New poll on the NB Power deal

I haven’t commented much on the deal lately because my opinion is well known but I did find the results of the new Radio Canada poll interesting. Particularly the set up question. Now it is possible that my French is not particularly good so I Google translated the question:

An amended agreement was submitted in January. Are you aware of the differences between the two agreements?

Half of the people said they were not even aware of the differences and only 17% said they felt ‘quite’ aware. That drops to 10% or one out of 10 among people under the age of 34.

This is the defining public policy issue of the day and half of New Brunswickers have essentially no knowledge of the deal as proposed? 

And then I get this stream of commentary about the ‘wisdom of the crowds’ and the shining example of democracy at work. 

And the other thing that is interesting about this poll is the deep division between Anglophones and Francophones.  On almost every question, Anglophones have at least a 50% more very unfavourable rate than Francophones.  Sometimes it’s double very unfavourable.

The final point is – and you can chop these things up in a thousand ways – the higher income reponders in Fredericton and Saint John tend to be far more against the deal and Edmundston-Woodstock is deeply against it but it is interesting to note that 35% of the respondents in that zone are retired.

The richer, older and anglophone are correlated with deeply against the deal.

I guess all these things make some sense.  The fact that only 17% of people say they have a good understanding of the new deal.  I guess that makes some sense.  The vocal and public opponents of the deal have little interest in people knowing the deal – there are still placards all over the place that read “say no to the sale of NB Power” even though NB Power is not being sold.

The fact that richer folks are more likely to be deeply against the deal. That makes sense I guess. 

The fact that older folks are deeply against it – I guess that makes sense as well. 

The high correlation between anglophones and deep dislike of the deal?  That card has been subtley played all along. 

The last point, of course, is likely the most important.  This is a relatively small poll – particularly when you chop it up into regions and linguistic groups. 

I think there is no doubt that the majority and a strong majority do not like the deal but when half of the people say they have no understanding of the difference between the first deal and the second, there is a fundamental problem.    A problem with how this is being communicated in the media.  A problem with how the government communicates complex public policy issues and a problem with how we tend to take the easy way out and go with our ‘hunch’ or gut feel on issues (I just read Gladwell’s Blink which is a good exposition on this issue).

PS – I can’t find a link to the full poll online.  If anyone knows where it is let me know and I will link to it here.

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24 Responses to New poll on the NB Power deal

  1. richard says:

    “A problem with how the government communicates complex public policy issues”

    The govt has not been honest with the public on this issue for at least two decades (a period that covers times when both major parties have been in power). A public utility used as a job creation engine rather than sticking to its business; couple that with some bizarre business decisions and you have a mess. The result is a utility so mired in debt that it has essentially no equity in its assets. Despite this, we were told, up until 6 months ago, that everything was hunky-dory. No wonder there is outrage. To be fair to the govts, tho, we have to admit that very few have been asking the tough questions and the media has hardly done its bit either. Consequently. the public has largely only gotten upset when power rates threatened to go up.

  2. mikel says:

    First, there have been NO details of the second deal given out. Unlike the first deal which had an MOU, the second deal so far has nothing but the blanket statement of ‘we’re just selling the assets’. So OF COURSE people don’t know the details of the second-do YOU? Nobody does, at the Facebook site TJ Burke has joined and has been answering questions and its clear HE has no more idea than anybody else.

    As for ‘democracy’, nobody has said anything of the sort. The only ‘wisdom of the crowds’ has been having enough wisdom to get organized and fight against a blatantly anti democratic decision. And again, this is NOT a referendum-why bother researching and formulating an opinion on a decision where your input is zero? If it were a referendum, then it would be a different story.

    The poll is instructive, but with that small a sample size you can’t break it down by demographics, its just TOO small. In the first poll francophones were just as opposed, but for very different reasons. Now it IS different, I’ve talked to many senior riding liberals who say that the deal NOW may not be so bad, and that’s true, it MAY not be so bad, and their biggest regret is the knowledge of what this will due to their election chances.

    It MAY be good, and imagine a scenario where Graham said “look, we got a deal for the dams and generation, what do you think?” THEN it would be a different ballgame, but thats not the case here.

    It IS very sad but true that many have no idea of the deal, as I’ve pointed out, MOST people had never even read the MOU-but again, they were quite right not to.

    And of course the simple retort about the ‘wisdom of the crowd’ is that by definition you have MEMBERS of that crowd who are the ones making the final decision. Guess what? No matter what you do, in the end it is members of that crowd making the decision. Just because they have been nominated and represent a party, doesn’t make them smarter than anybody else. Like I said, the most active members of the facebook group know FAR more about energy policy than TJ Burke, whose most frequent answer is of the variant “I trust Shawn Graham”. Trust may be fine for a political party member of their leader, but in the real world of politics, trust is earned.

  3. richard says:

    “And again, this is NOT a referendum-why bother researching and formulating an opinion on a decision where your input is zero?”

    Clearly the public’s input is not zero. If it was, MOU2 would not have been negotiated. So there has been plenty of incentive for the public to educate themselves re the condition of NB Power.

    The real problem for the govt is not the ‘deal’, its the fact that the deal came out of the blue after over 20 years of obfuscation and hiding the sad truth re NB Power. The problem for the Tories is that there is no alternative to the deal that will not result in large increases in power rates in the short term. That’s why Alward is talking about consultation, rather than a binding referendum. He knows very well that the only way to keep power rates low in NB is to sell assets. He won’t say that, however, until after the election.

