B3

Herb Duncan

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Earlier this week, provincial Energy Minister Jack Keir suggested the Memorandum of Understanding (MOU) between New Brunswick and Québec Hydro would yield 60 per cent of the benefits to commercial and residential customers, with the remaining 40 per cent going to large industry.

More recent number crunching shows the total savings of roughly $116 million for the first year. Rate reductions give industrial customers approximately 79 per cent of the total rate savings in the first year, leaving residential and commercial customers with approximately 14 per cent and seven per cent of the savings as a result of the five-year rate freeze. The share of benefits going to residential and commercial customers should increase in subsequent years if rates rise for industrial users and remain frozen for residential and commercial customers.

Given the figures for the first year, how long will it take for commercial and residential customers to arrive at the 60 per cent benefit level first suggested by the energy minister? Ten, 15, 20 years?

There are a lot of unknowns, speculations and suppositions between now and that eventuality.

If the Graham administration has been less than accurate in calculating the savings shared between the big and little guys, how confident can we be in their ability to negotiate and understand an MOU that is meant to serve the long-term interests of New Brunswick citizens?

I believe the major asset and value at NB Power is the power grid. New Brunswick is ideally positioned as an energy gateway to the energy-hungry eastern seaboard of the United States with a population of 110 million people - more than three times greater than the entire population of Canada.

If you can't be a transport company without trucks, planes or trains, then I fail to see how we, as a province, can be an energy hub without a distribution and delivery infrastructure. Would you agree?

More basis and fundamental to sell or not to sell NB Power debate is ownership. NB Power is owned by the people. Given the record of this and previous administrations, can we afford to subscribe to the "father knows best" approach to decision making? The far-reaching benefits or consequences for this and future generations of the final decision requires - no, demands - participation by the citizens of New Brunswick who are the rightful owners.

TransCanada Pipeline today is one of the continent's largest providers of gas storage and related services with approximately 370 billion cubic feet of storage capacity as well as a network of more than 36,500 miles of pipeline that taps into virtually all major gas supply basins in North America. TransCanada owns, controls or is developing approximately 10,900 megawatts of power generation.

During the 1980s TransCanada took on massive debt in order to expand their gas distribution system throughout North America. At the time the common shares were trading at about $36 per share. Most of the major security analysts were concerned about the amount of debt TransCanada was putting on its books and recommended that clients sell their holdings. Investors obediently and obligingly vacated the stock in droves. Over the next year or so the share price took a long steady slide to around the $9 mark. TransCanada's investment in the expanded pipeline infrastructure soon began to produce the revenue and cash flow necessary to improve their debt to equity ratio. You guessed it - the stock recovered to the $30 plus range and then every analyst in the country was recommending buy, buy, buy. Today TransCanada Pipeline generates more than $9 billion in annual revenue.

The TransCanada story provides us with a valuable lesson, folks. The global economic downturn has put many businesses and provinces between a rock and a hard place, but that doesn't mean that we should abandon an economic strategy that is designed to lead New Brunswick to eventual economic self-sufficiency.

We must be careful that we don't throw the baby out with the bathwater.

Herb Duncan is a Saint John businessman who has followed city

issues for more than three decades.

He can be reached by e-mail at

duncan.herb@telegraphjournal.com.