HALIFAX – Despite recent changes to the original sale proposal, Hydro-Québec will soon have nearly “exclusive” use of the New Brunswick electricity grid if the proposed sale of NB Power is approved, concludes a new analysis.
That review of the revised NB Power-Hydro-Qubec pact, authored by Maine-based energy expert Gordon Weil, also concludes that New Brunswick residential ratepayers can expect “significant rate increases” following the deal’s initial five-year rate freeze.
“As with any other rate cap that has been applied in the period since electric industry restructuring began in 1992, it is certain that at the end of the freeze there will be a significant amount of deferred costs to be recovered from customers,”
Weil writes in the six-page report, released by the Atlantic Institute for Market Studies.
Last week, the Shawn Graham government – under heavy fire for its push to sell the public utility – released a revised deal, meant to ease critics and concerned citizens.
Under the new tentative deal, Quebec will pay New Brunswick $3.2 billion, instead of $4.75 billion.
NB Power will retain ownership of the transmission system. And the New Brunswick System Operator – the independent body that operates the transmission system – will remain in New Brunswick and separate from Hydro-Qubec.
Under the original deal, a number of power plants and the majority of the transmission grid would have been permanently transferred to Hydro-Qubec.
Weil, president of the Standard Energy Company of Maine, says the retention of the transmission grid and the system operator are improvements over the old deal, noting they could help the province play a “key role in managing the regional transmission grid.”
Yet despite those modifications, the core of the deal remains unchanged, he said.
“The essence of the deal remains the same and the use of the transmission system, for the almost exclusive benefit of Hydro-Qubec, is also unchanged. From the Quebec perspective, there was virtually no loss of what it had gained, but an immediate saving of the $1.55 billion that had been assigned to acquiring the transmission system,” he states in the analysis.
“Hydro-Qubec will still have almost identical control over the NB Power transmission system that it would have had by acquiring it “_ Hydro-Qubec will have acquired virtually all of the capacity that exists and that it would have obtained by purchasing the transmission system.”
Conservative Energy critic Paul Robichaud says Weil’s analysis confirms his party’s concerns with the Liberal government’s “Plan B.”
“Hydro-Qubec has been able to reach the same goal, but we will receive a lot less money from them,” he said. “It just proves the government is wrong – we’re losing all our control and sovereignty.”
Robichaud, the MLA for Lameque-Shippagan-Miscou, also said New Brunswickers should fear Weil’s prediction of significant power rate increases after the deal’s fifth year.
“Watch out for Year Six – it could be a small gain for very, very long pain,” he said. “It’s a bill freeze, not a rate freeze.”
But Energy Minister Jack Keir says the Opposition has been fear mongering about rate shocks. In reality, says Keir, any rate hikes after the five-year freeze must be based on one of three things: transmission and distribution cost increases, new generation capacity or inflation.
“Any increase must be justified before New Brunswick’s Energy and Utilities Board,” Keir told reporters Wednesday.”Quebec has absolutely, positively no control over electricity increases in the province of New Brunswick in year six.”
Keir also dismissed Weil’s report, suggesting that Derek Burney – former chairman of NB Power – better understands the benefits of the energy deal for the province.
“I’m more concerned about what the folks in New Brunswick who understand NB Power think,” he said, adding that he would put “a whole lot more credence in what Derek Burney is telling me than Gordon Weil.”
In an opinion article published in the Telegraph-Journal Wednesday, Burney said the energy agreement is a positive for New Brunswick.
– with files from Brett Bundale