Regarding the NB Power discussion, I am going to move this blog back to other economic development topics until there is new information that we can chew on. I have always viewed this blog as a place where people can debate ideas and policies related to economic development and in this situation it has turned into a bash Shawn Graham blog for a whole lot of people. I have disagreed with the Premier on a wide variety of policy issues – tax cuts, etc. but it has always been on the issues – I find demeaning a person’s character is quite distasteful. Maybe I am a bit guilty of personal attacks with my critique of David Alward’s reponses to this whole thing although you will never read me ripping into to the guy’s integrity or character. I admire everyone that goes into public office to work for the people and I mean that sincerely.
That stuff’s just not my bag, folks. I think that whole issue with Drew Speight and CBC crystallized things for me. On the one hand people (certainly not all people but a considerable number of the people commenting on this blog) will mock and scorn the experts who looked at this deal – Energy Probe, the investment bank that evaluated the assets of NB Power, etc. and on the other when Mr. Speight says he doesn’t think NB Power’s assets have been properly valued I get 12 blog posts with “see, I told you so” and the link or cut and paste content from the CBC story. So that’s what we have. For some people, if the head climatologist at Environment Canada came down to New Brunswick and said there is a hurricane coming and you had better prepare and Aunt Kate said “don’t be so silly, my cat told me there is no hurricane coming” I’d get 12 snarky blog posts saying “see, I told you so” and crapping on David Phillips. I know you some of you like to pick apart my little analogies but you can choose your own.
Of the 400+ comments, there have been some that have addressed the serious issues that need to be clarified and possibly adjusted in the MOU. I hope those voices, many are against my position, are the ones that bubble to the surface.
As I see it these are a few of the major issues:
What about power outside the Heritage Pool? There must have been some modelling done on this and I think the government should be clear and show us. It is obvious that power outside the Pool will be more expensive but I think we need to know what the impact could be. In addition, we need a credible assessment of our needs going forward (again this should have been done for this exercise). It just came out that Ontario’s electricity needs are going down over the next 20 years due to industry changes and energy efficiency efforts. If that is the case in NB, that would be good to know.
The spirit of the agreement is to peg future rate increases to inflation but there are clauses that have been put in that are causing concern among people that know about these types of things. David Alward says that this will allow “Hydro Quebec to charge whatever they want” and the government is saying these are just reasonable elements of a contract. It shouldn’t be too hard to put out real examples of what these additional costs might be (credible sources – not disgruntled NB Power guys sending around spreadsheets and, yes, I have received several already). If they could be a serious impact on rates, we should know.
The valuation of NB Power’s assets. As much as I like Drew Speight, I think it would be a good idea to make the investment bank’s assessment public (has anyone seen this?).
There are others about use of local suppliers, the government’s energy strategy/hub concept, etc. that should also be addressed.
I’d like them to project out 30 years for me and tell me what we will see. It’s impossible to say with any degree of certainty – if you believe some of the global warming ideas we could be in full scale catastrophe in 30 years – but they should be able to do some reasonable forecasting. In that time frame does New Brunswick remain a competitive place for electricity costs (residential, commercial and industrial) or is David Alward right and New Brunswick will become a wasteland.
Finally, what are the terms under which the deal can be made null and void. If Alward is right and Hydro-Quebec puts the screws to New Brunswick and our rates end up going higher than the rest of Canada and it pushes industry out of the province – what is the recourse?
So please feel free to comment but the blog is moving on for now. If you want to hammer Shawn Graham you can go to the CBC website and fill your boots. There must be other blogs for that. This blog has never really catered to a retail audience – I’d like it to be retail but most people don’t really care to much about economic development. It’s a boring topic and I am happy writing content that is read by economic development types and others that have an interest. I don’t make any money on this thing, I don’t get paid to write it or to advocate for any company or government department. I have authored this blog for five years because I continue to believe there is a need to debate real issues regarding this province and Atlantic Canada’s economic development.
