Change my mind

We all have vested interests.  I am a very large residential customer for NB Power.  My bill each year is a little over $4,000 – the cost of owning a 100 year old home originally built by a guy named Gordon Baxter in 1905.

Tell me why I – as a resident, taxpayer and rate payer, should say no to a deal that I know for sure will save me between $1,600 – the cost of my son’s next round of braces and over $2,000 (if the 3% rate cap goes away) – the cost of my daughter’s voice and drama lessons – over the next five years? 

Because power outside the Heritage Pool has to be purchased on the open market?  Because Joey Smallwood negotiated a bad deal 40 years ago?  Because there is another mythical suitor out there that we don’t know about?  Because evil big business is getting a rate cut?  Because we are losing our sovereignty? 

Enlighten me.

This is fun, isn’t it?  I had no plans to be a strident supporter of this deal when I first heard about it.  I thought the broad strokes sounded like the government had solved what was really starting to be a crisis (in my opinion).  But when I first read the line of reasoning behind the opposition (which is getting more refined), I couldn’t believe it.  Some poor shmuck who can hardly pay his electricity bill was about to get a rate freeze for five years – something that no other resident in Canada will get – and we are debating the finer points of constitutionality.

28 thoughts on “Change my mind

  1. It is because you would probably not sell me your house when you had no intention of selling it (and in fact promised your wife not to) then I come along and say hey, I’ll buy your house for the value of your mortgage. You don’t get a market value assessment done or seriously entertain any other offers because I happen to be a successful property manager so I must know what is best for you. You have your eye on that new hunting cabin and if you get rid of that house mortgage you will have enough credit to get it plus you had a variable rate mortgage and you never know, interest rates might go up. You promise to rent the house forever and your rent payments will be frozen at your mortgage payment for the next 5 years. Any repairs or maintenance to your house will be placed in an account and I’ll start charging them back to you in 5 years. Because I am a good guy, I’ll give your neighbour a break and reduce his mortgage payment by 30%. Your neighoour happens to be your orthadonist and drama teacher so surely that will benefit you when your kids need their services.

    Most of us would not go for that deal; guess we are emotional idiots.

  2. Where do all the postings that don’t agree with you go, you cheap prostitute! Your an embarrassment to our future children!

  3. Other than the rate freeze, are there any other benefits? I have yet to see any. Why couldn’t NB just trade some right of way to the US for some cheap power? Why can’t the politicians just admit that years of stuffing boardrooms with their unqualified friends has lead to the bad state we’re in today?

  4. I think I know what you mean but your “this is fun” comment immediately generates an image of a giddy premier getting high fives from his pulp mill buddies at their fishing lodge.

    This is not fun. It is not a game. It is not like a french immersion policy, a UNB SJ polytech policy, or a Gagetown ferry policy where you can say oops, got it wrong. I’ll change that. How do you like us now?

    This is a very serious game changer. It is not something you take lightly nor is it something an inexperienced person should be negotiating and fabricating deadlines. Pro or con this decision will impact NB’s future for the next 100 years. Energy resources and strategies are directly related to prosperity. Those who get it right are prosperous. Those they get it wrong suffer.

  5. “Energy resources and strategies are directly related to prosperity. Those who get it right are prosperous. Those they get it wrong suffer.”

    Here’s a fun fact, NB’s energy policy was last updated in 2001. The white paper suggested NB move towards full retail competition, merchant power generation, green power pricing options, and states that NB will not move towards petroleum product pricing regulation. In fact, all industrial power users over 750 kW were supposed to be able to pick their retail power supplier by April 03 (we’ve only missed that goal by 6 1/2 years).

    All of the energy projections in the white paper are made up to the year 2010 (six weeks from now). Of the five references listed in the white paper, four come from the late nineties, and are thus now at least a dozen years out of date. The latest report I can find about NB Power on the Dept of Energy’s website is titled: Electricity in NB Beyond the Year 2000″. It’s hardly current.

