D5

W.E. (Bill) Belliveau

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In New Brunswick, power generation consists of a mix of coal, oil, gas, hydro and nuclear capacity. Electricity generation in Québec is close to 100 percent reliant on hydro power.

The current mix of generation facilities in New Brunswick are not competitive in a world with oil prices at $120 per barrel (they were $73 per barrel yesterday). Given the price of oil and coming climate demands, it would be difficult to justify the rebuilding of thermal (oil, gas and coal) generating stations today. To even suggest this would reveal a complete disconnect from the coming realities of climate change.

In Canada all major power producing entities are required to reduce their CO2 emissions intensity by 18 per cent of 2006 levels by 2010, with two per cent continuous improvement every year after that, according to the April 2007 Federal Regulatory Framework for Industrial Greenhouse Gas Emissions.

There is no way we can meet those standards unless we get off imported fuels. The Hydro Quebec deal would accomplish that objective. The only way we could do it ourselves would be to replace our thermal generation with wind, solar and biomass capacity, increase the number of power generating stations on our rivers and divert our natural gas exports to our own generating facilities.

The problem with this scenario is that we would likely have to increase our debt substantially and destroy much or all of our fish habitat. The fish would not be happy and the 750,000 debt-payers who populate New Brunswick would not be happy.

Distributed energy resource systems might be an alternative. At the very least they would make us less dependent on Hydro Quebec. Small-scale power generation technologies (typically in the range of 3 kW to 10 MW) can be used to enhance a traditional electric power system. Combined with a net metering program, they allow communities, individuals and businesses to reduce their energy costs. Historically, the problem with distributed generators has been their high costs. That is changing as more and more communities move in that direction.

A few weeks ago, I suggested that opposition to the NB Power/Hydro Quebec deal was running at about 75 per cent opposed while 25 per cent were either sitting on the fence or favoured the deal. It turns out that I was wrong. A more scientific poll suggests that opposition to the deal is only about 60 per cent while 22 per cent of respondents like the agreement and the remaining 18 per cent have not made up their mind yet.

Conservative Leader David Alward has made up his mind. He opposes the sale of NB Power to Hydro Quebec unequivocably and without qualification.

He promises an alternative but refuses to share it with New Brunswick taxpayers, ratepayers or even members of the legislature.

Others have called for a Royal Commission to chart New Brunswick's future energy policy. They cite Louis Robichaud's Equal Opportunity program as the outcome of a Royal Commission. Equal Opportunity dealt with social and economic issues. It dealt with the structure of government and taxation. It was the report of the Royal Commission on Finance and Municipal Taxation, established in 1962 and chaired by Edward Byrne, that prompted the radical restructuring of local and provincial governments in New Brunswick. Armed with the Byrne Report, Louis Robichaud led the charge on those reforms against the opposition of a great many people in this province.

Government advertising to sell the Hydro Quebec deal leans heavily on the notion of average residential rate savings but offers no formula for individual calculation so readers are left with a guess and a promise as to the real value of their savings.

More importantly, this reliance on rate-savings as the key selling point ignores the public's concern about loss of control and the uncertainties of rates after the five year freeze.

A friend of mine suggests that it's like trading the mortgage on your house for a five year lease in an apartment building with no assurance of what the rent will be after the five years.

The more I learn about the Hydro Quebec deal, the more convinced I am that the benefits are not in the immediate rate freezes and rate cuts but in the avoidance of future rate shocks that could result from one or all of the following:

Increases in the cost of fuel (my biggest concern); the need to construct additional generating capacity; the cost of refurbishing the existing plants including, but not limited to, Mactaquac; unexpected cost increases; unexpected plant shutdowns; carbon surcharges or enforced carbon reductions and currency fluctuations that inflate the price of imported fuels.

We cannot afford to close the door on Hydro Quebec. It would be nice if we could sweeten the deal with a regulatory framework that would encourage the development and installation of a complementary network of distributed energy.

* W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. His column appears here each Saturday. He can be contacted at bill.bellstrategic@nb.aibn.com