PS – about CBC
Just a little piece about CBC. The folks here in Moncton ran a commentary from me supportive of the NB Power HQ deal (assuming my caveats above are fleshed out and addressed properly). I have interacted with the Information Morning team on a number of occasions going back five years or so and they are top notch. I would go to bat for those guys at any time. Jacques Poitras, in my opinion, is the one of the top journalists in New Brunswick and probably unequalled in the area of legislative reporting – certainly since I have been around. I won’t begin to try and explain how the log starts rolling on a specific story like H1N1 or NB Power. I suspect there are graduate level seminars in journalism schools about how these things evolve. I just wanted to be clear on this. In my experience, the CBC at least in Moncton has not been hostile to economic development and in my recollection has covered most related stories very effectively.
David,
I’ve enjoyed participating in the NB Power debate and agree that we need more info to decide as you point out.
I’m curious to know where you feel New Brunswick development should be heading to take advantage of the new economy.
I understand you are fed up with the discussion, especially when there are far more questions than answers. But the reality is it will be tough to have meaningful economic development discussion when we are on the verge of making what I think is New Brunswick’s largest investment ever in economic development; a billion dollar subsidy to prop up the pulp mills for an unknown amount of life extension.
To me, this is so massive, it makes it tough to seriously talk about any other economic development initiatives which have recently included tourism information booths, pot holes and $50 million bail outs. Nova Scotia spent just under $100 million for three Michelin plants that have been operating for 35 years; I sincerely hope we can keep 30 pulp mills going for 35 years with our investment. As you have pointed out, the $25 million for Bricklyn is still a hot topic in New Brunswick. How long will we be talking about a billion?
I am thrilled to see the willingness to invest a billion dollars in ED; I am shocked that there is no debate, no consultation, no strategy that concludes pulp mills are the thing to invest in. To me, this is the most disappointing part of the the deal and the discussion that has taken place on this blog.
But let’s move on, what’s the next topic, year round operation of those seasonal ice cream shacks?
I am a long time reader and first time commenter. Have followed the NB Power announcement with great interest and have turned to this blog for a lot of insightful info.
Just wanted to pass along a thanks for the info provided. Looking forward to seeing more debate as more info reveals itself.
The Gov’t has done a very poor job of providing meaningful information to allow objective people to evaluate this proposal. In lue of this, the vacuum has been filled with fear and a lot of mis information. It is most likely too late to turn public opinion. For all you students of the body politic out there – great lessons here on how not to handle a major announcement. Hard to believe the Gov’t could have so badly mis read the tea leaves on this one.
For the record – after reading all I can get my hands on – I am against this deal. I am not in love with NB Power and would have no issue if it was sold. I also believe there are too many risks associated with this and there may be a better deal out there. This is subject to change as this opinion is based on the current info on hand.
Will continue visiting this blog to get more info.
Cheers.
Thanks for those comments. To RKA, you have to read 2,504 posts going back five years :-). In a nutshell, much of the discussion (not the current debate on NB Power) has centered on this. I think we need to develop comprehensive sector development strategies around a few key opportunities and then lean into them at all levels. Education, infrastructure, tax policy, business attraction, entrepreneural support, etc. – all designed to make New Brunswick a global leader in ‘x’. The customer contact centre industry, much maligned, showed us that NB can attract global investment when we have the right value proposition for specific opportunities. We’ll talk, I’m sure, in days ahead about specific sectors and opportunities.
To Anonymous, that is a fundamental question and I wish we had town halls and public discourse on this around the province. People need to understand that public policy is always about trade offs – always. I would take issue a bit with the semantics. I am not sure you can call a lower power rate a ‘subsidy’. Do the companies getting the L rate now in Quebec get a subsidy? Do the pulp and paper mills in South Carolina getting $40/MW power from Duke Energy get a subsidy? No, they get an industrial rate. I understand your point – getting the industrial clients to the L rate required a public policy decision (they could have easily raised the industrial rate and cut residential to the bone) but I tend to think of subsidy as a straight cash transfer. If the government invests $60 million in the Port of Belledune that benefits a half dozen companies is that a subsidy?
To Mr. Anderson – that’s all anyone can ask for.
Thanks David. I started right after I left my comment. Only 2470 left to go (working backwards 🙂
I have always viewed this blog as a place where people can debate ideas and policies related to economic development and in this situation it has turned into a bash Shawn Graham blog for a whole lot of people. I have disagreed with the Premier on a wide variety of policy issues – tax cuts, etc. but it has always been on the issues – I find demeaning a person’s character is quite distasteful.
