The Moncton Times and Transcript
Restructuring will boost NB Power’s U.S. revenues
New policies in New England costing provincial utility millions in lost revenue
By DANIEL McHARDIE Times & Transcript Staff
FREDERICTON – NB Power must speed up its restructuring process and start co-operating more with New England electricity utilities if it wants to fight back against new power policies that have hurt its export revenue, warns a U.S. energy expert.
Gordon Weil, an energy consultant with the Weil Consulting Group in Augusta, Me., said NB Power must take some of the blame for the negative impact it is feeling by the New England Power Pool’s move to a policy called Locational Marginal Pricing.
“In a way it is partly a result of NB Power’s own policy which has been to say, ‘Our interests stop at the border; it is your problem on your side.’ Well New England solved its problem and now N.B. has to live with that,” Weil said yesterday.
“N.B. has been very adverse to becoming involved on the U.S. side of the border for fear of U.S. regulation. In effect they are now getting the effects of U.S. regulation without having a role to play.”
Locational Marginal Pricing may sound like an esoteric energy theory to some people but ratepayers should understand that for years NB Power has kept local electricity rates low by selling surplus power into the New England market at jacked-up prices. Without access to the higher-priced market in southern New England, NB Power is being left with no choice but to look for other places to sell its extra electricity and that could have an impact on provincial power rates.
The new pricing policy is supposed to encourage the creation of power transmission systems in congested areas by varying the price. So, in regions where there is too much load required, not enough generation and where the transmission system is limited, the price of electricity is high. But in Maine, where NB Power sells its power, rates are low because its congested transmission grid cannot handle all the local generation. This means NB Power can no longer access the lucrative southern New England market like it once did before March 1, 2003.
Darrell Bishop, the utility’s vice-president of generation, said in a recent interview this policy acts as a “trade barrier” and it is costing NB Power “millions” in lost revenue.
The U.S. energy consultant said NB Power could start reversing the negative impact on its revenue by positioning itself as a larger player in the regional transmission system. Weil said NB Power’s refusal to enter into these arrangements in the past is coming back to haunt the utility now.
“N.B. has been very reluctant to get into those kinds of arrangements or get into regional transmission undertakings. There is the whole thing about NB Power as being the patrimony of the province and, ‘We can’t do anything with the family jewels,'” he said. “It has to some degree worked for a number of years quite well, but now it is … part of the problem of why this happened.”
Another way to help boost revenue, Weil said, is for NB Power to implement its restructuring plan, which would see the utility unbundled into a holding company and four competing subsidiaries.
“NB Power is like a keystone in a relationship between New England and significant parts of Canada,” Weil said. “It could make the most out of that role or it could make itself a victim if it remains immobile and people on both sides of it are doing things that affect it. It is not big enough on its own to ignore that. So it can either lead or be squeezed.”