  4. Samonymous says:

    When I work as a communicator in Ottawa I use to send out press releases three times a week on behalf of the member[s] I worked for. I had the privilege of working for four great MPs (one from Saskatchewan, one from Ontario, one from Alberta and my first job was with an MP from New Brunswick). All these MPs but one (the NB MP) allowed the press releases to have words contained within the releases that suited typical educated political speak. Why did the New Brunswick MP disallow such wording? Because the member was of the opinion that many in her riding (and bordering regions) could not understand the terminology that other, more educated “have” regions, could. Let me tell you, I was quite surprised by the whole situation but chose to go with it anyway as the member called the shots.

    Anyway, with that said, I guess I quickly learned that our region (in certain areas of the province) sometimes is not on par with other parts of the country when it comes to the discussion of public policy and issues in general. Furthermore, we [New Brunswickers] on average are the last to become policy experts and read complicated MOUs when we probably can’t grasp the meaning of a Archie comic plot.

    So, in turn, I believe that the government failed miserably in their attempt to sell this to the general public. If it makes no sense to the average educated person, then how are people without that level of thought going to grasp such a discussion or document (no matter how good or bad the deal is or could be). What the average citizen does understand is simplicity, in that, they can feel when politicians are “shoving” something on them without clarifying just what it is their “shoving.” Plus, when the deal has absolutely no bipartisan support (and even a few within their own caucus questioning it), it doesn’t bode well for the general public’s acceptance of it.

    That said, I still think it was very bad strategy by the government to place the onus on common citizens and people who wanted a better and clearer explanation of both MOUs (telling them to come up with something better if they disagree). That’s not their job. It’s the people’s job to vote for the government they feel the most comfortable with and it’s the government’s job to fulfill the promises and commitments put forward to the people who put them there. In the case of NB power, this was not a proposal in their platform so they had better do a fantastic job of communicating this about face. Something I believe they [the government] failed miserably at.

  5. mikel says:

    That’s not exactly ‘input’. If you look at the opposition to the deal, certainly nobody was saying “we looked at it and think you should only sell the generational capabilities”. The ‘input’ was simply the mass uprising that occurred, and even that input was not direct-it’s more likely that the fact that liberal members themselves were not going to support it that made the difference.

    So to protest you certainly don’t need to know the specifics of the deal, they are largely irrelevant. That’s not an incentive to learn about the deal, if its a foregone conclusion the only thing you can do is to resist.

    It’s a mistake to state that its a problem ‘for government’. Its a problem for New Brunswickers, and I’ve pointed out numerous times that you can’t have low taxes, low rates, AND low debt. Costs CAN be contained, but it has to be subsidized, that’s the whole point of public services.

    It’s also a mistake to state knowledge of ‘why’ a person does something. I suspect Alward is making his claim so that he can give a response to those who state he’s got nothing to say, but more importantly to give people an outlet and get the subject back to some sort of semblance of sanity. While I agree with Richard about the past, I don’t agree that its THAT bad, and I don’t agree that its too late. Alward can get all these issues out in the open, have some sort of rational debate, and then propose a referendum. It’s true he may not, but a lot depends on how people-and business, respond over the next couple of years.

  6. mikel says:

    By the way, looking at the poll there is another important factor-and that’s that although protest has been virulent, its NOT as big as people may infer based on the media. The poll shows lots of people “don’t like” the liberals, but those aren’t transferring to votes for the tories. Fully one quarter of the population is so disillusioned that they don’t care, and one quarter simply can’t make up their minds -meaning, they don’t have all the information. That says a LOT about the political climate.

  7. richard says:

    “Alward is making his claim so that he can give a response to those who state he’s got nothing to say, but more importantly to give people an outlet and get the subject back to some sort of semblance of sanity. ”

    Well, then I guess he has failed miserably. He has not provided ‘a response’, he is just avoiding the question of what to do. He can go thru the motions of ‘consultation’ if he wishes but that is just more of the same shell game that politicians have been subjecting us to for decades. The only alternatives to this deal now are much higher power rates; he knows that but won’t say it till after the election. He is getting cudos from certain CBC ‘reporters’ for being politically astute, but IMHO he is being much more dishonest and deceitful than Graham on this issue.

  8. >A problem with how this is being communicated in the media. A problem with how the government communicates complex public policy issues

    Yes, and this isn’t helped by the misinformation continually being spread about the deal, as evidenced even in this comment thread (of readers that seem to respond only to posts dealing with NB Power).

    That said, though, it’s a pretty easy trap to fall into: to wit “And then I get this stream of commentary about the ‘wisdom of the crowds’ and the shining example of democracy at work.”

    Now maybe you’ve read Surowiecki’s “The Wisdom of Crowds”, but I think it would be less likely you’ve read the other literature on the subject – things like Buchanan’s “Nexus: Small Worlds and the Groundbreaking Science of Networks” and Barabasi’s “Linked: How Everything Is Connected to Everything Else”, much less the scientific papers on networks, graph theory, and connectionist theories of computation.

    Because if you had, you wouldn’t have dismissed ‘the wisdom of crowds’ with such an offhand and factually incorrect remark.

    What we are seeing around NB Power has nothing to do with the wisdom of crowds. It’s the same old power politics played out by the same old parties, engaged in a dialogue of domination and control, where the one that wins the mass (however uneducated) wins the day.

    None of this has anything to do with the NB Power issue, of course. But it is enlightening to see you jump with both feet firmly misrepresenting something just paragraphs away from an expression of concern about that very same phenomenon.

  9. mikel says:

    Those are two very different terms, he’s obviously not as ‘dishonest’, since it was Graham who made the election promise and then reneged. As for deceitful, that can’t be proven in advance so its just as hypothetical as all the people calling Graham an outright ‘crook’.

    And again, energy can be subsidized, that’s how it is in many provinces and countries, so its not true about higher rates. That MAY be the best way, but it also may not be. In fact, subsidization is FAR more advantageous because the other tactic some people are talking about are the considerable fuel alternatives and conservation measures that most other regions have available. However, the more NBers conserve, obviously the more money NBPower ‘may’ lose-depending on foreign sales.

