Energy policy

The NB Power/Hydro-Quebec MOU clearly states that New Brunswick retains full control over its energy policy and its industrial policy.  I take that to mean what is stated.  However, upon reading Nova Scotia’s concerns once again in the media, I now understand their concerns.  They aren’t worried about FERC rules or any EUB issues.  They want to know if they (i.e. NL, NS, PEI) will be able to string another parallel electricity system through New Brunswick if required – and bypass Hydro-Quebec’s newly purchased system.  I may be wrong but here is the salient piece in the article:

Nova Scotia Energy Minister Bill Estabrooks said just that earlier last week — it wasn’t enough. Estabrooks reiterated Nova Scotia wants a written document they can point to before the sale is completed in March. He said they also want a written commitment of a new energy corridor through the province.

It seems to me that a new energy corridor is a euphemism for the ability to by-pass HQ.  Based on my reading of the MOU that would be allowed but I suspect that it would be very costly.  I also suspect that the final conctract outlining the sale of NB Power will limit this opportunity.  I would think that one of HQ’s reasons to buy NB Power would be to earn the revenue from transmitting Lower Churchill or PEI wind power or whatever to New England.  And Graham is going to great lengths to ensure that power can travel through New Brunswick under FERC.  That’s not what they want.

Am I wrong on this?  I don’t particularly care one way or the other.  New Brunswick’s primary interest must be its own domestic market (just like the Atlantic Accord in Nova Scotia and Newfoundland).  The interests of other provinces will need to be a secondary consideration.  That’s common sense.

22 thoughts on “Energy policy

  1. Heard about this story on the news this morning that adds another element of uncertainty….

    Commission members’ resolve to protect Maine’s energy interests rose even higher after Hydro-Quebec — Canada’s largest electricity producer — announced plans to acquire New Brunswick Power in order to gain access to U.S. markets.

    New Brunswick Power already has transmission lines passing through Maine to southern New England and mid-Atlantic states and is likely to build more if the acquisition is approved. That prospect has raised concerns that Hydro-Quebec could stymie or squash demand for renewable energy from future wind farms or other projects in Maine.

  2. I simply want to know, what is in it for the Premier and his followers. Because something is.

  3. Sigh. It must be hard to go through life thinking that everything is a conspiracy. Even if people disagree with the government over the NB Power sale, why do we have to make the leap to Swiss bank accounts? Did you ever think that Premier Graham and David Alward might actually be interested in the well being of New Brunswickers and trying to propose policies that they feel in good faith will move the province forward? When you start adding in all that crap – my eyes glaze over.

  4. New Brunswick’s primary interest must be its own domestic market (just like the Atlantic Accord in Nova Scotia and Newfoundland).

    True, but if your secondary interest are dissolved [developing a cooperative region state] due to your hardheadedness to get a deal through to benefit the province in the short term, it may hurt your ability to get together in the future for such long term projects like a new energy corridor. But I am speculating a bit.

  5. That’s hardly a ‘conspiracy’. Frank McKenna was courting big business to NB, then once he left politics he was suddenly working with the biggest corporate players in the WORLD. How many trial lawyers from NB can make that claim? Bernard Lord was also a trial lawyer who, by the time he was finished as Premier, was a multi millionaire, all thanks to somehow getting a massive salary from the PC party (whose donors remain secret) that was more than his Premier’s salary.

    Neither of those facts are contentious, they are SO mainstream that everybody knows them (if they read Irvings media and the CBC, and don’t have a two month memory span). So while its not the main issue, a politician’s motivation certainly is grounds for questioning, particularly when single handedly selling something that doesn’t belong to them.

    But more to the point, what is also in the MOU is this:

    “The regulatory framework governing the generation, transmission and
    distribution of electricity in New Brunswick will be altered to conform to the framework currently in effect in Québec”

    That’s a fairly broad statement that has recieved NO media analysis. Has anybody gone through what the framework is in Quebec? So how will NB’s have to change? So that COULD have a lot of impact on how other parties attempt to do business. The ‘framework’ in Quebec is what is giving Newfoundland all of its current headaches and is why Williams is so public about this. So to think that a business will go out of its way to help competition seems, well, kind of nuts.

