FREDERICTON, Feb. 1 /CNW/ - The Advisory Panel on the Proposed New Brunswick - Québec Electricity Transaction released their report today with an overall conclusion that the deal would be good for New Brunswick.
In total the report of the Panel, which is made up of six well-known New Brunswickers, contained seven conclusions about the proposed agreement and also had five recommendations aimed at the government of New Brunswick moving forward.
"Overall our investigation of the proposed agreement led us to conclude that electricity rates would be lower for New Brunswick customers in the near and long term if this deal goes through," said David Ganong, Chair of the Panel. "Residential, commercial and wholesale customer rates are expected to average more than 6% lower during the first 10 years and 13% lower by 2030, than they would have been in a business as usual scenario," Ganong said. "Industrial rates are expected to average more than 20% lower during the first 10 years and 23% lower by 2030 versus the status quo, numbers the Panel viewed as significant."
In addition, the Panel concluded significant risks that will affect rates in the near and long term will be substantially reduced should the deal be completed. "Fossil-fuelled power plants make up about 45% of NB Power's electricity generation when Lepreau is operating, while 97% of Hydro-Québec's generation comes from renewable sources," Ganong said. "NB Power's reliance on fossil fuel exposes us to fuel price escalation and volatility."
Climate change was another area that the Panel focused on. "All fossil-fuelled plants are expected to face greenhouse gas (GHG) regulations that are increasingly stringent. The estimated cost risk for NB Power to meet future GHG regulations could be well over $1 billion, based on net present value, between 2010 and 2040," Ganong said. "This is a significant risk to the province."
"In addition, NB Power is faced with replacing several generating facilities over the next 20 to 25 years, including Mactaquac by 2030, Belledune by 2033 and Point Lepreau by 2035. These significant capital expenditures would have to be rolled into rates under the status quo, with Mactaquac alone expected to be in the $2-3 billion range," Ganong said.
"With this agreement, a substantial portion of the NB Power debt would be moved to Hydro-Québec and future debt accumulation for replacing or refurbishing generation would be avoided," he said. "We are a province with a small population base and to take on debt of the magnitude we are speaking about would be crushing, both in terms of the rates for electricity we would have to charge and our ability as a province to invest in things like health care and education."
Among the recommendations the Panel makes are that the province strengthens the regulatory framework as soon as possible to provide broader authority and oversight for the New Brunswick Energy and Utilities Board (EUB) in keeping with what is normal in other jurisdictions, and eliminating government interference in its decisions. The Panel also recommends that costs associated with the Lepreau deferral account should begin to be applied to rates in the first year of the Proposal term rather than being deferred for five years and that significant new dollars should be set aside by utilities to fund investments in aggressive energy efficiency.
"Our conclusion is that the benefits to New Brunswick of rate savings over the short and long term, reduced environmental impacts from fossil-fuelled generation, the transfer of significant risk on generation facilities to Hydro-Québec, the mitigation of financial risk related to current and future debt and the positioning of the province toward a greener economy all contribute to real and positive value to New Brunswick over business as usual," Ganong concluded.
SOURCE ADVISORY PANEL ON THE PROPOSED NEW BRUNSWICK - QUEBEC ELECTRICITY TRANSACTION
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