Sell NB Power - and study it
Published Wednesday October 28th, 2009
The house of cards that has been under construction since the early 1970s has finally - and inevitably - collapsed. Over the past 30 years NB Power, aided and abetted by successive governments, has pursued a build-for-export strategy that worked in the 1980s to subsidize provincial power rates with export sales, but left us with a vastly overbuilt, capital-intensive energy grid that New Brunswickers did not need nor could we afford.
The strategy was fatally flawed. Because it was based on capital-intensive megaprojects - Coleson Cove, Point Lepreau, and finally Belledune - NB Power amassed huge debt from their construction. Power was exported from these power plants when they were at their peak, when oil was cheap, and when pollution was ignored. Now we ratepayers are left with the legacy of deteriorating power plants, high oil prices, pollution reduction requirements and radioactive detritus.
The hole has only been dug deeper with the decisions to rebuild first Coleson Cove and then Point Lepreau. Instead of shedding these sinking flagships, we have instead reinvested in them with the same blind enthusiasm with which they were first built.
It cost close to $1 billion to retrofit Coleson Cove to burn Orimulsion, an even dirtier fuel than Bunker C, but cheaper. The alternative was to build a smaller, cleaner, more efficient natural gas generator to replace the aging hulk. We all know where that short-sightedness ended up. There is no Orimulsion, and Coleson Cove remains largely shut down because it is cheaper to buy power from Hydro Quebec than produce it at our newly-remortgaged monument to the 1970s.
The Point Lepreau story is even more depressing. Its original construction cost escalated to three times its original price, coming in at $1.2 billion rather than the estimated $460 million. Twenty years later and despite the warnings, the smart people in charge decided to rebuild, knowingly loading another $1.4 billion debt on top of what remains of the original mortgage. (It is not paid back yet, even with the province having written off nearly $500 million of Lepreau debt a few years back, moving that amount off NB Power's books and onto the province's balance sheet).
NB Power's reported current debt of $4.8 billion includes the original retrofit budget, I expect, but not the cost overruns. This could add another billion to that debt, with no guarantee that the plant will ever run. A $6 billion debt is a real possibility, much of it directly tied to Point Lepreau.
In a few years, we are going to be faced with a decrepit dam at Mactaquac. It too is on its last legs and will require billions in new investment if it is to be maintained. At least it has paid for itself.
Today, NB Power's staggering and growing debt is worth more than its generating stations. An NB Power manager admitted to the Public Utilities Board that if this were a private company it would be bankrupt - and this was before the Lepreau refurbishment was approved!
The chickens have come home to roost. Combined with disastrous tax cuts and a billion-dollar deficit in the provincial budget this year alone, we are in critical condition. As much as people might want to hang on to NB Power, to bail it out would bankrupt the treasury and drive power rates beyond what anyone could bear.
This is a monumental testament to failed public policy, akin to the collapse of the northern cod fishery. It was deliberately pursued by successive, highly paid power executives, elected politicians and the business elites, all of whom failed to do due diligence on behalf of New Brunswickers. Voices of dissent, there from the beginning, have been ridiculed or dismissed.
Premier Graham could salvage his term in office if he manages to sell a bankrupt utility to Hydro-Québec for a profit and protect New Brunswickers from skyrocketing power rates. But we can't write the final chapter without reading the rest of the book.
When the northern cod fishery collapsed, nobody was held to account. Onward and upward, the fisheries minister said; it would be counterproductive to look back and cast blame. They got away with that. As a result no one was held accountable, no lessons were learned, and fish stocks continue to decline.
If lessons are not learned from the NB Power fiasco, history will repeat itself. The opportunity to put our province on the right track energy-wise using the proceeds of a Hydro-Québec sale will be squandered and we will remain mired in archaic and debilitating leadership on this front.
New Brunswickers do not deserve this. We ordinary people need to take the reins, call the elites to account and set a new agenda for the future, funded by the proceeds of the white elephant sale to Hydro-Québec. Otherwise, the delusional mentality that led to this will persist among decision-makers.
Citizens must insist on a public inquiry into this whole affair. The demise of the public utility that electrified our province in the early 20th century is worth some investment in getting to the bottom of what went wrong.
Janice Harvey is a freelance columnist, university lecturer and president of the New Brunswick Green Party.
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YAWN.
There are those that prefer to ignore the facts, I believe this is such a case, You might have welcomed a ticket on the Titanic? In the absolute belief that it could not sink.
To have not even payed off the original cost of building and then refurbish.... is it possible that much incompetence can exist in more than one place?
Am I the only one who see's the possibility that NB Power is in so much debt because while it was owned as a crown corporation the governing powers took every profit it made and put it into social programs? After all you can't have a publick utility showing profit or the rate payers would be screaming thier paying too much for power. Then once the profit margins disappeared the debt was NB Power's problem, Let's seperate ourselves from it being a "crown utility".
What we need are decisions, not studies.
I think that's what Janice is fishing for. She has to pay the bills too.