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The proposal put on the table Thursday by Premier Shawn Graham and Quebec Premier Jean Charest promises to eliminate NB Power's debt, while offering New Brunswickers the lowest electricity rates in North America. Its impact will be transformative - breathing new life into the economy and giving citizens the relief from excessive energy costs they've been seeking.

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The problem

NB Power was created to serve the public interest by providing electricity to both homeowners and business owners. In its current state, it poses a public liability in two significant ways. It has added $4.75 billion to New Brunswick's total debt, contributing to a growing fiscal crisis. And its rates are higher than the cost of power in competing jurisdictions, leaving industries and businesses at a great disadvantage.

New Brunswick has tried a number of options to meet electrical needs affordably, from building new power plants to offering subsidies to industry and emergency aid to homeowners. The result has been mounting public debt and high power rates that have contributed to the loss of thousands of jobs in forestry and manufacturing.

Taxpayers have been affected, because the government's ability to borrow money at reasonable interest rates is limited by its debt rating. Ratepayers have been affected, because their bill payments help service NB Power's debt.

The provincial government can't keep budgeting around NB Power's debt, and New Brunswickers can't keep paying steep rate increases. The cycle must stop - and the proposed agreement would stop it, to the benefit of both provinces.

The opportunity

Quebec has a surplus of cheap, clean hydro power, which it wants to sell to Atlantic Canada and the northeastern United States. New Brunswick has an excellent power grid, a debt that needs to be addressed and nearly 750,000 residents who want lower power rates. The proposed partnership would give both provinces a competitive advantage. Quebec would gain greater capacity to move its power to market; New Brunswick would see its debt and rates reduced.

The economic impact will be tremendous. New Brunswick's economy was once quite similar to Quebec's, but the growing gap in electrical costs has helped la belle province create new industries and higher-value jobs.

Dropping industrial power rates will provide relief to provincial businesses, while the combination of cheaper, cleaner power and low taxes will make New Brunswick a more marketable jurisdiction for new industries. This is an advantage the private sector and government can leverage into more widespread economic growth, north and south.

The future of NB Power

Under the proposed agreement, NB Power would retain its workforce and remain a New Brunswick-based utility. The provincial government would retain the same power to set energy policy, and NB Power would still be regulated by New Brunswick's Energy and Utilities Board. But there would be an important difference.

Consumers would gain greater transparency and accountability in energy decisions. The true cost of policy proposals would no longer be hidden from the public by a Byzantine corporate structure. The Energy and Utilities Board would be aligned to the structure of the utility, and clear lines of communication and accountability would be observed. This would overcome one of NB Power's principal weaknesses and the reason for much of its debt - the degree to which the Crown corporation has been used as a political tool to secure votes through make-work projects.

The energy hub

Approving and implementing this agreement would solidify New Brunswick's position as the regional energy hub.

Free trade rules ensure that the international transmission lines between New Brunswick and Maine will continue to be run on an open-access basis, serving producers across the region. As demand for renewable electricity increases, the provincial government can call for the addition of wind, tidal or biomass power projects to meet New Brunswick's needs, opening up energy development in rural and northern areas as well as the industrialized south.

New Brunswickers have many questions about the details of the proposal and its ramifications. Over the next five months, there will be plenty of time to debate the underlying issues.

In its broad strokes, it is calculated to achieve the goals this province has established in energy - to lower power rates, reform NB Power's structure, contain its costs and contribute to the growth of a more dynamic, high-value economy.