    But contrary to David’s statement, IF NB’s regulatory framework must conform to Quebec’s, then its pretty impossible for NB to be only interested in its own domestic energy policy. It all will depend on what the regulatory framework is in QUEBEC, NOT New Brunswick. Energy policy in Quebec does NOT come from Hydro Quebec, but from the Quebec government. In effect if the government wanted to screw over NB they could make policy that hurts NB and helps Quebec and point at the MOU and say “sorry fellas, you have conform to our energy regulations, and that means double rates on hydro power that comes from dams that are more than 20 years old”. Obviously I’m not suggesting they WOULD do that, but this IS politics, and again, its NOT a ‘conspiracy’ that Quebec workers can bid on contracts in NB (and very often win them) while NB companies can’t bid on contracts in Quebec. Thats just the ‘status quo’ thats been there for a long time. In short, Quebecers have the same view as David-that the most important issue is the well being of Quebecers, and that doesn’t include New Brunswick.

  6. “That prospect has raised concerns that Hydro-Quebec could stymie or squash demand for renewable energy from future wind farms or other projects in Maine.”

    I’m not sure why that adds uncertainty. Its similar to the plaint of NS – where there is fear that the deal will stymie tidal power, etc. At present, the power from those alternate power sources (wind, tidal) seem to be more expensive that hydro from QC. I suppose they feel that they would not be able to compete. Not sure why that is our problem.

  7. Sorry David, we should care very much about these things as they should be viewed as revenue generating opportunities.

    As has been stated many times on your blog, New Brunswick is not blessed with oil. We have few competitive advantages. One of the few is our geography. We should be taking advantage of any advantage we have. For example, collecting tolls from the vehicles passing through our province. New Brunswick should make money from natural gas passing through our province. We certainly should be making money from electricity traveling through our province.

  8. David, the conspiracy theory/”fat cats in their ivory towers” is the redneck approach to politics. It is the soapbox of every Tim Horton’s politician and always will be. The actual intentions are ignored, and replaced with misinformed musings and character attacks on those who actually get off their rear ends and do something to make a difference. Those who contribute the least to progress are generally the loudest ones heard.

    In terms of creating an additional energy corridor in the province, I would be in favour of such an initiative if we were able to charge a tariff on the energy transmitted through our province and into the US. NB should be operating as a toll booth collecting its commission for everything to the US, and energy is no exception.

    In my gut I feel like the deal won’t be as sweet as the Liberals are making it sound, however I think that it will be the right decision in the end. I also feel that the bipartisan politics in this province will lead to its own demise. Selling NB Power is only a good plan if we are able to lure significant companies into the province. If the always contrarian David Alward is elected, he’ll oppose valid initiatives started by the Liberals just for the sake of disagreeing with them and giving them an entry point for criticism.

    Economic development is a long-term project, and without a consistent ideology on where we should be focusing our efforts, we’ll never realize the full potential of its benefits. A four year term is just not enough to “fix the economy”.

  9. First, Lower Churchill has to get built first before there’s any power to send down the lines.

    Second, if it does get built, the simple economics of the line not through Quebec makes that option pretty much out of the question.

    So that leaves third, that the power will either be sold directly into Quebec or wheeled through Quebec to the New York state border or to Ontario.

    But, as I said, that’s a dodgy proposition.

    The Maritimes are a nice little market for Quebec to supply. It seems pretty simple to me.

  10. Politicians get into the ‘business’ for all kinds of reasons. Some genuinely want to ‘serve’, but lots simply see it as the only way to gain a decent income, and if they have the right connections, then its a fall back position. Some do it for the ego trip, and some to make the connections. Nobody should be fooled into thinking that politics can’t be a dirty business.

    However, it’s true that politicians DO make a sacrifice in ‘being public’, but its also wrong to assume that critics are people who don’t contribute. It’s also a mistake to ‘generalize’. From the above we have two consecutive postings about how it would be great for NB to be a ‘conduit’ economy. I agree with that, although unfortunately in a global economy there are barriers to that. Bernard Lord stated constantly that NB was getting screwed by natural gas royalties, unfortunately NB doesn’t have the power to set those, thats federal, and the last I heard, the boys in Calgary simply said “we’ll do a study”.

    For highways that’s different, and contrary to the opinion generally given here, I bet if there were a referendum on the issue, there would be tolls on the trans canada. I know many who were staunchly against tolls, but as many now know, there are still tolls, they are just ‘shadow tolls’ that disappear into a private company.

    The post above is a good one because it points out that those who support the deal do so on a ‘feeling’, thats no different than the ’emotions’ that those opposing it describe. And as pointed out, it only benefits IF more businesses come-several HAVE made announcements, but so close to this deal that we don’t know if they are related.