The tax cut proposals were debated in committee (both parties had select representation) and the general public got to throw in their two cents online (and through their designated MLA) after the Green paper release. Not to mention, the proposed policy was widely debated in the press before it’s implementation into the 2009 budget.
If anything the unilateral decision to hike taxes in 2007, after campaigning that you wouldn’t, was more of an outrage for NBers (especially given the half baked reasoning by the Finance Minister for such a move). The same goes for this “debate after it’s a done deal” NBP deal.
But again, the fact that we’re even having a rash discussion on the possible selling of assets and the debt of a utility is due to the tax cuts forcing such a discussion. In other words, the government has left themselves no wiggle room other then to cut spending and reduce the size of government in order to bring the debt into check. They can’t, as you have suggested David, back peddle and hike taxes once again ((like they did in 2007) as Graham pledged to stimulate the economy via tax cuts and incentives rather than through corporate welfare loans. A path I’ve had no problem with as long as the public has a chance to participate as oppose to it being rammed down their throats by handpicked experts close to government.
The converse of that would be to see all this information and then, as others have mentioned, see some answers from NB Power as to plans for the future, then put the other political parties on the hot seat as well as the critics. It is VERY true that a big problem here is a lack of democracy, but town hall meetings were designed as places where people met AND voted on issues, they are not places where government comes in and ‘sells’ a plan. I think it will be a hard slog, but its clear that at least SOME NBers are really starting to pay attention to public policy.
In reading Moody’s past credit rating analysis (some of which popped up under ‘jupia.ca’) there are serious concerns about Lepreau. But again, to be fair, opponents can’t be criticized for belittling ‘experts’ when there have BEEN no experts come out. The expert opinion we DO have is the auditor general saying that NB would be losing potential profits, Moodys’ and three other credit rating agencies saying that the deal would have NO effect on NB’s credit rating (so thats the debt argument gone).
While in Toronto Graham was part of a conference that included Richard Reich (bad name, but supposedly an ‘expert’). The Gleaner tried to pump Graham up but couldn’t mask over what Riech actually said-that he was ALMOST convinced it was a good move, but more importantly that cities and regions shouldn’t use power rates as ED tools because “there will always be some other place that can do it cheaper”. So thats LOTS of expert opinion (and there have been LOTS of criticisms here of ‘so called experts’ (coughRichardFloridacough), certainly not just no names that CBC is quoting. It even took Frank McKenna a couple of weeks to actually say that he supported it. At the toronto conference apparantly lots of people were ‘excited’ about it, but its doubtful they knew much about it. It’s also interesting to know that I went back a few years to reports on various Premier’s visiting such conferences and virtually EVERY report mirrored the article on Graham, you’d think they used a template. THe various NB premiers were always ‘stars’ of the event and other attendees were ‘wowed’ by their performance. I’ve been to a few business conferences before, and there is seldom such ‘enthusiasm’, particularly in areas that have zero affect on most of those in attendance.
But in moving on, it seems now that Graham has announced MASSIVE increases in welfare and poverty social spending. While its about time, there does have to be a way to PAY for such things. So Graham should really be introducing a budget at Christmas, well before this deal is meant to be implemented.
Mikel is right, the poverty action plan had some major actions which may very well be needed and when asked how much will they cost and how will they be paid for , the answer was “don’t know but we need to do it and will be better off when it is done”. This is more consistent with Liberal fundamentals.
With a billion dollar shortfall, lowered revenues through tax policy, tightened transfer payments and increased spending for social programs, it ought to be an interesting budget.
Perhaps this NB Power sale will unlock a wealth of economic opportunities. Maybe there is a queue of companies ready to locate here once we have the power deal signed. Maybe after 20 years there will be some effective economic development initiatives. I don’t beleive the government would purposely try to inflict pain to NB so they must have some indication that there is good news around the corner.
I hope so because it sure appears that spending plans and projected revenues do not add up.
@mikel
“So Graham should really be introducing a budget at Christmas, well before this deal is meant to be implemented.”
The budget will be introduced in early December. It’s the next shoe to drop in NB politics, because we’ll soon find out that the deficit for 2009/10 will be >$1 billion, and that we’re projecting more of the same for 2010/11.