    Other alternatives include expanding NBPower into natural gas, something the prairie provinces have been doing for decades, which is also beneficial because as people continue to switch to natural gas, again, those are lost dollars for NBPower.

    Energy is a VERY complicated issue and there are a LOT of options and alternatives-and of course you can’t fault Alward for that tactic and forget that Graham has announced the same thing-the only difference is that Graham says in advance that no matter what the consultations yield the deal is done. Which means not only is he more dishonest and deceitful, but may be outright dumber.

    Regardless of what CBC reporters say, even with his chest thumping and grassroots rhetoric, Alward doesn’t rank much higher than Graham in that poll mentioned, so its not as politically astute as some may think. Like Nader was saying of John Kerry in the US, with such an unpopular leader making seriously unpopular decisions, Alward should be leagues ahead, Danny WIlliams kind of lead-yet the poll shows him at only 6 points ahead.

    So I’d advise his management team to not pay too much attention to CBC pundits.

  10. Samonymous says:

    Alward can get all these issues out in the open, have some sort of rational debate, and then propose a referendum. It’s true he may not, but a lot depends on how people-and business, respond over the next couple of years.

    If politics “as usual” rules the day (which it usually does here), he won’t likely do anything. And why would he? Rule #3 in politics: When your opponent is in the process of destroying himself, don’t get in his way…get the heck out of his way. This is what Alward will do and continue to do as log as Graham is willing to drive over the cliff with this.

  11. richard says:

    “it was Graham who made the election promise and then reneged”

    He did not renege. The promise was not to sell NB Power. He isn’t. Alward is being deceitful because he has access (from his Lord colleagues) to the 2001 data from NB Power. He knows the implications of those data – that NB Power has no equity in its assets and is running on debt. That is not sustainable. He may not like the deal, but he does not have an alternative. Failing to admit that is deceitful.

    “Other alternatives include expanding NBPower into natural gas”

    You are (like many of your Facebook ‘experts’) confusing alternatives to the deal with alternative sources of energy. Nothing in this deal (with one exception) prevents NB from developing natural gas, tidal power, wind power, etc, post-deal. The ‘exception’ is that hydro power from HQ is so much cheaper than alternative power sources that those alternatives will require large subsidies to get them into the grid. If those who clainm to actually have an alternative to the deal were honest, they would provide the costs and meter rates that their proposal would provide. They will not do so, since they know that the prospect of large rate increases would greatly reduce opposition to the HQ deal.

    “there are a LOT of options and alternatives”

    So let’s see a couple of alternatives to the deal, with price tags and meter rates attached. And I mean alternatives to the deal, not alternative power sources.

    “So I’d advise his management team to not pay too much attention to CBC pundits.”

    At last, something we can agree on.

    “This is what Alward will do and continue to do as log as Graham is willing to drive over the cliff with this.”

    It hardly matters which politician is driving over the cliff. After all, we have an inexhaustible supply of them. Whoever wins the next election will not alter the deal; and that is a good thing.

  12. mikel says:

    That’s specious, Graham WAS selling ALL of NBPower, and while he’s not selling ALL of NBPower, he IS selling NBPower. My arm and leg are only part of me, but they are ‘me’.

    It’s ridiculous to state the province has NO equity in its assets. It owns ALL the assets. You think Quebec would want to purchase generation capabilities that are worthless? Come on!

    It is not running ON debt, it is running debt. So is the province. So what? Have you seen the federal governments debt and deficit? To say something is ‘not sustainable’ simply because it has debt and a deficit is just silly.

    There is one BIG exception to alternate power purchases-namely Hydro Quebec. Hydro power is cheaper NOW, but that means little. Prices aren’t only determined by production costs but by market costs. Which means if the US needs power and drives the price up, then thats the price you pay.

    Nobody is doubting about the subsidies, but they need not be that large. The extra transmission lines to the US were done with regular operating costs.

    I don’t really understand the other part, you say ‘lets see alternatives’ and then say ‘I don’t mean alternatives’. The alternative to selling generational capabilities to Quebec would include NOT selling to Quebec-if Quebec wishes to purchase them you can bet they are worth something. Or the other alternative is to sell to somebody else.

    Again, like any deal, Quebec wants to make money, thats why they want to purchase. If these assets weren’t worth what they are paying, it would be silly to purchase them.

    So I don’t understand exactly what price tags and meter rates you mean. The mactaquac dam operates on a certain budget and produces a certain amount of power-so what exactly are you talking about if NOT ‘alternate sources of power’ which you say are so much more expensive and require large subsidies.

    But of course Richard, like anybody, is entitled to think what he wants of Alward. However,for readers, we should note that the terms he uses to describe Alward are based on Alward not sharing his opinion-something he isn’t required (and shouldn’t) do. Graham, on the other hand, we have all the evidence in front of us, and Richard has even admitted most of them. And again, its useful to remember that Graham hasn’t even released the details of the latest deal, so its hard to criticize people for not knowing something which hasn’t been made public-and it says something about a persons ideology that they will agree to a proposal whose details haven’t even been released. Would you ‘agree’ to sign a mortgage when all you had was very basic information….or would you reserve your judgement til you’d read it over? Say what you want, BOTH sides in the debate are being ideological and biased from the outset. At least ONE side is asking simply for a referendum so all the information can come out first.

  13. richard says:

    ” he IS selling NBPower”

    No he isn’t. He is selling some of NB Power’s assets. There was no promise not to do that. NB Power continues to function, so your analogy is not apt.

