Even some sober experts fanned the flames with their careful analyses, and less than ringing endorsements, of the tentative agreement. “NB Power customers will receive significant rate relief in the initial five-year period,” wrote Gordon Weil, president of Maine-based Standard Energy Company, in a report for the Atlantic Institute for Market Studies. “But the promised additional benefits are considerably more speculative and will be received over a period extending more than 30 years.”
Moreover, he observed, “The size of the HQ power supply and its control of an extensive transmission system may cause anti-competitive concerns for entities outside of the two provinces. Utility regulation in New Brunswick will be required to follow the Quebec regulatory system and be subject to specific legal requirements limiting its discretion. Such a transfer of regulatory control is unprecedented.”
With his polling figures at record lows (something he still insists doesn’t worry him), Graham recognized he had a serious problem. “Hydro-Quebec president Thierry Vandal knew that the issue of sovereignty and ownership had become the top concern,” the Premier now says. “So, just before Christmas we began discussions to see how we could address that issue. But, you know, we specifically asked New Brunswickers to become engaged. And that’s exactly what they did. And I must say the debate, while passionate, has been civil. I wanted to hear what New Brunswickers had to say, and they’ve clearly said we respect the end objectives you’ve laid out. But they’ve also said we’ve got to find a mechanism to maintain ownership of NB Power while still achieving those same objectives. And that’s what we’ve been able to do today.”
Notwithstanding Shawn Graham’s cheerful confidence, the essential problem remains: There is still enough uncertainty about the revised deal’s potential impact on New Brunswick’s control over its energy apparatus, and on the future of new energy development in the region, that many both inside and outside the province remain sceptical. Certainly, Gordon Weil appears unconvinced. In his review of the second deal, he writes: “The essence of the deal remains the same and the use of the transmission system, for the almost exclusive benefit of Hydro-Quebec, is also unchanged. From Quebec’s perspective, there was virtually no loss of what it had gained, but an immediate saving of the $1.55-billion that been assigned to acquiring the transmission system.”
Nor is he particularly impressed with the rate provisions. “As with any other rate cap that has been applied in the period since electric industry restructuring began in 1992,” he observes, “it is certain that at the end of the freeze there will be a significant amount of deferred costs to be recovered from customers.”
Beyond the studied, measured demurrals, there is some evidence to suggest resistance to the overall approach within Graham’s own cabinet. Prior to the announced amendments in January, a handful of high-profile ministers indicated that they could not, in good conscience, vote in favour of (for lack of a better term) Plan A. The Premier, however, dismisses any discussion of a threatened cabinet revolt. “There is a lot if misinformation out there,” he says. “What I asked Cabinet to do was go out and listen to the people and bring that back to caucus. Look, I’m not being distracted by all the rabbit tracks. I’m remaining focussed on the end goal.”
None of which explains the sudden and mysterious departure in late January of NB Power’s president and CEO David Hay, who reportedly abstained from voting on the matter at the board level. About this Energy Minister Jack Keir told reporters, “David Hay retires having turned around the utility and made it a great place to work. His counsel leading up to the period of transition has been invaluable, and I thank him for his services to New Brunswickers… This is David Hay’s decision. He saw that NB Power is headed in a new direction and he saw this as an opportune time to pass the torch.”
In all of this, the studied ambivalence of the federal government continues to raise questions. Ottawa has clear jurisdiction in any circumstance where barriers to inter-provincial or international trade could arise – a point Ontario Senator Lowell Murray articulated prior to the revised deal when he said, “I am motivated by a responsibility on the part of Parliament. We’re still in early days here and we only have an M.O.U. There are going to definitive agreements and legislation and all the rest of it. But Ottawa has to get interest in this and get into the game.”
As an economist (and ex-pat New Brunswicker) who’s read several analyses that support the NB Power sale, I understand the reasoning behind them. However, I am still concerned over the long-term implications which NO ONE can come close to predicting.
I respect the views of sages like Donald Savoie who has been calling the alarm over New Brunswick’s escalating fiscal imbalance and the probable need to begin selling off crown asstes. But when it comes to selling NB Power to Quebec Hydro, along with guaranteed access to the purchase of its transmission capacity should that decision be made in the future,I begin to think that this may be the contemporary equivalent to Newfoundlanmd Premier Joey Smallwood’s disastrous decision some five decades ago.
Our grand kids may very well shake their heads and wonder what Premier Shawn Graham was thinking in 2010.
Jim Taggart
Ottawa
It is a bad deal for NB.
I find it amazing that yet another generation of Maritimes / Atlantic-Canadian readers of the mainstream periodical business press are to be brought up once again on utter pap of the kind on offer in Alec Bruce’s article. Absent anywhere in the piece is even a breath of a hint of a clue, a hemidemisemiquaver, of the reality of the private corporate control/diktat that has been driving the entire NB Power/Hydro-Quebec deal “from the get.”