@Anonymous:
“With a billion dollar shortfall, lowered revenues through tax policy, tightened transfer payments and increased spending for social programs, it ought to be an interesting budget.”
That’s why the lower debt part of the NB Power spin doesn’t sell me. When the guy who’s extolling lower debt is also adding new debt at a rate of a billion per year, I begin to doubt his fiscal bona fides.
The Americans’ CBO recently stated that there is a massive disconnect today between the services Americans expect from government and the taxes they are willing to pay to pay for these services. We’re in the same boat here in NB/Canada. It’s very easy to campaign on tax cuts, or reducing poverty, or freezing power rates, but who’s paying the bills?
I’m a bit tired of the discussion now too. Much of it seems to be repetitive of the views and arguments. And stepping back from it for a bit might be the best thing. About this blog I’d say as wearying as some of the comments may be, of the various discussions I’ve seen online this place seems to have the least cranky, most informed debate and I think has a far higher percentage of reasonable people than any other I’ve seen. Some of the comments I’ve seen elsewhere give me the willies.
Hi David,
Thanks for many thoughtful posts on the NB Power sale, including the above.
For the record, I have absolutely no knowledge of the value of NB Power’s assets, and I also make no claim to expertise on such matters. I do wonder, though, if what we’re selling may perhaps be worth more that we’re getting for it, and so I was (and remain) curious to know what the experts say the numbers are. That’s one of the many issues I have with the proposed deal as embodied in the MOU (others include re-writing the rules which govern the EUB, liability for Point Lepreau cost overruns, unbundling of transmission/distribution charges from generation after 5 years, the Heritage Pool’s potential chilling effect on future industrial growth, protection of current NBP employees and their pensions, and the new company’s Crown-corp exemption from any NB taxes or payments in lieu), but at the Q&A on the weekend we were only allowed one question apiece, so I picked valuation. But I digress.
Cheers,
Drew Speight
“We’re in the same boat here in NB/Canada. It’s very easy to campaign on tax cuts, or reducing poverty, or freezing power rates, but who’s paying the bills?”
That is exactly right. There is a massive disconnect when it comes to services and taxes. Most do not understand the costs of the services they receive, and do not appreciate the amount of provincial expenditures that come from transfer payments.
NB is heading for very troubled waters. I note that the new govt in NS has announced that taxes will be raised and program spending cut in order to improve NS finances. Perhaps that will give NB politicians the balls to do the same thing. But nothing will happen until after the next election; you certainly will not see either major party leader promising to raise taxes during the campaign. The new admin will follow the NS pattern – appoint a committee of experts (while knowing full well what the recommendations will be) then do at least some of what has to be done.
Actuallly, the BEST place for information has been the ‘say no to NBPower’ facebook group. That’s because SOME (yes, a minority) have picked apart the MOU and the NB Power financials pretty clean for ammunition. It’s been a good debate because many (again, not the majority who post on ‘the wall’ treat it as if it WERE a referendum question and want as much information out there as possible. But again, we need to stress that in selling a public utility, particularly one the political leader just finished promising not to sell, there really doesn’t NEED to be in depth analysis of the financials. That WOULD come later if it were a referendum. And to be fair with regard to Rob’s argument, EVERYBODY knows that their bills will be raised by 3% next spring and what MAY happen if the deal doesn’t go through. So it certainly is not the case that there is a ‘disconnect’ amongst all people-people seem perfectly willing to pay 3% more this year.
“there really doesn’t NEED to be in depth analysis of the financials. ”
That is patently ridiculous. Of course the details of NBP finances need to be released now. Otherwise there is no real way to determine if the proposal makes sense. I am surprised to hear that someone who want to stop the sale does not want this information – everyone else seems to be asking for it. What exactly are they hiding – NBP must be in much worse shape than appears.
“people seem perfectly willing to pay 3% more this year”
Easy for someone not living here to say. I am doubtful if all low-income earners feel that way.
“because SOME (yes, a minority) have picked apart the MOU and the NB Power financials pretty clean for ammunition”
That sounds like self-serving crap to me. Looking for ‘ammunition’ is not what is needed – what is needed is full disclosure and some expert analysis.
David,
Do you happen to know anything about this? I’m curious.