    “It’s ridiculous to state the province has NO equity in its assets”

    That was a statement made by NB Power execs at a EUB hearing in 2001. NB Power has given up all of its equity in its assets in order to acquire more debt. If you have a house mortgage, for eg, and borrow against the equity in your house, you are giving up the equity that you built up by paying down the mortgage. In effect, you lose whatever equity you have and own nothing but the debt obligations. You can talk to an accountant if we need help with this, but it is pretty basic. NB Power has acquired so much debt that, according to NB Power execs, NB Power no longer has any equity in its assets: it owns nothing but the right to sell the assets.

    Readers are encouraged to go to the EUB site and scroll thru the transcripts of hearings: they are quite illuminating and alarming.

    ” You think Quebec would want to purchase generation capabilities that are worthless”

    They are not worthless to HQ, because HQ is not assuming the debt. NB Power will be taking revenue from the sale to pay down the debt. You need to talk to an accountant.

    “Nobody is doubting about the subsidies, but they need not be that large. ”

    The current subsidies have a 20% premium or more. That would mean at 20% spike in power rates if they represented the sole source of power.

    “Which means if the US needs power and drives the price up, then thats the price you pay. ”

    That’s why the proposal to negotiate a long-term deal with HQ for hydro (as opposed to the current deal) will again raise power rates. And that is why those who support this idea are mum on the costs. They are being as deceptive as Alward.

    Still waiting for you and your Facebook energy experts to come with alternatives to the deal, with price tags attached. Isn’t it time to admit you don’t have one? Your sqawking about Mactaquac is hardly relevant; its paid for itself alright but provides only a fraction of NB’s power requirements. Come up with a real alternative that provides the power the province needs, with price tags and meter rates.

    ” are based on Alward not sharing his opinion-something he isn’t required (and shouldn’t) do”

    Again, that may be a good political tactic, but it is deceitful to not put forward your alternative when you have all the data necessary to provide one, and instead, pretend that you will undertake a meaningful consultation. Note that he has not promised a binding referendum; he knows very well that a radical solution is required for NB Power and its going to be one NBers won’t like.

  14. mikel says:

    He is not selling NBPower in its ‘entirety’, but he IS selling NBPower, just not ALL of it. That’s partly semantics, but Bernard Lord was well known to be trying to sell Pt. Lepreau, NOT NBPower, and the response to that was Graham saying that “I won’t sell NBPower”. And of course at first without the protest, he WAS selling it in its entirety. So the claim that he’s not dishonest because public protest made him back down from his lies are pretty specious.

    The house analogy is NOT apt for talking about a business, unless your home was also where you made widgets. Then your equity partly becomes the value of the widgets you make and sell. As is well known, the main reason for most of the debt is that debt financing is dirt cheap, so the province WANTED it to be financed with debt. As a businessman you should already know this, the value of Mactaquac’s Dam is NOT simply how much debt and how much it cost-but how much you can sell what it produces. That’s pretty elementary, and its something we simply don’t know, because nobody knows what energy prices will do.

    “They are not worthless to HQ, because HQ is not assuming the debt. NB Power will be taking revenue from the sale to pay down the debt. You need to talk to an accountant.”

    About what? You haven’t actually SAID anything. Quebec hydro is BORROWING the money to make the purchase, it is acquiring its OWN debt. They then have to pay on that debt, as well as the interest, as well as make enough profit to make the purchase worthwhile. Those are not insignificant costs, and you don’t need an accountant to tell you how to add.

    There ARE no current subsidies, NBPower is ‘self financing’ right now. That comment makes zero sense.

    For price tags and meter rates, again, you make no sense because the alternatives all rely on alternative sources of power. Again, buying equity into natural gas will cost something, but over the long term its negligible. Natural gas costs right now are at an all time low, so switching Coleson Cove over to gas may have a cost at first, but over the long term it is amortized enough to make it dirt cheap. That’s why public investment is far better than private, Enbridge is already griping that it costs too much for them to lay pipe.

    Either way, what you are arguing doesn’t really make any sense. The province is selling generation capabilities, that has NOTHING to do with rates. They are all self financing, so your rates will have to pay for the cost of Mactaquac no matter WHO owns it. In the quebec deal they have the profit motive on top of it, so rates would have to be higher than the status quo to cover it.

    As I said, Alward has not promised a binding referendum, but for Richard to ASSUME that its because of the reason HE thinks, is bad science. For energy costs we simply don’t KNOW what the future is, it COULD be bad, but it may not be. Lepraeu MAY work better than initially thought, the dams may hold out longer, there may be record precipitation, AND there could be conditions where the US needs to buy power at an inflated rate. Richard seems to think he KNOWS the future, if that were true he’d be a lot more famous and rich. It’s as dangerous to be TOO cynical as it is to be too optimistic.

    I would agree about rates, in fact right now I think most NBers would as well. However, with rate increases can also come efficiency measures and other programs, thats something that SHOULD be done because higher rates spur conservation, but unfortunately not everybody can afford that. As said, this all goes back to subsidization and the liberals idiotic move to lower taxes, particularly for the wealthy. Energy is a public resource, you don’t get low rates, low debt AND lower taxes. So forget the meter rates, call off the deal, raise the taxes on resources and corporations, pay that into NBPowers special account, and that helps keep rates low.

  15. richard says:

    “Quebec hydro is BORROWING the money to make the purchase, ”

    Quebec has billions in equity in its assets. It can borrow whatever it wants. Talk to an accountant.

    “There ARE no current subsidies, NBPower is ’self financing’ right now. That comment makes zero sense. ”

    NB Power is running on debt. See the EUB filings. The subsidies (please read more carefully) are the feed-in tariffs for wind power and other alternate power sources.