    As for economic development, that has little to do with electoral cycles. As David continually points out, the press releases and policies of the government change very little from one party to the next. When Irving wanted an LNG deal, both parties pulled out the stops, the only difference was that the liberals wanted the whole province to subsidize it.

    As David also points out, the problem is not contrarian views between parties, the problem is that lack of long term economic initiatives from EITHER party. That’s a societal problem, and as David continually points out, the vested interests of the large industrialists and the narrow view of small businesses means that that is not likely to change-not unless more people start getting off their butts (and its not only critics who are guilty of too much voyeurism in public policy).

  11. Sorry to put words in Davids mouth, the last point that David refers to is the complaint about the lobbying and statements of current businesses in NB, it’s MY point that that is not likely to change until the political status quo does.

  12. I don`t think there is a mystery or conspiracy; the whole issue is pretty transparent. Those that stand to gain with rate cuts are identified here:

    That list is diluted with M class users and with anticipated L class users such as UMOE who so far have not even started production. This misleading information is intended to soften the appearance that it is really the Irving Group of companies amd a handful of others who will greatly benefit form this deal.

    I have nothing against Irving; the province could use about 4 more of them. However, their influence, either direct or implied, should not be totally dominating government policy to the point of breaking election promises and forcing through rushed deals that will impact New Brunswick for generations to come. Let`s call a spade a spade, we are selling our power utility to get low rates for Irving companies. That is not necessarily a bad thing if they are going to create more employment and prosper but the deal should be evaluated from that perspective. However, the government`s endless spin and lack of transparancy provokes conspiracy thoughts.

  13. So my Tim Horton observations, that are true, keep disappearing! Odd that no investigation has occurred, eh Mikel. Oh, I just remembered, we did have investigations! They just seemed like strange ones. I guess someone must have got off their rears and did their job! Covered them up. Oh yes, and then the investigators just lost their jobs a couple years ago didn’t they? Or was that just Jon Horton talk?

  14. “That’s a fairly broad statement that has recieved NO media analysis”

    Actually, this has been discussed in the media, and has helped feed some of the paranoia. The MOU certainly is not very clear in this regard; an alternative interpretation is that it is an attempt to avoid having HQ face two very different regulatory regimes. The word ‘currently’ (as opposed to ‘forever; or ‘thereafter’) in that MOU phrase suggests that. I don’t see a clear statement that prevents NB from adjusting the regulatory framework after the deal goes thru, or making other changes that benefit NBers.

  15. Not sure what the comment above is about, but the Caissie Populairie was a good example. It was becoming very clear that BOTH parties were up to some specious shenanigans, and the tories dragged their feet once they propped it up, and then the liberals closed the investigation. So while taxpayers ponied up the funds, nobody ever found out where the money was going. Stuff like that happens all the time in politics, but it unfortunately feeds the Tim Horton paranoia mill simply because people DON”T find out what happened, and so gossip runs amuck. As has been noted here often, politics in Canada suffers from some very bad transparancy rules. But as we also know from THIS deal, that even the few elected representatives often have very little knowledge of these things.

    I’d like some links to the media that has discussed the energy framework in Quebec because I can’t find it. While the issue itself has been ‘mentioned’, it has fueled speculation because nobody has talked about it in depth.

    The statement that NB energy policy will conform to Quebec energy policy seems fairly clear, it SAYS NB policy will conform to Quebecs, so I don’t see how NB can make a policy that does NOT conform to Quebecs, since it says so right in the document. NB could perhaps make changes and spend years in court arguing semantics, but that could put off any changes so long that they are no longer appropriate.

    Part of the FERC requirement is that Quebec open up its transmission lines to third parties, and that is the sticking point. According to THEM, they are, but according to Newfoundland, they are being so belligerant about it that it is making it very difficult for Newfoundland. I can’t remember the details of that, but that was Williams chief complaint-so Nova Scotia and Maine would have valid points that although Quebec SAYS it is complying, it isn’t really (again, according the NFLD, which is the 3rd party attempting to use the transmission lines).

    But for energy policies, I think the best way to analyze that is to look at a policy example and see how it would work, I can’t think of one at the moment.

  16. “, it SAYS NB policy will conform to Quebecs, ”

    No, it does not say that. You are missing the word ‘current’. That would seem to mean that the goal is to harmonize the current regulatory systems. That does not imply in my mind that changes could not be made to NBs regulatory system after the sale. Of course, we would have a better idea on that once the draft legislation is released.

