Energy minister says gov't never hid benefits of sale for large customers

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BY GREG WESTON
TIMES & TRANSCRIPT STAFF

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FREDERICTON - As the government continues to tout the virtues of the proposed sale of NB Power, many observers are left weighing the benefits for residential customers versus those for large industry.

Energy Minister Jack Keir spoke to the Saint John Board of Trade and the St. Stephen Chamber of Commerce yesterday, the latest stops in his ongoing tour of the province promoting the $4.75 billion deal with Hydro-Québec to New Brunswickers.

Under the terms of the proposed partnership, large industry electricity rates would drop 30 per cent to Quebec levels, while residential rates would be frozen for five years at the current rate -- about 70 per cent higher than in Quebec. Keir says the government has been up front about the fact industry will receive more benefits at first, but maintains the residential freeze would even that out in the long run.

"There's no question that industry gets the early benefit, but overall our residents are going to get as good a benefit as industry does," the energy minister says. "What I would look at is the status quo of what would happen if we don't do this. We know for sure there's going to be a minimum of a three per cent increase in April of next year and who knows what after that."

Peter Gordon, CEO of Fraser Papers, says the deal would save the company $8 million in the first year and give them rates that are competitive to industries in Quebec, Ontario and British Columbia. While he recognizes the savings look big, he says it needs to be put in context.

"It's not like we've been earning windfall profits over the last five or 10 years, far from it," he says. "We are in bankruptcy protection and, while power is not the only factor that has affected our business, it is one of the largest factors."

The company, which employs about 650 people in New Brunswick, has been in bankruptcy protection since June. Its Plaster Rock lumber mill is scheduled to reopen next week after a $17.6 million modernization project, bringing approximately 175 employees back to work at the facility.

Gordon says the preservation and expansion of large industry in New Brunswick, particularly in the north, would have trickle-down effects for all residents.

"When industry benefits, there's a direct flow through into communities and into families that are being employed. Think through the impacts in the communities like Dalhousie and Miramichi," he says, estimating that Fraser creates $450 million worth of indirect benefits in the Edmundston area.

But David Alward, leader of the Progressive Conservative Party, says the deal would favour industry customers over residents in the short-term, but even they might get hurt after the first five years.

"We certainly have concerns and I believe there are members within industry that have concerns, because of the fact that there are no guarantees long-term," he says.

"While I want to see New Brunswick's large businesses be competitive, we also have to remember that there are many other small businesses in New Brunswick that are bearing the brunt of this agreement."

Alward says debate is needed on both the terms of the deal and possible alternatives, including other potential energy partners. He says the Opposition will be presenting such alternatives once the debate begins.

Keir says the perception the deal was made behind closed doors and without public consultation is a "fair comment," but the focus now has to be on the facts of the NB Power agreement.

"New Brunswickers have told me for three years they can't continue paying the rates as they are. Industry has been shutting down, in part because of electricity rates," he says.

"We've got to do something and this is our solution to that."