    “For price tags and meter rates, again, you make no sense because the alternatives all rely on alternative sources of power”

    OK, you are clearly way out of your depth here. Every alternative solution must have a price tag; what are the price tags for your solutions? Your self-financing nonsense is ignoring the fact that in order to be self-financing, power rates have to reflect the costs of providing power. In NB, the current power rates are way below the costs of providing power. That’s why NB Power is running on debt and has no equity in its assets. What is the solution to that? Graham has provided a start of providing one. What are the real alternatives?

    “Lepraeu MAY work better than initially thought, the dams may hold out longer, there may be record precipitation”

    ..and pigs may fly. But it would be damn poor planning to expect that to happen. NB Power is in deep trouble right now and all indications are that it will get much worse in the short term (see the 2009 EUB filings for example). What is your proposed alternative?

    ” So forget the meter rates, call off the deal, raise the taxes on resources and corporations, pay that into NBPowers special account, and that helps keep rates low.”

    Well, at least you are admitting that the alternatives all involve significantly higher power rates. Why don’t you issue a press release on behalf of the facebook mob recommending that Alward support the much higher rates required to make NB Power self-financing? But wait! First you say power should be self-financing, then you say power rates should be subsidized by taxpayers. Perhaps you should take some time, right things down, edit for logic and facts, then prepare a rational alternative to the proposed deal with HQ. At the moment, you are running around in circles.

  16. mikel says:

    Dude, Quebec has less equity in its assets than New Brunswick. They owe BILLIONS more than their assets are ‘worth’-48 billion at last count. What makes the difference is what the asset PRODUCES, namely the power. The value of a dam is the value of what it produces, thats why people INVEST in them. The quebec dams are simply bigger, so they produce more power, and they are newer, meaning they will produce them longer with less investment for a longer period of time. That doesn’t change the fact that the VALUE is in what is produces. NB Power is going to have a VERY rough year next year because there was very little spring runoff this year, unlike past years-of course that could change depending on the weather-it ALL depends on the weather. But on good years with lots of rain, OBVIOUSLY the value of a dam goes up-you need an accountant to explain that to you?

    Actually, the facebook group has no problem with rising rates. YOU are saying they need to be ‘MUCH” higher, but thats not yet a given. But overwhelmingly people have supported higher rates-REASONABLE higher rates. As David has pointed out several times, NBPower has raised rates over 20% in five years, NOBODY has complained about that. Thats NOBODY.

    And again, you are skipping what I said, I’ve never said what rates SHOULD be doing. I don’t care, I don’t live there. We get all our power from natural gas, so even what the energy utility does HERE means little to me. What I said was that ANY province can have lower rates IF it subsidizes them through taxes.

    As for debt, again, it HAS debt but “running on debt” isn’t actually a fiscal term. Obviously the assets have value-otherwise Quebec wouldn’t want them. But theres no doubt and I’ve pointed it out before, where power rates don’t much power cost-you need to either subsidize them or raise rates. One or the other.

    NBPower is in no deeper trouble now than it was 20 years ago, or 40 years ago. If it needs more financing, you simply finance it. So what if it gets worse in the short term, its ironic that things are worse in the short term, yet you are advocating accepting a deal to FREEZE rates. Inconsistent much? Who is talking in circles? Everybody admits that the governments budget is going to get worse in the short term, but its the long term that is the concern. If you look at the financials of both NBPower and the province of NB, the PROVINCE will be insolvent long before NBPower.

    Like I’ve said, I don’t think power SHOULD be self financing, in fact thats a HORRIBLE way to run it. It should be at least partially financed through the tax system since its a public good. That’s something I’ve said pretty consistently, if you’ve missed that, you haven’t been reading.

    As for the alternatives, again, this deal has nothing to do with alternatives, it is simply selling off assets. The alternatives rise and fall on their own so have little impact on this deal one way or another. That’s a completely separate issue.

    By the way, NBPower can also borrow whatever it wants, so far it pays the government to use their credit rating to get better rates, but it can certainly borrow what it wants, it had NO trouble finding creditors to pony up the dough for Lepreau even though that had a spurious business plan from the get go.

    A feed in tariff isn’t really a subsidy, it simply offers the producer a rate based on its cost of production, rather than market prices. NB COULD buy cheaper power from coal plants in the US, or coal from south america, but ‘in addition’, it is buying some power from wind sources and soon maybe alternative sources. The rates they pay are NOT below what it costs to produce the power, they are the SAME as, with a tacked on level for ‘profit’, much the same as they were offering Hydro Quebec.

    For the costs of those, you can see them at NBPowers financials, they vary by year. The other problem is what exactly that ‘profit level’ is, because NBPower maintains that what it pays suppliers is confidential, so we can’t find out. That’s why numerous sources have said it would be FAR better if NBPower would invest in the wind turbines itself. A single wind turbine can pay for itself at the feed in tariff rate in as little as 5 years, which means instead of paying it off that soon you can provide lower rates instead for longer. But like any investment, you can have higher rates to pay it off, THEN actually lower the rates.

  17. richard says:

    “Dude, Quebec has less equity in its assets than New Brunswick. They owe BILLIONS more than their assets are ‘worth’-48 billion at last count.”

    Dude, where do you get this stuff? HQ has assets worth over 60 billion, with equity of almost half that. They can borrow whatever they want for 2 reasons: they have the export potential to generate a lot of revenue (NBP does not have that as NBP’s power is much more expensive) and they have plenty of equity in their assets.

    “I’ve never said what rates SHOULD be doing. I don’t care, I don’t live there.”

    Exactly. You don’t care. That’s why you have no interest in an alternative. You don’t care abot NBP’s fiscal situation, the effect that will have on power rates, and the impact that is going to have on NB’s debt. NB is heading for a world of hurt, but you simply want to engage in rhetorical nonsense.