    Do we have a plan for energy in this province beyond the mythical “energy hub”? I get the idea we’re flying by the seat of our pants, of which the sale of NB Power is indicative. Maybe the deal is worth it, but when we have no reports studying NB Power published in the past decade, no reports studying the deal, no independent scoring of the deal, how can we make an informed decision?

    Maybe it’s worth it to eat the 3% rate hike in March so we can thoroughly study the proposed sale. Heck, the province has had since January to figure this thing out, and they can’t even get their stories straight.

  6. Are there any safeguards in the proposed deal for a worst case scenario? From what I’ve seen (from both sides) there are assumptions or predictions about future performance, like the consumer price index and power rate increases. While these may be reasonable and probable, what happens if they are incorrect? There is no 100% certainty of anything and no way to predict the unpredictable. So in a post-freeze world, if things go sideways, is there any kind of cap to the amount of potential increase in consumer rates (and industrial)? For all I know, there are. But that is why I’m asking.

    I’m a bit concerned that both sides in this debate base much of what they argue on how they believe the world will evolve but they don’t consider their positions from “what if it doesn’t work this way.” I guess I’m asking both sides about risk management.

  7. Most realize that the in thing for gullible parents are, BRACES.
    Another sad projection for the poor Children that really need Braces!
    That really need teeth work.
    Of the sad situation where a society driven parent forces their Children into situations suitable for wine party conversations.
    Oh yes, my child is in french immersion!! Very sad generation.

  8. Simply put, there is no guarantee you WILL save that $1600. You MAY, but in this deal there are enough loopholes that you very well could end up paying more. Your kids may get braces now, but in ten years when they are paying Quebec and have ZERO power over their own province’s energy policy, they may not be quite so grateful.

    It is especially large users who are the problem. Seldom is it discussed, but this is also social policy-since we know that those in the higher income brackets use far more energy. Large drafty homeowners who can’t be bothered to implement energy conservations want a guarantee of endless cheap power so they can continue to waste energy but not have to pay its real cost.

    Large old homes are the most energy inefficient buildings out there. Not sure if thats hypothetical or another person, but if its David then his position at least has some basis. I agree that for many people this is serious business, they, their parents, their grandparents, worked their asses off to pay taxes to help build up NBPower. But again, CLEARLY if somebody thinks that the price they will pay is GUARANTEED to stay that low, they haven’t read the actual deal.

    Plus, there is also a better way, lobbying the government to include provincial incentives for energy conservation would save a residency consumer WELL over 3% a year. Heck, a hot water heater blanket would save more than 3%.

  9. Well first of all this isn’t fun. Second you ARE paying for those rate reductions through the $5 billion in NB Power equity (or as David want us to call “good will”, that HQ is returning to us in those subsidized rates. Remember the president of HQ this week told us that he is paying $10 billion for NB Power, $4.7 billion in cash and just over $5 billion in the form of subsidized power rates. As I said earlier we could forgo the rate subsidies for the industrial users and take the full sale price in cash, pay off the NB Power debt of $4.7 billion, reduce the provincial debt by $5 billion and leave us with an income tax break. I don’t know how much you bring home but the tax break appeals to me more than the short term savings to heat my 150 year old home. or we could just eat cake!!!

  10. “Tell me why I – as a resident, taxpayer and rate payer, should say no to a deal that I know for sure will save me ”

    If I told you I could save you a thousand dollars a month, but I need to sell your house (for 0 dollars) to do it, wouldn’t you be a bit skeptical?

    Then I promise to let you stay in the house under certain (somewhat vague) conditions, take care of the upkeep, only charge you more for big additions, etc – you might start to get more comfortable with the deal as pure greed takes over.

