-largest electric utility, serving 36,000 residential, commercial and some small industrial customers inside city limits.
That confined area is easier and less expensive to watch over and maintain than NB Power's sprawling territory and Saint John Energy customers consistently suffer fewer and shorter outages than NB Power customers. Saint John Energy also charges less for what customers view as better service.
The utility's residential customers pay $17.20 per month in basic monthly service charges, 23 per cent less than NB Power charges customers. Customers also pay 10.28 cents for every kilowatt hour of electricity consumed, eight per cent less than residential customers of NB Power.
"We have a smaller territory. We are urban so we have a lot of things going for us. That makes us nimble, flexible, all of those," said Jessica DeLong, the manager of stakeholder relations for Saint John Energy.
"Our customer satisfaction has always been through the roof."
It is not an exaggeration.
Saint John Energy has one of the highest customer-satisfaction scores for an electrical utility in North America and although the Canadian Electricity Association, or CEA, will not release specific national rankings, it may be the highest-rated utility in Canada among the association's 40 members.
In 2019 the utility scored 25 on the CEA's net promoter score, or NPS, scale, the industry's primary measurement of customer satisfaction.
Nationally, electric utilities posted an average satisfaction score of –25, which is 50 points worse. Atlantic Canadian utilities scored an average of –8.
In the survey, consumers are asked, on a scale of zero to 10, how likely they would be to recommend their electricity provider to family and friends if there were more than one provider to choose from.
Consumers who answer very likely (nine or 10) are counted as promoters of the company. Those who select numbers from zero to six on the scale are counted as detractors. Subtracting the percentage of detractors from the percentage of promoters generates the NPS score.
NB Power's NPS score is not public but during rate hearings in front of the Energy and Utilities Board this year, evidence showed it ranked 139th out of 143 North American power utilities in a 2019 J.D. Power and Associates residential customer satisfaction study.
Utilities that finished well ahead of NB Power in those rankings, like New York's Consolidated Edison Inc., Pennsylvania's PPL Corp., Missouri's Ameren Corp. and Minnesota's Xcel Energy Inc. have NPS scores of between one -10, according to the NPS tracking website consumer.guru.
"I think the number speaks for itself," said DeLong about Saint John Energy's score of 25 in an industry where ratings of zero and below are common. "We are a small utility and we perform well for our customers and they appreciate us."
Don Darling and John Collin both say the city is a long way from making a decision on what to do with Saint John Energy, and there will be plenty of time for citizens to express their views.
"The only decision [May 4] will be to continue exploring three options to maximize value for taxpayers," said Darling.