New plant ‘huge boost’ for Caraquet
http://telegraphjournal.canadaeast.com/rss/article/851231
http://welcome.greensafecanada.com/index.html
Greensafe Demanufacturing Inc processes all end-of-life white goods, with a specifically designed European technology to safely demanufacture refrigerators and other cooling units.
With a bit of Googling I found this – Big Pakistan bucks / renewable energy and stuff:
Bergamo Acquisition Corporation Domestic Funding Set to Close
On November 5, 2009, GreenSafe Demanufacturing, Inc. released a press release in Canada about Bergamo’s planned investment in the company. Bergamo will be making an initial investment of $50 Million USD and will be put aside funds for an additional investment of $70 Million USD. There are several acquisitions and investments already planned domestically, and details of those will be forthcoming.
http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20091109005585&newsLang=en
This I find a bit questionable (based on the amateurish website and the stock listing [OTC Pinksheets: BGMO] which frankly I know nothing about) but there seems to be supporting evidence. I’d like to believe it’s going to happen. Peter Swire is listed as the CEO. His name is also connected to the Acadian Railway. He’s a big dreamer but I don’t know about credibilty.
There appears to be no Provincial or Federal money involved and interestingly the # 6. FAQ states: Why New Brunswick and Why Caraquet? …..New Brunswick already has low, industrial power rates as well as lower corporate tax rate.
——————————-
BTW I continue to stroll backwards through your archives. Interesting stuff. When the anti-depressants kick in I’ll pick up where I left off. 🙂
Richard, as usual, is woefully misinterpreting what I said. If people DON”T want to sell NB Power, and if people are angry at Graham for breaking a promise, then the specifics don’t matter. If somebody doesn’t want to sell the utility, somebody could offer ten times the amount, and if people don’t want to sell it, thats the publics right-they paid for it.
3% increases in power rates is nothing, here in ontario we regularly see 5% a year. In Nova Scotia under Emera they regularly have had 8% and 10% increases in a single year. Again, NB Power has had fewer increases and has the lowest rates in atlantic canada.
I didn’t say low income earners feel that way, I said ‘amongst people’, which obviously means NOT every single person. But I know lots of people who are going to be at that protest, and unlike Richard they do not own businesses that can deduct their energy increases off their taxes. They are seniors who are on fixed incomes, AND some who are on income assistance, and they are all fervently against this deal. It’s actually quite rare to find somebody who is in FAVOUR of it, Rogers had a call in show and couldnt find a single caller in support of it.
It’s HARDLY ‘self serving’ if those people who oppose selling know that their rates are going to rise by 3%. It is OF COURSE self serving in that the people want to continue to own their public utilities them ‘selves’. And there is nothing wrong with that. I’ve never seen Richard even TRY to understand the opposition and clearly said that its his business he’s worried about, so why isn’t THAT ‘self serving crap’?
But just for public policy in general people need to have the information, something I’ve said numerous times as well, however, again, if people don’t want to sell, they don’t have to see the breakdown. If I have a car I don’t want to sell, I don’t need to see a sales contract or the ‘specifics’, all I know is that its my car and I don’t want to sell it. The same goes for a public utility, and again, the ONLY way that can be decided is democratically through a referendum or plebiscite.
As for the above, we mentioned that last week, I also found the cheap website to be kind of strange for a company that supposedly has over 100 million lined up in equity. However, a BIG question there is whether the company was given CURRENT power rates, or rates once the deal goes through. I do agree with David somewhat that power CAN be used for ED, and there is no reason why IF a power deal is necessary in a case like Caraquet to get an employer who doesn’t want any direct subsidies and will employ over 100 people then NBPower CAN make accomodations. That wouldn’t be so easy to do if Hydro Quebec were calling the shots.
To go back to democracy, thats regularly a feature in the US and other places, and the result is that corporations need to offer their best deal in order to get people to agree with it, in NB, well, just look what a ‘deal’ they brokered in Irvings LNG terminal.
I see Danny Williams in the Globe asking the Feds to give New Brunswick money to stop the sale of NB Power. I suspect that no federal government would anger 7 million Quebeckers to please 500k Newfoundlanders – in other words Harper won’t get involved.