    Then you find out your neigbour’s hair salon was offered a 30% better deal, that there are guys lined up to rent a bit of your property, that there was going to be big increases in home values, massive currency inflation, etc…

    Wouldn’t you want to take a second look, to see what the deal was? But then the ‘deal’ maker starts bringing in his pushy boss who makes an even more empassioned speach about how good the deal is, all the while threatening to raise your mortgage interests if you don’t agree.

    Just from a gut feeling – if it seems to good, it probably ain’t – plus it’s nice to own your own home, excepting the real banksterism that goes along with it.

    That if it seems to good, you’ve got to take a second look is the kind of wisdom we seem to have lost. It seems to have died off with the generation who built those power dams and nuclear stations.

  11. “Large drafty homeowners who can’t be bothered to implement energy conservations ”

    Most large drafty homes are owned by persons of lower income who do not have the capital to invest in energy conservation. They will be hit the hardest by the 3.5% due next year and the much more massive rate increases that will follow, should the deal not go through.

  12. “Maybe the deal is worth it, but when we have no reports studying NB Power published in the past decade, no reports studying the deal, no independent scoring of the deal, how can we make an informed decision?”

    That’s a good point. I wonder if the lack of reports is suggestive of the difficulty that NBP is really in? Certainly it does not reflect a well-run company, nor one that believes in transparency.

  13. The reason I like the NB tax cuts: 1.) it forces other jurisdictions to become competitive by lower their rates (do so, or risk losing investment) and 2.) the tax cuts themselves force governments to lower their expenditures (keeping wasteful spending in line). So it’s good for the average citizen who sees more of his/her savings while their governments become much more efficient and effective.

    So even though I think they {NB gov’t} could have cut many other wasteful programs “first” before doing a “knee jerk” on NBP, I still see the possible sale as a good sign. Not only for NB, who has continually held on to useless government programs for decades that should have been cut eons ago, but for PEI, Nova Scotia and Newfoundland who will be forced to align their policies with NB or risk being overlooked for outside investment. It’s all about the tax cuts baby! Which will lead to smaller and more effective government.

  14. Call me oblivious, but in all the above comments, I don’t see a single response that actually answers David’s challenge and offers an alternative. I can see what you’re against. But what are you for?
    I live in a small, single storey home and my power bill would be modest, except it has increased by one-third in the past few years because of rate increases. I can look around at how NB Power generates electricity and see those rate increases progressing for the next 20, 30 years – if for no other reason than to replace the increasingly costly power generated at Dalhousie, Belledune and Coleson Cove and to rebuild the dams on the St. John. My parents and aunts and uncles are in their 70s, on very small fixed incomes and electric heat. How is that going to affect them?
    Here’s what NB can’t change: it can’t change the rising price of oil and gas, or uranium, for that matter. It can’t change the debt that’s been accrued, at least, not without billing you and me and everyone else in this beautiful province about $13,000 all at once, or a fortune in interest incrementally over the rest of our lives as NB Power customers. It can’t change the global political climate, which is being affected by the deteriorating atmospheric climate, with the eventual result that we’ll be paying a tax just to keep our-oil-fired plants polluting.
    What we can do is trade NB Power for the elimination of the debt and pricing guarantees.this may not be the final deal, but it’s a good start.
    Do I wish the province had asked for residential rate parity at the beginning of negotiations? Sure. Am I edgy about what happens in year 6? Sure. But I have a pretty good idea what’s going to happen if nothing changes: N.B. goes broke, one business and one family at a time. and let’s not kid ourselves about those large, industrial users – they employ a big part of the province, and the taxes they generate in HST, income and property levys pay for the teachers, the nurses, the bus drivers, the university professors and everyone else who draws a penny from the public payroll. Without the private sector, there is no public sector.
    I don’t own NB Power, any more than you do or the province does: the banks own it, and they have for a very long time. One of these recessions, someone’s going to call in that note – and then where will we be?
    Count me as sceptical, but more so of the inarticulate opposition than of the proposal itself. I’m still waiting for someone to answer David’s question – just convince me.