    “For the costs of those, you can see them at NBPowers financials, they vary by year”

    Ahh, no you cannot. You cannot even get a good idea of NB Power’s debt fron their financials. You have to go to the EUB site and look at 10-year old data. That’s how bad things are.

    “A feed in tariff isn’t really a subsidy, ”

    Sorry, its a subsidy. One that is paid for by power consumers.

    “NBPower has raised rates over 20% in five years, NOBODY has complained about that. Thats NOBODY. ”

    That is completely wrong. There has been a great of complaint about that – that’s why there is a cap on rates. I am glad to hear that the facebook mob does not care about rates. Now if they would just send a few letters of to the local press stating that…

    “but it can certainly borrow what it wants,”

    Yes, they can borrow whatever they want. That’s because the good old NB taxpayer stands behind every loan.

    “FAR better if NBPower would invest in the wind turbines itself.”

    Once again, you are talking about alternative sources of power, not alternatives to the proposal. Two very different things. Nothing prevents NB Power now or in the future from investing in wind power.

    “The rates they pay are NOT below what it costs to produce the power, they are the SAME as, with a tacked on level for ‘profit’, much the same as they were offering Hydro Quebec. ”

    If you are talking about the feed-in tariff for wind power, then I’m afraid you are again confused. NBP Disco and HQ Disco pay wind energy providers a higher rate for their power than they pay for other sources of power. That higher cost is factored in to the entire power supply; that in turn causes power rates to be pushed upwards. Its a subsidy. Its funny how you keep saying that we can’t know what is going to happen in the future (therefore planning is futile), yet you seem to think it is a certainty that wind power will be profitable enough to lower power rates below what they are now.

  18. mikel says:

    HQ has assets of 60 billion, with a debt of 40 billion. According to independant evaluators, its ‘worth’ double that, because of what it produces-namely subsidized power.

    If you don’t choose to believe what they state about debt, thats your business, but like the girl at facebook making wild accusations, if you only have ‘hunches’, then don’t expect people to believe you.

    People ALWAYS complain about rate increases to the EUB, such as when NBP wanted to raise rates 12%. The EUB looked at their case and concluded that 12% wasn’t necessary.

    That’s absolutely right that the NB taxpayer stands behind the loan, thats’ the whole idea. The same as Quebec Hydro’s debt is guaranteed by Quebec taxpayers.

    For the final paragraph, you are just repeating what I said. I didn’t say you can’t plan for the future, I said you can’t predict the future, there’s a big difference. It’s not a CERTAINTY about wind power, but we do have the data on wind for NB, and we’ve seen numerous cases where wind turbines have paid for themselves in as little as four or five years. Typically those are in areas which are fairly close to urban centers or the users of the power. Thats why a ‘plan’ would be for NBPower to be building wind turbines itself, something I’ve argued for YEARS. On years where it can only afford a few, then just put up a few, but so far there has been almost no talk about it as serious policy. They found money to put up another transmission line to lease to Quebec, so they can find money for some turbines. But again, paying somebody what something costs to produce is NOT a subsidy-just because you can find it cheaper somewhere else. It goes into the energy mix, which is why wind power SHOULD have been expanded during the cheap coal years. But again, until Point Lepreau is up and running-or dead, its crazy to be making long term plans. It supplies close to HALF the energy for the province, and a lot depends on it.

    For wind power, there are still a lot of variables. No wind turbines have been taken out of commission yet, so we don’t know exactly how long they will last. Some companies have had recent scandals where turbines have broken down quickly, other places in europe are now reaping dirt cheap power because the turbines are lasting far longer than expected.

    But simply having a different owner for the assets certainly means nothing about the overall picture of the energy sector. If you are arguing for higher rates, then that may occur no matter who owns the asset. But like I said, THIS deal is arguing for freezing rates and then claiming to support low rates into the future, virtually EVERYTHING about this deal has been arguing directly against what Richard says needs to happen. So the question is, why would a guy be supporting a decision whose outcome is the OPPOSITE of what they want to see happen?

    As for facebook, those members send emails almost DAILY saying exactly what Richard says, the only difference is that they want to maintain ownership. So the real question is, why is Richard so vehemently arguing for a deal that represents the opposite of the policy he supports?

  19. richard says:

    “HQ has assets of 60 billion, with a debt of 40 billion. According to independant evaluators, its ‘worth’ double that, because of what it produces-namely subsidized power.”

    In other words, HQ has substantial equity in its assets. The opposite of NBP. In absence of this deal, NBP will have to either massively increase rates or be bailed out by the NB taxpayers, who are hardly in a position to do so.

    “But like I said, THIS deal is arguing for freezing rates and then claiming to support low rates into the future, virtually EVERYTHING about this deal has been arguing directly against what Richard says needs to happen. ”

    Ahh, do you have an English translation of that, cause it makes no sense. The deal has two parts : debt reduction and holding down rate increases. WIth debt reduction, NBP can perhaps start looking at investing in other generation sources, close down the thermal plants, etc. With power rates kept low, power consumers benfeit. Now maybe some want NBers to put on hair shirts and suffer much higher rates in order to encouragte conservation; I’d rather have the lower rates.

    The real question is where are the alternatives to the proposed sale of assets to HQ? I have yet to see an alternative that faces the harsh reality of NBP’s zero equity, its massive debt, and the impacts of those problems on power rates, and power generation re-investment / maintenance. If the Facebook mob is indeed the source of letters-to-the-editor then I have to say I am dismayed. You claimed Facebook was populated by energy experts; the letters in the press suggest that instead they are irrational boobs who have more in common with the clowns at the McIntyre and Watts climate denial sites than anyone knowledgeable about energy policy. By now, actual experts would have been able to put together a rational alternative. Where is it?