Cupidity, thy name is IRVING.
In the 1970s it began to be pointed out occasionally [in forgotten publications like The Mysterious East and the even more thoroughly forgotten federal Royal Commission on Corporate Concentration] that the so-called “interests of New Brunswick” happened — by just an amazing coincidence — to reflect exactly 100% — not 9% and not 101% but 100% — the interests of the Irving business empire, full stop. A generation of us eventually learned to read between the lines and look for the Irving-imperial interest[s] served by the Robichaud, Hatfield and McKenna administrations. In no field was this more blatant than that of oil-and-gas / energy.
Unloading NB Power onto Hydro-Quebec resolves quite a number of challenges to the Irvings’ future interests both in the short/medium-term and the longer term. The Irvings cannot possibly have a really profitable energy hub in Saint john, especially with a huge foreign investor partner such as Repsol SA, unless NB Power’s provincial monopoly is utterly tamed and retired as a potentially independent operatort not entirely under the Irvings’ control. The Irvings frequently use/attract Quebec-based capital to absorb assets that they find troublesome (remember Cabano? ever heard of Acadian Lines? SMT?).
What’s obviously no longer a source of maximum profit in minimum time are those penny-ante 30-year Bunker C contracts to supply NB Power thermal generating plants. Does anyone seriously expect Hydro-Quebec to maintain those aging and increasingly outmoded facilities?
In the wake of Hydro-Quebec’s digesting NB Power and thereby entirely monopolizing the export of electric power from east of Quebec into U.S. markets, I would look forward to Emera finding ways to dump any further long-term involvement in costly and decreasingly profitable monopolies like its current domination of the provision of electrical power throughout Nova Scotia. Central Maine Power which it already owns is a far better prospect, and in the U.S. there would be no hassles bringing unlimited quantities of Colombian blood coal to power the company’s generating plants. Well, then at least we won’t have to wait for a bad storm to knock or brown out our power services.
As for The Rock, those benighted folk have already been compelled to kiss a 400-year old fishery goodbye to make way for the offshore oil play that became Hibernia and the Hydro-Quebec coup will be curtains for any Lower Churchill dreams anyone was still harbouring. “Williamsville,” about to shrink to the size of a patch of Continental Shelf 300+ km or so southeast of St John’s, will just slide into a new desuetude as the easternmost oil tank of U.S. eastern seaboard oil refineries. Danny Millions’ personal republic will stay afloat on the basis of safety standards of the kind that sank the Ocean Ranger and took more than 80 workers’ lives nearly 30 years ago, and that contributed to the loss of almost everyone on Cougar Flight 491 when it ditched a year ago today (March 11). As for those pathetic 700,000-plus other folk still trying to carve out a livelihood on the island of Newfoundland, all I can say is: remember the Beothuk.
Having received the Atlantic Business magazine two days ago I was delighted yesterday to learn that New Brunswick has now decided to dump the power deal with Quebec – or perhaps as the Government of New Brunswick would prefer me to say….hmmm, Hydro Quebec pulled the plug on the deal.
I think not!
Last night I watched the New Brunswick premier try to keep up with Steve Murphy’s interview in which among other things he wondered how the Premier plans to get re-elected….that’s where the -it was Hydro Quebec’s dumping of the deal surfaced.
Having spent nearly 30 years in the media and a very large part of it working in Newfoundland and Labrador to try to get a “fair deal” from Hydro Quebec on the Labrador Hydro deal I feel qualified to offer the following.
The Alec Bruce article is a brilliantly written presentation of the power project. A case which openly wonders about what the deal would ever have meant to increasing value in Hydro Quebec – without something else, more devastating to the region to follow on the heels of this agreement. New Brunswick residents seemed at the outset of the “Plan” to twig to the potential black hole, in the fine print or in the what was not said.
Premier Graham almost made Jean Charest’s day, or perhaps more likely “Legacy of office: and don’t forget the business interests in New Brunswick to boot – they seemed destined for a comfortable future too.
The rest of Atlantic Canada should be happy with the outcome of the poor plan because as has been the mantra on the rock for over 4 decades now…isn’t it a tad strange that the “Government of Canada” could give permission to oil companies to build a pipeline from Alberta to Nova Scotia…but Newfoundland couldn’t run a power line across Quebec. I think to fully understand that you have to put Quebec and Hydro Quebec in that picture and you also have to put emphasis on the word POWER.
New Brunswick, you have just dodged a huge bullet – and don’t get too pent up in the very sad story about to enfold about how you missed the opportunity of a lifetime – I don’t think so!
To Atlantic Business Magazine – a perfect setup of the story of the year in this Region!