  15. It’s not so much the fact that NB Power is up on the block. It’s the blindside/rollout/spin.

    I’ll stick with everybody’s favourite, the house analogy, only I’m not getting into all the numbers and stuff. For me, it’s about trust.

    Your neighbour who moved in a few years ago comes out his house one day with another guy. As you’re talking over the fence, your neighbour tells you he’s selling his house to the gentleman with him because he can’t afford it anymore. The gentleman seems like a nice enough guy and they both go on to tell you that the new owner intends to change the zoning to – I don’t know , let’s say Highway/Commercial. And he tells you he’s bulldozing the house to build a road so you and your neighbours can more easily get to the Walmart three blocks away. They then reveal the fact that they’ve been working on this deal for 6 months and it’s closing on Friday. Today’s Tuesday.

    You’re understandably shocked. Especially because he didn’t mention anything to you about this before now. You tell him you have some concerns about how this will affect you. He smiles condecendingly and says “I understand that you’re concerned, so come over to my house after supper and we’ll talk about it.” While eating supper you hear the story on the radio about how this great new road to Walmart will make it faster and easier for all the 18 wheelers to get to the store with the goods. And cheap, plentiful goods will improve the neighbouhood, forever.

    You head next door after supper and knock on the the door. No answer. So you leave him a note asking him to please call you as soon as possible. In the meantime you start to think of the implications on the value of your house, and quality of life, especially since you really like your house and quiet neighbourhood. It continues to appreciate in value and you intend to live there well into old age. Sure, your neighbour’s house isn’t the nicest one on the block but it still adds value to the neighborhood.

    Next morning (Wednesday) you see him getting into his car so you go out to have the chat you we’re invited to have last evening. You lay out your concerns and he smiles and tells you EXACTLY the same thing he told you yesterday. As you try to make your point more clearly he says don’t worry, we’ll talk this evening. He doesn’t even mention the note or apologize for the no-show the previous evening.

    That afternoon you run into Mrs Peabody, another neighbour, and as you pass the time you discover that her efforts to discuss the matter with your neighbour have been dodged precisely the same way. She also tells you that your neighbour is head of the zoning committee so trying to stop the zoning change is probably not an option. After talking to a few other neighbours you hear that they too have been given the same story.

    Thursday morning you see a guy with a transit surveying the frontage of your neighbours lot.

    At what point would you start feel that your neighbour had no respect for you and had never intended to take your concerns into consideration? Do you still trust him? How confident are you that this road to Walmart going to be in your best interest?

  16. I don’t think this house analogy works in this case but let’s say it does. I guess my question would be, what if the impact on you and the neighbourhood was positive? What if your property value skyrocketed, the road wasn’t next door but elsewhere and had no impact on you or anyone else? Would you still turn down the proposal because of how it came about?

    My point is that the deal and trust, while interlinked, are two different issues. The deal as a deal is either good or bad regardless of how it came about. The issue of government and public trust is another thing and is applicable to whatever party is in power, provincially, federally and so on. I think trust is a huge issue but I’m not going to cut off my nose to spite my face.

    In an election, I may want to turf the government and I may want a public review of how government operates and communicates. But if a deal is good, I don’t want to throw it out the window because I don’t like the guys who made it.

    In this debate, both sides are using false arguments so it may be of use to have a look at a list of of false arguments:

  17. Simple to convince you Quaco! We sell out NOTHING to Quebec, now or ever. We are far better to join the U.S and adopt their governing system, so that we never have such an incompetent bunch running our Province or Country again! If the past 15 years of the boast of all the NEW green energy by all our governments and scientist are now apparently lies, you can be sure there has been no change. We are still getting the same bull, to fill the pockets of the corporations and their shareholders. Until then, there are many ways for cutting consumption of everything! Mansion size houses and cars are not one of them. My hydro bill this month is 77$. And none of it used to thaw out frozen junk food, heat the outdoors, drying clothes on a humid day or baking two potatoes. Etc!

