I’ve been asked at least a dozen times in the past 24 hours if I like the new NB Power/HQ deal. Remember back to my reasoning for supporting the initial proposal:
It resets NB Power’s cost structure to a much lower foundation. In other words, the cost of generating and distributing electricity drops over night taking advantage of HQ’s lower cost of generation. Assuming a reasonable rate escalation methodology and the right regulatory structure, this will almost certainly lead to lower and more stable rates for industry, small biz and residents for the future. And as I have pointed out many times – nothing in the old deal would have precluded the government from taking steps in wildly unlikely case of massive increases in rates.
It reduces or eliminates the huge environmental risk associated with having 63% of our generation from burning fossil fuel – the highest level in the country. Cap and trade system is likely to add something like $20 per MW to the cost of power coming from fossil fuel burning plants. No one knows for sure the amount but it could be substantial. Over a reasonable period of time 10-15 years, we will seen an orderly phasing out of these dirty plants.
It’s reduces our debt exposure – current and future. We have the second highest debt load per residential customer in the country and a pile of older and mostly fossil fuel burning plants (and the hydro will need refurbishing as well).
The new deal seems to meet these three objective – based on what we read in the media so I continue to support it. I never said it was perfect – nothing ever is. Cateris paribus, I would have no problem with NB Power being a crown corporation but not with the risks outlined above.
Some say that energy policy moves to Quebec. That is nuts. Nova Scotia has the most aggressive renewable energy strategy in Canada right now and its generation and distribution system is owned by a publicly-traded, private company called Emera. NS Power, the Emera subsidiary, follows the energy policy set by the government. That doesn’t mean there will be good energy policy but that risk exists either way.
A couple of people told me this would make the deal acceptable to NBers. Who knows? Even with Danny Williams’ supports of the deal, it likely won’t matter. I heard on the radio yesterday a journalist already shifting the argument to keeping NB Power a ‘manufacturer of electricity’. No mention there of Hugo Chavez, 63% dirty production, nada. But at least he is consistent.