Changes reflect concerns of Atlantic provinces
Premier Darrell Dexter says he is pleased with what he has seen so far of NB Power’s revised deal with Hydro-Quebec.
“It addresses many of the issues that we felt were of concern to us with respect to the continued ability of our province to advance our energy interest through transmission capacity in New Brunswick, so we’re optimistic about the new agreement,” Mr. Dexter said Wednesday.
The original deal announced at the end of October had Hydro-Quebec purchasing most of NB Power’s assets, including the transmission and distribution system.
Newfoundland and Labrador Premier Danny Williams and Mr. Dexter were worried that would give Hydro-Quebec too much control over the movement of energy in and through Atlantic Canada to the lucrative northeastern United States market.
But some details of the new deal leaked this week and New Brunswick Premier Shawn Graham announced changes Wednesday morning.
A major change is New Brunswick retaining ownership of the transmission and distribution system, and the value of the deal being reduced to $3.2 billion from $4.75 billion.
Mr. Dexter said he needs to see the new deal’s fine print before saying all of his concerns have been allayed, but Mr. Graham seems to have heard the concerns of his Atlantic colleagues and also those within his province.
Mr. Dexter said Mr. Graham gave him a heads-up about the changes a couple of days ago.
“I got the real sense that they had really spent the time considering the positions of the other provinces, and obviously what they were hearing from their own people,” Mr. Dexter said.
“I’m pleased to see that with respect to transmission and distribution, that that’s going to remain in the hands of the New Brunswick government, and that the independent system operator will continue to be owned by the government.”
Mr. Dexter said he thinks the New Brunswick government will make decisions on power transmission that are in the best interests of the Atlantic region, while Hydro-Quebec has its own interests.
He said New Brunswick Power already has a relationship with Nova Scotia as a power supplier, and he said in the long run, the New Brunswick government would be interested in making money from green energy that Nova Scotia may be able to send to the U.S. through that province.
Mr. Dexter said he will be talking about energy transmission in a couple of weeks with Kenneth Irving, chief executive of Fort Reliance, the parent company of Irving Oil Ltd. in Saint John, N.B.
Fort Reliance announced this week that it is interested in building a regional power transmission system connecting Eastern Canada and New England.
In New Brunswick on Wednesday, Mr. Graham said the renegotiated agreement shows his government has listened to the criticism from the public and others in New Brunswick, including members of his caucus and a cabinet minister who opposed the sale of the public utility.
He said the revamped deal still achieves the original objectives of lowering power rates and reducing debt, while maintaining his goal of making the province a so-called energy hub to the northeastern U.S.
“We still get the heritage pool of cheaper power,” he told a news conference. “We still have full control of the development of the energy hub. We still sell the assets with major cost risks in the future, and we still eliminate the majority of NB Power’s debt.”
The original purchase price of $4.75 billion equalled the amount of NB Power’s debt.
Under the new agreement, Hydro-Quebec will make two payments, with the first of $1.8 billion coming this year and the second of $1.4 billion for Point Lepreau coming once its refurbished nuclear reactor is back online, which is expected in early 2011.
Almost as soon as the initial deal was announced last October, it drew sharp rebuke from groups in New Brunswick, including the union representing workers at the public utility.
Business organizations backed the plan, citing a 30 per cent rollback in electricity costs for industrial customers as a competitive edge.
Under the new deal, industrial customers will see their rates drop by 23 per cent, while homeowners will still get a five-year freeze on their rates.
Mr. Graham said the deal doesn’t give Quebec any special deal to export power to the United States, and open access to that market will be maintained.
“Those rules have to be followed,” he said.
“So whether it was ownership of NB Power or Hydro-Quebec, the rules applied for open access to that U.S. market. And today, those rules will be followed, but they’ll be put in place by a New Brunswick system regulator and, at the same time, ownership of the lines belonging to New Brunswick.”
New Brunswick Conservative Leader David Alward said the government must provide time for the deal to be studied.
“Don’t make a disastrous decision by forcing a signature on a line on an arbitrary date; let’s get it right,” he said. “He (Graham) proved the first time he couldn’t get it right. We’re going to prove that he still doesn’t have it right.”
Barbara Pike of the Atlantic Institute for Market Studies, a non-profit research group in Halifax, said the revised deal and efforts by the province to change its tax system will help the province’s economy.
“The deal continues to make New Brunswick very competitive. You’ve got tax reform, and now you’ve got stable power rates that make it very attractive. When companies are taking a look at where they’re going to move, they’re going to look at a place like this.”
Opposition MLAs in Nova Scotia said the Dexter government needs to get on with getting Nova Scotia connected to Newfoundland and Labrador to take advantage of the proposed Lower Churchill hydroelectric project.
Tory energy critic Cecil Clarke said Nova Scotia should invest in a subsea connection, while Liberal Leader Stephen McNeil said there are other ways that the province could facilitate the connection.
“I’m pleased to see that with respect to transmission and distribution, that that’s going to remain in the hands of the New Brunswick government, and that the independent system operator will continue to be owned by the government.”