NB Power’s dilemma

Rachel Cave
The Telegraph Journal
November 11, 1998

FREDERICTON – NB Power can’t move further into the North American energy market until the provincial government sets the rules for deregulating the industry in New Brunswick, say executives at the provincially owned utility.

“We’ve tried to be prepared,” says Stewart MacPherson, NB Power’s vice-president of corporate planning. “We don’t have a sense of fear associated with [de-regulation] because we do believe we can adapt to it.”

But the question remains: adapt to what?

Next week the Select Committee on Energy will start considering the possibilities, with its report to the government expected in the spring.

So far, the Liberals haven’t indicated how long it will take them to draft new energy policies, nor is it clear whether New Brunswickers will have a chance to vote on those policies when they go to the polls sometime next year.

All of that puts some distance between now and when NB Power will have a clear blueprint of the future, a future that could be radically different.

For instance, the utility could be left intact or sold off in pieces. And at the market level, electricity in New Brunswick could be heavily regulated or blown wide open to competition.

NB Power could find itself competing for wholesale contracts like the ones it currently holds with power commissions in Saint John and Edmundston.

Or it might have to compete at the retail level – fighting for business in every office and every home across the province.

It’s somewhat similar to the way long-distance telephone services are now being sold.

Here in New Brunswick, NBTel owns the wires and the competitors rent access to them.

So far, that’s the generic market model provinces are considering for the electricity market.

In fact, Mr. MacPherson believes it’s entirely possible that NB Power will be turned into a “wires” company. He says transmission and distribution are really the core of NB Power’s business.

“That’s the part of the business that is regulated and is a natural monopoly. It’s the real reason Crown corporations were put into place,” he says.

The utility has already divided itself in two. It has separated its power plants from its business operations so competitors who want to get on the wires won’t also learn the corporate secrets of NB Power’s generating business. The utility has also set transmission fees, the price it will charge competing power-sellers, to use its wires.

Mr. MacPherson says that right now he’s only certain of one thing; natural gas is coming. He also knows that natural gas generators, especially co-generators, are more efficient than any power plant NB Power currently owns. He’s also convinced that the utility’s traditional market will start shrinking.

It’s a tough diagnosis for a company that’s $3.6-billion in debt.

But Mr. MacPherson says he’s not going to lobby the legislative committee to lean one way or another.

“We’re not trying to pre-judge where this is going to come out. We don’t want to get into a situation where we’re trying to stifle discussion on this issue because I think it’s important that we hear everybody’s views, everybody’s ideas.”

He says after the public has had its say, NB Power may wade in with an opinion in the end

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