Energy as a competitive advantage

It’s kind of funny.  Minister Leonard makes an impassioned defence of NB Power in this opinion piece today positioning the company as a paragon of fiscal management.    He never mentions the stranded debt.  Never mentions the industrial power rate structure compared to other provinces and states with heavy industry.   The last time I looked, NB Power was one of the most debt laden electricity utilities in North America as measured by debt per MW of generation capacity and on a per customer basis.

But has never really been what has bugged me about NB Power.  The Minister can pick and choose his words carefully to construct a version of NB Power that he needs.  I get politics.  I understand this.  What I will never understand is how guys like Leonard and most of his predecessors never talk about NB Power as an asset for economic development.  Never.   Sure, they talked about the economic development from wind energy (which, by the way, is minimal) but never more than that.

Since the 1920s, public energy infrastructure has always been developed through the prism of economic development.

Now, it seems that when we need economic development the most, we take NB Power off the table.

I have called for the government and NB Power to come up with a plan for low cost industrial power.  I was talking with a guy involved in the energy industry here in Brazil and he told me that large industrial customers receive very low electricity rates relative to other classes of customer.  He said it only makes common sense.  Not here.  The last time I looked (admittedly nearly two years ago), the rate spread between NB Power’s largest industrial customers and its residential customers was among the tightest in North America – again particularly so compared to jurisdictions with heavy industry.

NB Power could convert Colson Cove to a nat gas fired plant and offer that power at very low rates (comparatively).  Call it NB Power Industrial or something similiar.  I know the province doesn’t particularly like data centres but considering that Canada is considered the second most attractive location in the world for them, wouldn’t it be nice to at least make an effort.  I can’t see the downside from having Google, Yahoo!, Microsoft, Amazon, etc. here even if it is with relatively few jobs.

But NB Power has never been interested in economic development – only, I guess, in the abstract.  In fact, I would go further and say that NB Power resents economic development and equates it to government intrusion in its business.  Economic development = political interference.

Funny how all those jurisdictions from Oregon to Alabama have power companies eager to come up with lower rate classes for large industrial clients and I don’t hear much about ‘politicization’.

Anyway, this is a common theme here but I can tell you it doesn’t do much good.  Things have only gotten worse in recent years.

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3 Responses to Energy as a competitive advantage

  1. mikel says:

    I suspect the problem has been that there has been such little interest in new large industrial developers. We know that UMOE was being promised the Quebec rate as soon as the NBPower sale was complete. However, in NB its very much the case that large industrial get so many buyouts and investments from the province, that this is a case of quid pro quo.

    However, just for fun I went to one of Oregon’s power companies, and it depends on the specific industry. So, I would be more prepared to say that a company could get cheaper rates depending on: whether they are public or not, the number of employees, how many more jobs would be created, and other investments.

    And to be fair, Oregon’s range (at one energy company) is from 5 (off peak) to 6.2 cents per KWH. In NB, with that horribly debt laden company (and why shouldn’t big industrials pay more if the company is so deep in debt-most of them have benefitted from cheap crown wood for years), the first 100 kwh are at 12 cents, but the rest is at 5.76 cents per kwh.

    So the prices are fairly comparible, the big difference is that Oregon seems to have more schedules and prices to reflect on peak and off peak, and depending on the industry the customer is in. But pricewise, NB is CHEAPER than many industries in Oregon, so so much for that argument.

  2. richard says:

    Here is a summary of power rates in the US:

    US Power rates

    Looks like US industrial rates are, on average, 60% below residential rates.

    Canadian Power rates

    Looking at Figs 24-25 and 36-38, NB appears to have below-average residential power rates, and above-average industrial power rates. That would seem to place NB at a competitive disadvantage.

  3. richard says:

    Opps, a few too many ellipses in the URL. Let’s try it again.

    Here is a summary of power rates in the US:

    US Power rates

    Looks like US industrial rates are, on average, 60% of residential rates.

    Canadian Power rates

    Looking at Figs 24-25 and 36-38, NB appears to have below-average residential power rates, and above-average industrial power rates. That would seem to place NB at a competitive disadvantage.

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