  20. mikel says:

    OR it can increase debt, as its done in the past when necessary. Debt is hardly a question when you own the assets. Let’s start with the Mactaquac Dam:

    “Due to expanding concrete problems, engineering reports say that the Mactaquac Dam should be shut down in 2013 and be replaced. The Mactaquac Dam cost $113 million to build in the 1960s.”

    “To date it has paid for itself more than 15 times over, making more than $1.5 billion in profitable business sales for NB Power over 40 years. There is no reason for the Graham government or the people of New Brunswick to fear the $2 billion price tag to replace the dam. Because of new technology developments over the last 40 years, a new dam would be able to turn out twice the profit in energy, and this time last 100 years.”

    In fact, if MORE power was desired, again, depending on weather, because “the dam and powerhouse are a “run of the river” design, meaning that the reservoir has no additional holding capacity in the event of unusually high water flows” then it could be built with that additional holding capacity so it can generate even more power.

    So its ridiculous to state that a reduction in debt is a priority for such investments. A dam that has paid for itself 15 times over will have no problem finding investors if it needs it, and the credit market would be clamouring to hand out money. And that’s even though its only lasted half as long as it was supposed to.

    In fact, if its paid for itself 15 times over, then I’d suggest that the whole reason for the deal would be just to get their hands on the dam.

    “Should it last in to the next century, sales will exceed $180 billion.”

    And what is Quebec offering? 3 billion for ALL the power generators? Call that a good deal if you want to, but good luck selling that idea.

    As for letters in the press, thats IRVING press, so its really no surprise. However, there have actually been a fair number of decent articles in the rags, more than I would have thought. But again, Richard thinks everybody is an idiot who doesn’t agree with him.

    There ARE alternatives, Richard simply doens’t LIKE them. Again, dirt cheap credit always flows to hydro, thats what has helped Quebec, so as mentioned above, the Dams are not an issue. Point Lepreau can still get funding from the feds, or through a lawsuit, and once active again thats more cheap(er) power.

    If you want to see more alternatives, check out the Green Party of New Brunswick. If you want ‘lower rates’, then look at efficiencies. NB is one place where there is lots of opportunity there. We know that rates are ‘frozen’ for the first five years, again, Richard likes that, and doesn’t care what he gives up to get it. Thats fine for HIS opinion, but not everybody agrees with that.

  21. mikel says:

    Actually, if you want a REALLY good alternative, what you do is sell HQ the Mactaquac Dam, then you build ANOTHER dam owned by NBPower further upstream. If only your representatives were so smart:) Then do the same with the other dams:)

  22. richard says:

    Mikel still doesn’t get it. Another dam is another source of power generation. Its not an alternative to the proposed debt reduction. NBP has zero equity in its assets. Until that is resolved, there will be little or no re-investment in new power generation sources. Its not the refit of Mactaquac that is the problem, its that NBP is not in a position to take on any more debt (the cost of the refit plus the cost of replacement power). I don’t know who you are quoting from, but pretending that NBP can continue to borrow more and more, that debt servicing is not an issue, is the height of fiscal irresponsibilty.

    “So its ridiculous to state that a reduction in debt is a priority for such investments”

    That makes no sense whatsoever. If NBP was on sound financial footing, we would not be talking about a deal with HQ, and NBP would be borrowing money for the Mactaquac rebuild. No problem. The debt reduction need is for NBP, not the bloody dam!!!

    The Green Party ‘alternative’ does not have a price tag or meter rates attached to it, neither does it deal with the debt issue. It hints at much higher meter rates, but the Green Party knows exactly what will happen to whatever miniscule support it has now should it stand up and say ‘our alternative means much higher power rates – vote for us’. The idea of buying power from HQ long-term sounds good, until you look at the impact of that on power rates. In negotiating a deal like this with HQ, we would be competing with other regions in NA that are already negotiating with HQ for such deals; in most cases, they are already paying much more for power than we are. That means a long-term deal would be very expensive. NBP needs to reduce its debt load – such an agreement would have no effect on that, unless NBP turned around and sold that to NBers at much higher rates than power consumers are now paying. If people want to propose these as alternatives, that’s fine, but they need to be honest with NBers as to the impact of that on power rates and NBP’s debt.

    Dismissing debt as an issue is an old political game. Remember the 80s and 90s? We paid a big price for ignoring debt issues then, and we will pay again soon. Projected increases in interest rates are going to cause a world of hurt. GNB already has a massive debt; are people seriously proposing those debts don’t matter? When it comes time to fix those issues, its the lower income groups who will suffer, yet those opposing the HQ deal often claim to be working for the betterment of the poor. Talk about stabbing in the back.

    You want a quote? Here’s a quote from the transcripts of the New Brunswick Board of Commissioners of Public Utilities from January 28th 2002

    “In response to a question from the Board, Ms.
    MacFarlane (note – she was vice pres finance NB Power) indicated that the interest coverage ratio is
    currently below one and that in the last two fiscal years
    it had been below one because of the losses incurred. Ms.
    MacFarlane agreed that the retained earnings of the
    corporation at March 31, 2002 would be approximately $9
    million after including the net income for the current
    year now forecast to be less than $1 million. This would
    mean that NB Power is effectively being financed 100
    percent by debt.

    Ms. MacFarlane made the following statement. “”Now it
    is the case that I believe we need to re-establish our
    balance sheet. And as we go into the future operating
    with a zero equity and with interest coverages where they
    are today, is not sustainable into the long term. And
    does not meet the requirements as you clearly pointed out.
    And that will be.. part of the consideration that we look
    at in putting together a rate plan for the long term.””
    (Transcript – Page 597).

