FREDERICTON – A new analysis of the proposed sale of NB Power assets to Hydro-Québec says the energy deal safeguards the province from future financial risks.
William Marshall, the former chairman of New Brunswick System Operator and author of the Atlantic Institute for Market Studies analysis released Tuesday, said a deal would benefit New Brunswick.
“I support the deal,” he said in an interview. “In my view it is a financial risk mitigation strategy that provides electricity customers with lower rates and shields them from future cost risks.”
Marshall, currently the president of WKM Energy Consultants, wrote the analysis after a United States energy expert pointed out significant problems in the memorandum of understanding between New Brunswick and Quebec on the sale to Hydro-Qubec.
Gordon Weil, president of the Standard Energy Co., in Maine, said in an AIMS report that virtually all of the risk in the energy agreement falls on New Brunswick.
“There’s a need to take a closer look at many of the provisions and, in my view, at the distribution of the risk,” Weil said.
Weil also said there is growing unease in New England about Hydro-Qubec’s dominance and control of the region’s energy markets. He said the U.S. federal energy regulator, FERC, will hold hearings on the potential for greater market control by Hydro-Qubec as a result of any NB Power sale.
Although Marshall said he generally agreed with the analysis put forward by Weil, he said there was a “misrepresentation” of some of the information about the deal in Weil’s report.
“I take issue with Dr. Weil’s portrayal that it is just the facts,” he said in his AIMS report, a Halifax-based think-tank. “In my view there is a definite leaning toward opposing the deal “_ many people are using selections from the paper to support their opposition to the deal without a full understanding of the issues.”
Marshall says Weil’s commentary glosses over the potential magnitude of carbon costs in the future for a province such as New Brunswick, which has oil-fired thermal generating plants on the grid.
“The nature of the deal is that Hydro-Qubec will be obligated to take on all the market risks of fuel costs and carbon regulation while continuing to deliver electricity to New Brunswick customers at known prices,” he said. “This is a significant point on which the commentary is silent.”
In addition, Marshall says Weil’s commentary uses opinion and not fact in evaluating the projected rate savings to New Brunswick customers, which NERA, a U.S.-based energy consultant, forecast to be $5.6 billion.
“The analysis states concern over the risk associated with long-term savings and debates the validity of the NERA assumptions,” Marshall says. “This is opinion not fact. The method applied by NERA is the industry standard approach for the economic evaluation of long-life projects and is routinely applied by power system planners.”
While the agreement states that regulation in New Brunswick would conform to the framework currently used in Quebec, Marshall says the New Brunswick Energy and Utilities Board will continue to regulate energy matters in the province and future sovereignty over energy and regulatory policy would be maintained by the New Brunswick government.
Without elaborating, Marshall said in his analysis that the deal has shortcomings that need to be addressed in the definitive agreement.
“But overall the deal provides value for New Brunswick,” he stated.