  18. “Call me oblivious, but in all the above comments, I don’t see a single response that actually answers David’s challenge and offers an alternative. I can see what you’re against. But what are you for?”

    Yes, the silence is deafening.

  19. @richard There are no alternatives because the whole plan and arguments for it are based on false premises. Namely, we need lower rates and NB Power debt is crippling the province. Both are patently false. NB has some of the lowest rates on the eastern seaboard. Our rates are higher than Quebec but these deal does nothing to change that fact. Wrt to the debt, there is nothing wrong with a utility holding debt. Generation plants are expensive and you have to allow for the full life cycle to pay them back. Adding the refurbishment cost yesterday and then panicking today the debt has increased by $1.4b is simply ridiculous.

    Yet everyone has fallen for the government’s tactics here. These are the people that will add $2-3 billion to the provincial debt over their four year term. That is debt that is serviced by the taxpayer alone. That is the debt we need to be concerned about. NB Power debt is fully serviced and paid down through revenues generated from selling a product for which their is a never-ending demand. But the gov’t needs something to deflect attention from the mess they have made. So what better way to do that than create crises in NB Power?

    And shame on people for playing along by cherry picking CPI and rate data to suit their purpose. Alan Graham himself wrote a report on NB Power that stated CPI rose 31% while rates only went up 21% from 1987 to 1999 and CPI in the early 90’s was hitting 6%. People forget the benefits of owning the assets is that you can manage fluctuations on behalf of ratepayers. If CPI hits 6%, we are facing a 4% heritage pool overage increase and HQ submits a completely justifiable rate increase request due to they need another 6% as their new projects are producing electricity at 10 cents/kWh instead of 2, who is going to protect us from a 16% increase? The Quebec government? That’s not being anti-Quebec, the same issue would exist no matter what outside jurisdiction we were dealing with.

    The point being, don’t ask for alternatives to the Liberal plan. Ask why the hell they are doing any of this at all.

  20. Did you see the Auditor General on CBC last night? (skip to the 7:00 mark)

    The truth is I don’t see any alternatives that would provide short term relief from high NB Power rates. However, I don’t think the adverse long term effects of this deal can be discounted. You’ve probably heard most of them by now and I highly doubt you think there is zero merit to every one of them. The two main talking points for the deal (debt relief and lower residential rates) have been for the most part torn to pieces. So I guess the real question is why are you so keen to reap short-term benefits when with this deal when we are leaving ourselves open to long term pain?

  21. It’s on another thread-like I said, SUBSIDIZE NB Power with higher taxes on corporations and the wealthy. It’s not rocket science, its how most utilities have been managed. NB’s total debt is no different from Nova Scotias’, and better (per GDP) than Newfoundland and Quebec. As I’ve said, NB only gets 3% of its budget from corporate income tax, while Saskatchewan gets almost 20. The ‘sellout’ here is quite simply of Graham’s own making-by slashing corporate taxes (which only contribute $300 million as it is) he needs some way to pay for his poor tax planning.

    Use that money to invest in wind power, and increase subsidies for homeowners and small producers to build up net metering and small scale production. Farmers in Vermont used a government program to add to natural gas production from their livestock. There are TONS of ‘alternatives’ out there, but as we’ve seen, people simply keep saying “nah, thats dumb, can’t do that”. But its not that alternatives aren’t out there, its that some people don’t LIKE them. Those are two VERY different things.

  22. “There are no alternatives because the whole plan and arguments for it are based on false premises.”

    The 3.5% rate increase promised next spring is not a false premise. Note that 3.5% is the cap. I’d suggest that indicates NBP wants more and needs more rate increases. Is that status quo your alternative? As a resident and small business owner the status quo is not good enough for me. By all means lets see more data, but lets start with getting NBP to release its data on its cost structure and real maintenance costs. NBP has not been honest with the ratepayers of this province.