Re: Greensafe Demanufacturing
I saw that and actually cringed a bit. I don’t know if any of you remember Bennett Environmental but they built a plant up there that was bringing in contaminated soil and treating it. Bennett claimed the process was environmentally friendly and the company got a permit to operate from the Dept. of Environment but they were crucified by the media and certain groups up there. This Greensafe is doing something similar bringing in “harmful chlorofluorocarbon waste (CFCs)” and turning them “into a naturally occurring and environmentally-safe liquid.” I guess the rancorous opposition was too busy fighting Hydro-Quebec to notice.
In general, I support this type of operation if it can be shown to be environmentally benign. I suspect they look to site their plants in non-traditional locations to not excite the wrath of certain folks.
In looking through the archives I ran across the Google data centre power usage post (June or July). Put in context with the HQ deal – think there’s any chance that Mr Graham has an ace up his sleeve? He seems pretty cocky about this.
Maybe nothing, but I find sometimes looking back will tell you what’s coming.
To my little smart mouthed friend, I get your IP every time you send me a blog post. At some point, I turn it over to the RCMP. Harassment is still harassment even it if you try to hide behind a veil of anonymity.
” think there’s any chance that Mr Graham has an ace up his sleeve? He seems pretty cocky about this. ”
RKA – I wonder about that too. I think the ‘ace’, if there is one (maybe he thinks he has an ace but it is really a joker!) is NBP financial and asset data. Is GNB refusing to release the data before the sale goes thru because he thinks NBers would string him up, or because HQ is making its calculations on incomplete data and giving them all the data would cause them to end negotiations?
“if people don’t want to sell, they don’t have to see the breakdown”
Mikel believes that people have made up their minds not to sell, but given the questions people are asking, its equally valid to say that they want more information prior to making a decision. Why Mikel does not want people to have more informaion is unclear; perhaps he is afraid of something. Or perhaps non-NBers are just less interested that NBers.
Good Lord Richard, can we have less of the pettiness. I’ve said more times than you that more information needs to be out there, but it isn’t. I simply said people are justified in opposing selling WITHOUT the information. Is that clear enough? And since we don’t know who YOU are nobody has any way of knowing whether you are actually a New Brunswicker at all. Just because somebody moves away, it doesn’t take away their heritage. The swiss are even allowed to vote in swiss elections even if they’ve moved out of the country. And in Canada its partly other canadians tax dollars that contribute up to one third of New Brunswick’s budget, so people shouldn’t forget that this is ONE country. I know that Richard is only saying that because I usually disagree with him, but it needs to be said-particularly IF the feds become involved, then all of a sudden its no longer just a question for New Brunswickers.
I haven’t found Graham particularly ‘cocky’. Now, Frank McKenna, when he made an announcement, you really got the impression that he at least knew what was going on. If you look at the throne speech, its clear he’s barely treading water and his arguments are getting more ludicrous all the time (he even states that because of this deal Fraser has moved from bankruptcy to profitability).
For Greensafe, its QUITE a bit different than Bennett, VERY different. Bennett had a long history of breaking environmental laws and regulations, and its soil decontamination plants were noted for poor up front reporting. They also had the province provide all the materials for testing, and a direct subsidy. Greensafe has no such problems, its a new company with big money backing it up (some would say you just can’t make Mr. Campbell happy-here’s over 100 million in foreign direct investment:) But its true that ALL the questions haven’t been answered, and while they MAY have a product to make from the freon, they don’t yet have anybody to purchase it (maybe NB should look into it).
Ahh well, if you can’t offer up a rational argument, you can always throw mud, can’t you Mikel|
Looks like the big protest has been a bust – only a few hundred showed up. Perhaps too many of the Facebookers were from ON. Or perhaps they have been reading here about Mikel’s alternative to the sale – ON hydro rates. Sure let’s not sell to HQ, then we can have power rate increases of 5-6% per year, just like in ON. Only fair, I guess, after all we take so much in transfer payments out of ON taxpayer hides, its only fair that we pay ON Hydro rates in return. Mikel says its no problem, so it must be OK.
I see David’s harassing anon is posting under the name Richard now. Where exactly in that blurb was the ‘rational argument’? Actually, by most counts there were over a thousand people there, just watch some of the videos. Actually, NBers WILL be paying 5-6% higher rates, just starting in year six. Of course there’s always the CPI-which if it hits 6% or 10%, well, there’s your increase and the government has no way to challenge it.