A very important contribution to the debate over the NB Power-Hydro-Québec deal deserves much more public attention than it got.
The Atlantic Institute for Market Studies has released an analysis it commissioned of the memorandum of understanding. Gordon Weil, president of a Maine energy company, is eminently qualified for the task.
Holding a PhD in public law and government, he was the commissioner of business regulation, director of the office of energy resources and public advocate for the State of Maine. He was chair of the national organization of state energy agencies and chair of the New England negotiations leading to the region’s electric transmission tariff and the independent system operator. He has engaged in wholesale and retail power purchasing and power sales, and strategy development for wholesale and large retail customers in the U.S. and Canada.
I don’t reproduce Weil’s bio to fill space. I do it to demonstrate that he is the most authoritative commentator on the deal I have read so far. His report (available on the web at www.aims.ca//media/aims/NBPowerMOU.pdf) should be generously excerpted for all to see.
Now consider the credentials of those chief negotiators of the deal. John Mallory is the long-standing deputy minister of finance, who may know fiscal policy but has no expertise in the utility business nor energy policy. Doug Tyler is a former politician, now deputy minister of strategic priorities in Executive Council, of which the premier is president. His is a political agenda, period.
In my opinion, neither Tyler nor Mallory has any credentials to negotiate the proposed sale of NB Power to Hydro-Québec. Nobody from NB Power who speaks the foreign language of ‘electrical utility’ was involved. As a result, New Brunswick comes out holding the short stick.
Weil’s analysis concludes that this is a very good deal for Hydro-Québec, because Hydro-Québec assumes virtually no risk, and a bad deal for New Brunswick because we assume all the risk. Here I will excerpt only a couple points for illustration.
Weil writes, “The claim is made that the deal will be worth $10 billion to New Brunswick… based on the combination of a cash payment and lower rates. The cash payment portion of the deal will remain uncertain for some time [due to the Lepreau wild card: “The risk for New Brunswick is that Lepreau does not again enter into service”]. As for the rate relief portion, estimated to provide more than half the value, the benefits would only be derived over a period well in excess of 30 years and then only if certain assumptions work as forecast.”
The savings forecast assumes that if not sold NB Power would retain and refurbish all current power plants, including another go at Point Lepreau. This, says Weil, “seems to be an uncertain reed on which to build a forecast…. Projecting current trends and inflation rates plus forecasting the evolution of governmental and private sector actions and policies for many years, even decades, adds a great deal of risk to any rate forecast.” In short, to justify the sale of a provincial power utility on the basis of arbitrary and un-verifiable assumptions about the future is disingenuous and foolhardy.
More disturbing is the ceding of provincial authority inherent in the MOU. Weil writes of the power of the EUB, “the MOU will permanently reduce its ability to strike a reasonable balance between utility and customer interests.” Further, “Utility regulation in New Brunswick will be required to follow the Quebec regulatory system and be subject to specific legal requirements limiting its discretion. Such a transfer of regulatory control is unprecedented.”
Weil’s analysis goes much further than these examples. On the whole, it is a devastating indictment of the deal the negotiators brought home.
Premier Graham did not have a mandate to negotiate; worse, he sent negotiators who were not qualified for the job. Now Mallory and another Executive Council deputy minister, David Ferguson, are on the NB Power board to make sure the transition to Hydro-Québec goes smoothly.
I suggest another course of action: a suspension of the MOU and of its negotiators until a Royal commission is held to clear the air. Weil’s analysis makes such a public process imperative to the cause of democracy and good governance.
Meanwhile, all concerned New Brunswickers should send a copy of the Weil analysis to a Liberal MLA and ask for a direct response to every point. It’s not a job for Hill and Knowlton. MLAs are accountable for their decisions, and until they grapple with Weil’s analysis, they will be found derelict in their duty.
Janice Harvey is a freelance columnist, university lecturer and president of the New Brunswick Green Party. She can be reached by email at email@example.com