Utility has a stormy history
Published Thursday November 12th, 2009
Energy Utility has had a stormy history since it was established in 1920
From its birth on a balmy spring day in 1920, the New Brunswick Electric Power Commission was mired in controversy.
Under Premier Walter Foster, the fledgling commission was handed sweeping powers to supply the province with electricity.
The public utility replaced a patchwork of private power companies that - except for some sketchy regulation of rates - operated largely unrestricted by government.
But from the beginning the province grappled with the challenges of running a utility.
As heated debate rages across the province over the landmark agreement to sell most of NB Power's assets to Hydro-Québec, a look at New Brunswick's public utility over the last 89 years reveals a stormy history.
Its first project was the erection of a 60-kilometre transmission line to transfer electricity to Newcastle from a privately owned dam that supplied electricity to a pulp mill on the Nepisiguit River. It was widely criticized at the time when the mill reneged on its power contract and the government was forced to pay double what had been budgeted to supply Newcastle with power.
In 1923 record snowfall and heavy rains caused the worst flood in New Brunswick's history. The power commission's first hydroelectric dam at Musquash collapsed, pouring millions of litres of water over the nearby countryside.
For the opponents of public power, the calamity provided a platform to launch an attack on government.
"The disaster "¦ (calls) in question again the wisdom of the whole scheme in which the people of New Brunswick "¦ have an investment of some millions and the end not in sight," the Moncton Daily Times stated in an editorial.
Still, the power commission soon began plans for the Grand Falls hydroelectric dam, even though financing of the project would raise the provincial debt by nearly 50 per cent.
In response to the lofty costs, Peter Veniot, who succeeded Foster as premier in 1923, said: "The opponents of public ownership will raise their hands in holy horror to high heaven and tell the people that our scheme will bankrupt the province.
"But it is not (in the best interests of the economy) to withhold the expenditure of public monies when you are convinced that by proper and judicious expenditures, you can create a greater expansion of trade and industry. Hydro development is the salvation of the province of New Brunswick."
Veniot's comments are one of the first indications of the government using power projects as an economic development tool. The premier told New Brunswickers that an investment in the Grand Falls project would create jobs and lead to new paper mills.
Nearly 70 years later, this same mind-set led to megaprojects in the Acadian Peninsula, says leading energy expert Tom Adams.
"The Belledune coal power plant was built because it was politically expedient. It's far from the province's largest load demands and is not based on sound business decisions, but on a flawed notion of economic development," he says.
"It's proven to be hugely expensive for the province," he adds. "Every time you open your power bill a few dollars are going to subsidize that plant."
NB Power has "tended toward patronage, incompetence, short-term thinking and megaprojects," Adams said.
"The history of the utility ebbs and flows," he says. "I actually think the current executive over at NB Power are doing a pretty darn good job. In the last few years there has been a more business-like attitude.
"But overall, NB Power has been in a state of operational and financial crisis," he says. "Ratepayers have paid the costs of an inefficient power corporation long enough."
Arthur Doyle, a New Brunswick historian, says while NB Power started amid debate - and is once again at the centre of controversy - the public utility enjoyed years of strong leadership and growth.
"The Foster government was really quite progressive to go with the public model," he says in an interview. "The utility may have been controversial - and it certainly went though some rough patches - but New Brunswick has historically enjoyed some of the lowest electricity costs in North America as a result."
However, Doyle says the skyrocketing demand for energy in the past decade has created a sea change in the way power utilities throughout the region do business.
"The landscape has changed dramatically since NB Power was created," he says. "Providing New Brunswickers with electricity has become a very different business than it was in the 1920s. No one could have imagined energy would loom so large and coal-fired thermal plants would become passé."
Doyle, the author of the New Brunswick political history Front Benches and Back Rooms, says that "increased energy demands in New England, nuclear power and green energy have all changed the playing field for NB Power and created a whole series of new challenges."
While NB Power has always known controversy, Doyle calls the NB Power and Hydro-Québec agreement "the boldest and riskiest proposal" since Louis Robichaud's equal opportunity program, which in the 1960s realigned government and government services in New Brunswick to put the province's northern regions on a par with those in the south.
"The supply of power to residents and industries touches the lives of virtually every New Brunswicker. It's bound to stir controversy," Doyle says.
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