    It is clear that the financial position of NB Power is
    not healthy and the Board agrees with Ms. MacFarlane in
    the conclusions expressed in this paragraph.
    The Board notes that the eight-year projections
    included with the Business Plan indicate that the two
    ratios will not improve significantly over the period of
    2008/2009, despite the fact that the introduction of
    Orimulsion will result in reduced generating costs.
    Therefore, NB Power’s financial position will not improve
    over this planning period unless there are significant
    increases in its revenues.”

    That polite language from the Board says it all. A decade ago, NBP was running completely on debt financing. Ten years later, given increases in carbon fuel costs (a big chunk of NBPs power is thermal not hydro) the situation is unlikely to be better now.

    Any real alternative has to deal with the debt and the costs of debt servicing.

  23. mikel says:

    Actually, we don’t know how much increase the utility needs, it says 3% but now the government is telling it to hush up. That there will be an increase in power rates we KNOW, in fact that is one of the big problems because as many point out, the freeze is for five years, THEN the increase may well simply be in addition. In other words, within ten years you will still see the same increase.

    Right now, as said, there are many conditions, we don’t know what the weather will do re hydro. We don’t know how long Mactaquac will last, we don’t know what the ultimate prognosis for Lepreau will be. ALL those things will determine factors on debt. Over five years previous to last, NBPower paid 100 million per year on its debt. Those ‘sky is falling’ reports Richard quotes are from eight years ago, yet the utility is ‘still sustainable’.

    When you first purchase a house or business, you have no equity in it, you are basically paying on interest for YEARS before you build equity. But that’s no reason not to purchase a home. Again, IF Lepreau comes to full power, and Mactaquac gets rebuilt, we’re looking at good numbers that can pay down debt, OR supply cheaper rates. Over the past five years they have made much higher payments on debt than was ever expected.

    When looking at the numbers for NBPower, the worst ones we can compare to another problem Richard frequently mentions-namely, the size of the economy. The worst ratio’s are due to the small size of the economy and number of workers.

    It was in 2002 that Energy Probe was saying ‘things look bad’, and that’s true, ALL utilities look bad-take a look at the water system. Yet even the orimulsion debacle and lepreau have not necessitated a cash infusion from government, and most of those years saw the utility pay down debt-and STILL have the lowest rates on the east coast.

    Most importantly is the point about the eighties and nineties, Richard has his view, but many have argued that Canada’s fiscal restraint HURT the economy and cuts to health care, etc., were far too severe. Places like Sweden had similar problems but resolved them without the draconian actions of Canada, they simply looke at long term solutions.

    So again, this all comes down to personal belief. You may THINK the problem is terminal, but thats only what you THINK, you don’t know the future anymore than anybody else. Mactaquac dam could hold for longer, the rains could be record, and lepreau could start producing cheap power. Again, I believe NBPower SHOULD build up its equity-particularly with wind turbines. I also believe its been fighting against the future because of the bureaucracy in Fredericton that uses NBPower as a job creation tool, and those problems have to be addressed. But it certainly doesn’t necessitate selling assets. The option of ‘bailing it out’ is a worst case scenario, and again, thats for NBers to decide. It wouldn’t be Shawn Graham doing it personally, that’s why it requires a referendum. Voters are on the hook for it, so voters should be deciding it. Richard is right in that respect, its loans are backed by New Brunswickers, so its right that they should be deciding its fate.

  24. richard says:

    “Actually, we don’t know how much increase the utility needs, it says 3% but now the government is telling it to hush up.”

    Acutally, we have a pretty good idea, from the transcripts of the EUB hearings. I’d say 10-20% is required to re-establish some equity and pay down debt, plus make re-investments in power generation, based on the testimony in 2001 and 2009. The utility is asking for 3.5, but, as you can see from the 2009 transcripts, that is because that is all they can ask for without a full EUB review. The last review, in 2001, was highly embarrasing, and something they do not want to repeat.

    “When you first purchase a house or business, you have no equity in it, you are basically paying on interest for YEARS before you build equity. But that’s no reason not to purchase a home.”

    Ahh, the old mortgage story. Unfortunately, here we have a reverse mortgage. NB Power once had equity in its assets; now it has none, and that’s according to an NB Power exec. NB Power has been spending money faster than it has been taking it in for at least two decades. That debt accumulation is not sustainable. Remember we are now in a period of low interest rates; that will not last for much longer. Rates will return to historical means, then debt servicing costs will mushroom. More and more of NB Power revenue will go to debt servicing and less and less will go to re-investment in new generation sources and maintenance.

    I realize that some are cavalier about debt, figuring that someone else will have to pay the bill. In Canada, we have had a few adminstrations that were able to keep debt minimized while still providing progressive social services – Tommy Douglas’ CCF/NDP Sask govts come to mind. He would be rolling in his grave at the thought of so-called progressives dismissing the impact of debt on social services delivery. On the other hand, we have the Harrisites, the Kleins and the Harperites who are happy to let debt levels rise, so long as tax rates are low.

    “But it certainly doesn’t necessitate selling assets.”

    I am afraid it does. Zero equity means either selling assets or very large increases in power rates.

    “Over the past five years they have made much higher payments on debt than was ever expected.”

    Please don’t make stuff up. Zero equity in assets.

    ” thats for NBers to decide”

    And they are, in the legislature.

    “We don’t know how long Mactaquac will last, we don’t know what the ultimate prognosis for Lepreau will be.”

    Actually, the engineers have a pretty good idea of how long the dam will last before a refit is required. As for Lepreau, we have a pretty good idea of its lifespan, provided it can be re-started. If not, then things will simply get much worse, much faster. Hope is not a plan; it would be better if people took a hard look at the data from the EUB documents. It is not a question of dams or nuclear power plants, it is a question of running a utility on debt. That cannot be sustained.

    If there are actual alternative proposals that take that debt into account, then let’s see them with price tags and meter rates attached. Otherwise, well, ‘de Nile’ is not just a river in Egypt.

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