    ” Quebec SAYS it is complying”

    Would not Quebec have to comply in order to get FERC approval down the road? That would seem to be a non-issue – they must comply in order to transmit to the US. After all, access to the US market is one of their interests. Williams et al may not like the end result, but why should I care? Is Danny going to send us some oil/gas revenue if we reject the sale; will NS offer us cheaper natural gas if we reject the sale?

  17. @Anonymous
    I don’t know where the list of M and L class users comes from (nor I do have much background about the document) but the problem that I see is that it seems to go against what David supports most wholeheartedly: the attraction of big companies to NB. The way I interpret it is that the companies in the list will have an advantage over potential new entrants because of preferential low rates. David (or anyone else), could you please clarify if I am wrong in my interpretation? If my interpretation is correct, wouldn’t it be better to offer preferential rates based on, for instance, the number of employees in the province?

  18. Thats true that there needs to be far more detail on the issue than currently. However, lets look at it logically, the word ‘current’ means that energy regulations will be made to conform to Quebec’s NOW. Richard says that that doesn’t mean anything about the future, but ask a simple question-NB’s energy regulations need to conform to Quebec’s NOW, so what happens in three years if NB Power or the NB government says “we’re changing this regulation back to the way it was previously because it was more ‘beneficial’ for New Brunswickers. That would negate the whole point of making the energy regulations conform NOW wouldn’t it? So it would make no sense for Quebec to adopt such a stipulation.

    As for the FERC, Richard SHOULDN”T ‘care’, in fact there will be no point in caring about energy policy in New Brunswick AT ALL, because virtually all the facilities will be owned by Quebec and all the regulations will be (probably, we don’t know) controlled by Quebec.

    But nobody is making critical comments just on the basis of what Richard may or may not care about. The simple fact is that IF Quebec proves a hindrance to Newfoundland, why expect it to act any differently towards New Brunswickers. They will simply be customers in a monopoly. But here’s some explanation from Danny Williams:

    “Newfoundland and Labrador�s experience of dealing with a system operator that is imbedded within Hydro Quebec has show that this model can significantly delay decisions (4 years or more) even under an OATT process. It is this experience that leads us to believe the proposed move by Hydro Quebec to take over the NB System Operator (NBSO) role will likely lead to similar outcomes.”

  19. RKA to be honest with you equity in Fraser Paper is better than squat out of AV Nackawic. The Province has given them over $70 million. Look. I am not a believer in constant subsidization of industry – not even agriculture (which is the most subsidized industry of them all). But getting L and M rate power is about resetting the cost structure for electricity in this province – and to me that is not a subsidy. Hopefully these firms will not need to come to the government again. This is a broader discussion which I have talked about in the past. ‘Retention’ funds – designed to keep a company from either leaving or closing – should be used very sparingly. I don’t think taxpayers should be propping up companies with bad business models. I don’t rule it out completely – because I rarely ever categorically rule anything out.

  20. “all the regulations will be (probably, we don’t know) controlled by Quebec. ”

    There is no evidence to support that contention. Its just paranoia on your part. The word in the MOU is ‘current’. Not ‘now and forever’. Unless the draft legislation is worded differently, nothing prevents NB from changing the regulatory framework afterwords. Surely you can find things to object to in the deal that are not based on such thin gruel.

  21. I dont see how a massive power rate reduction ISN”T a subsidy. Even in Quebec they admit it openly, and whenever you say “we NEED to do this” then you are entering subsidy territory. NBPower currently has the lowest industrial rates on the northeastern seaboard, their rates are known as a cost, and industry is perfectly able to plan reductions in power use in advance. Heck, if Irving wanted to, they could build a biomass to supply ALL their own power.

    Resetting cost structures is certainly about subsidies-what if they were resetting them to zero? That’s quite obviously a subsidy. So the issue is really which of those numbers in between is the ‘cut off point’ between ‘fair value’ and ‘subsidy’.

    But I agree that an equity position in Fraser beats a blank cheque. In fact, years ago the government should have bought out the mills and then set them up as co-ops to be used by private woodlot owners and value added industries, rather than changing legislation that lets corporations ship out all the trees. That way, if they lost money they could still be utilized as potential power generators and other uses, and they’d be providing jobs in the supply chain. Unfortunately in this deal, however, the equity barely protects the province in the case of bankruptcy, and is acting pretty much like a loan that will be bought back at a specified time for interest. An equity position would let NB have direct say in the operations of Fraser, and for all those ‘keep government out of business’ people-do you think they would have run it worse than Fraser?

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