  23. Quebec Hydro has cheaper hydro rates because of a one-sided deal with the Churchill Falls project. That deal runs out in 2017. Any bets on where rates will go after that?

    Give the QH team some credit. They know exactly what will happen in 7 years and have successully signed up 330,000 customers at nearly twice the rates they charge their current customers. If they can sign up enough customers at those rates, they will be able to continue subsidizing rates in Quebec after 2017.

  24. Two of the proponents here are Richard and David, and its a good example (I think) of where the rigidity lies. As Richard says, he just doesn’t want to pay 3% more for hydro, David wants to save that $1600 for his drafty old house. THAT is what it comes down to and why proponents can’t be persuaded by logic or anything else, the conclusion is already pre-determined. I mention that because on the VERY few supporting comments we’ve seen on this deal it is OPPONENTS who are supposedly being narrow minded and emotional and not looking at facts.

    So its true, there is no point in debating the ISSUE of selling the utility, but the deal is another matter. For that, again, go read the Auditor Generals remark, one part of which agrees with Richard, that the public simply doesn’t have enough information. The second part is the realization that NB Power is in fact a money MAKER, at least up until last year. He also states that this will HURT NB’s debt because NBPower ‘pays for itself’ and has assets. Again, thats unlike Nova Scotia, which has a similar debt to NB but no public utility.

    So let’s forget talking about ‘alternatives’ because those who have asked for them simply refuse to accept any of them. More beneficial is looking into the deal itself as well as the utility system.

  25. ” As Richard says, he just doesn’t want to pay 3% more for hydro”

    No, that is not what I said. I said that the 3.5% approved for next year is a certainty without the sale. Thats a fact. Plus it is a capped rate. That means that rates considerably higher are merited by NBPs fiscal situation. If the rates are made high enough, yes, there will again be a net revenue flow to GNB but the power rates will be much higher than today. I do not see how that helps me; as to using taxes to subsidze rates, I’d just point out that NB cannot afford that scenario. The province already has significant debt and needs to generate more economic growth and the resulting tax revenue to pay down the fiscal stimulus spending of recent years. As things stand now, we will see a number of program cuts in the next few budgets; these will hurt the low income earners and pgms such as energy conservation, env regulation, etc will likely be gutted. Higher power rates (which are a certainty without the sale) will add another burden to lower income groups (even those with hot water jackets).

    ” proponents can’t be persuaded by logic or anything else”

    I have yet to see any logic from opponents. I see fear and loathing; I see empty rhetoric. A number of commentors mention risks in the sale (and yes there are risks, nothing is risk-free) yet appear to be blind to the risks in NBPs current structure. I note that after several weak ‘alternatives’ were presented then shown to be unworkable, opponents are now trying to turn things around and say alternatives are not needed. Well, I see a high risk of large power rate hikes coming down the pike from NBP. For my business, that means trying to pass on those costs to clients, or, failing that, freezing staff wages or laying off staff. Those are the realities that NBers will face unless something changes soon. IMHO, if you want to reject the proposed sale, then I need some real-world immediate alternatives. None have been forthcoming.

  26. You must only have electric heat for that home of yours. Sounds like you might need some insulation and drafts sealed. Next, move to Alberta. I’m paying less than 10% your power costs on an open competitive market, and we get told that our rates are high!

    What wasn’t NB Power offered for sale to NALCOR, Emera, Fortis, Atco, TransAlta, Enmax, Bruce Power, Epcor, Capital Power, Hydro ONE, BC Hydro? You would think there would have been a bidding war to buy out NB Power. The fact that no suitor hasn’t come forward with a counter offer shows there must be something up at NB Power that only Hydro Quebec could deal with. Could it be the hydro dams cracking? Could it be the uncertainty with the refurb of the nuke? How about all those deals that weren’t deals with Hugo Chavez in Venezuala?

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