I am a little weary of the NB Power file – I suspect many of you are as well but I have to clear up one more little point that many people are making. They talk about the $1.6B NPV rate savings from moving to HQ as some kind of liquid cash asset that can be used for whatever we want. Some have even talked about using the $5 billion rate savings to pay down additional debt.
This is not cash, folks. It has no cash value. I guess theoretically HQ could have put some kind of deep cash discount on it but they are already going to the debt market to raise the funds to pay off NB Power’s debt. The rest of it is a 30 year stream of economic value coming from the lower rates compared to what we would have paid under NB Power (based on a variety of assumptions that we have talked about before and that are listed in the NERA report). In fact, $1.7 billion of the savings is a totally theoretical number because it is stretched to infinity (they call it net present value in perpetuity).
The only real debate, then, is where you allocate the rate savings. You could maybe negotiate more up front or you could have cut residential rates and frozen large industrial rates – there are an infinite number of possibilities. The government, I assume, looked at it and said that the large industrials were more at risk from high cost electricity than other rate classes. You may disagree (and it seems most of you do) but at least we can talk about real process and real data and not theories and weird assumptions about the cash value of an estimated rate savings stream.