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Brett Bundale
Telegraph-Journal

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FREDERICTON - A new report says ratepayers in New Brunswick will save $5.6 billion on their power bills if a deal goes ahead between NB Power and Hydro-Québec.

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Jack Keir

In the legislature on Wednesday, Energy Minister Jack Keir tabled the report, which examines power rates in the province over the next 30 years under the proposed $4.75-billion deal.

The report estimates the sale of most of NB Power's assets to Hydro-Québec will offer residential and commercial customers $3.5 billion in savings, or 62 per cent of the total savings, while industrial customers would save $2.1 billion, or 38 per cent of savings.

The report by Washington, D.C.-based NERA Economic Consulting compared power rates under the proposed deal to the future rates under the current rate structure.

The forecasts for the status quo reflect the lowest feasible electricity rates, the report said, based on low inflation, capital expenditures and fuel increases.

Also, the status quo rates do not include the potential costly impacts of a carbon tax or future refurbishment cost overruns, which would drive up power costs in the province.

As for rates under the proposed deal, the report includes the costs of inflation, new power demands and increased costs of distribution and transmission service.

Eugene Meehan, senior vice-president of NERA and the report's lead author, said the best option for ratepayers is the sale of NB Power.

"There are a tremendous amount of benefits for all ratepayers, both in the first five years and beyond that period," he said. "The estimates in the report are fairly conservative, so the savings could be greater over time."

Keir said the report answers key questions about the memorandum of understanding between the New Brunswick and Quebec governments.

"This report clearly demonstrates the proposed agreement with Hydro-Québec would offer significant savings for New Brunswickers - particularly residential and commercial customers - and better protects ratepayers against dramatic rate increases," he said.

"It shows that New Brunswickers face a greater risk of large rate hikes under the current model, even using conservative estimates," Keir added.

"In fact, if inflation grows beyond current forecasts, the proposed agreement would offer even greater savings to ratepayers."

The report states that, because large industrial customers receive an immediate rate reduction to match Hydro-Québec's rates, those customers will receive 79 per cent of the total rate savings in the first year.

Residential and commercial customers will benefit from a five-year rate freeze and are set to receive savings of approximately 14 per cent and seven per cent, respectively, in the first year.

But small-volume customers will eventually receive more than 60 per cent of the total $5.6 billion savings and industrial customers nearly 40 per cent of savings, the report states.

The province has also hired Toronto-based Macquarie Capital Markets Canada to do an independent review of the NERA report.

The government would not release the cost of the studies on Wednesday, because the services of the consulting firms are ongoing.

"Those costs will be incorporated into the transaction," Premier Shawn Graham said. "When the transaction is finalized, full, open and transparent accounting will be provided to the people of New Brunswick."