Memo to McKenna: Get serious about Energy Probe report

Jackie Webster
Telegraph Journal
March 25, 2002

“Why doesn’t NB Power come clean and tell the people of the province just how financially precarious that operation is?” That’s Tom Adams, executive director of Energy Probe, the organization that tabled a devastating report on the Crown corporation in Fredericton last week.

It is dishonest to mislead the people on just what awaits them in terms of energy costs, says Mr. Adams, when a dramatic and unprecedented increase in power rates is inevitable. Well, why do they? One wonders.

“Because they are politicans, that’s why,” says Jack Wetmore, a former NB Power employee and long-time critic of the utility. That must be the explanation. Witness Deputy Premier Ray Frenette: “These experts after the fact, they are easy to find, but wouldn’t New Brunswickers have been freezing in the dark last winter if we had not had the Belledune power station to rely on?”

No, of course they would not. There is plenty of power to be had and much cheaper than from Belledune. But that is beside the point. The really interesting feature of Mr. Frenette’s defence of NB Power now, is that he was, in Opposition, its fiercest critic. With his great gift for rhetoric, he predicted over and over the sky was falling; that NB Power’s “high-priced mouthpiece” was fudging the figures; that disaster lurked around every corner. And those Cassandra-like prophecies of the Opposition days, have emerged full-blown in the Energy Probe presentation of Oct. 9, 1996.

Tom Adams, who wrote the report, was unequivocal. “NB Coal is a gaping wound that must be staunched if the utility is to survive.

“NB Power’s capital spending in the l990s – in excess of $2-billion so far – has been almost entirely wasted. . . . Building the $2-billion Belledune generating plant is probably the worst mistake ever made in New Brunswick’s history.”

Belledune cannot be blamed on previous administrations as can Point Lepreau. The latter white elephant was inherited; the former, announced with great fanfare by this administration within a year of it taking office. Then there was the overhaul of the generating station at Dalhousie. Another colossal mistake, according to Mr. Adams. And yet no admission that NB Power – and by extension, the government and the taxpayers of New Brunswick – are in dire straits.

On the contrary, the utility’s annual report is upbeat and positive. Satisfaction is mentioned often. Recently, when a young reporter spoke of New Brunswick’s “staggering” debt, he was called on the carpet by Premier Frank McKenna and chastised. New Brunswick debt is not staggering, said the Premier, and to say otherwise is irresponsible.

The Premier chose to separate the province from the Crown corportion in terms of debt. Which is absurd. The province guarantees NB Power’s debt, and charges in excess of $2l-million as a fee for that guarantee. The ironic twist to this whole financial boondoggle is that much of that debt was politically motivated.

Belledune and Dalhousie were both a sop to Northern New Brunswick, miffed that the highly touted nuclear plant was located at Point Lepreau in the south of the province. The decision to use NB Coal for its coal-fired plants, a decision both economically and environmentally disastrous, was to provide employment in the Minto area; a political decision. In l99l, after a series of misfortunes and adverse publicity, Premier McKenna announced plans to rein in the utility.

NB Power has been “a kingdom unto itself for many, many years,” but will have to start paying obeisance to the same rules as general government, he said. The new sovereign was three years too late; the $2-billion Belledune boondoggle, commissioned on his watch, was already under way. This must be a time of great frustration, combined with an overwhelming tendency to say “I told you so” from long-time critics like Janice Harvey, who addressed the matter in a column earlier this week, and Jack Wetmore, a regular at the Standing Committee hearings; his last appearance being on Oct. 9.

The Energy Probe report was given good media coverage and rightly so. On the same occasion, Mr. Wetmore made many of the points he has long been making, but without the media spotlight that focused on Tom Adams of Energy Probe. His comments have been applauded by a former senior writer with NB Power who says Mr. Wetmore’s observations are right on the mark.

Here are some highlights: The high cost of temporary help: The use of consultant firms to supply administrative personnel may have cost $45-million more than necessary over the past five to six years. According to NB Power’s own figures, consulting fees were from one-and-a-half to three times the salary paid to the individuals previously in that post. This markup structure is standard practice, but it is expensive.

It looks good to show a reduction of 200 staff in the annnual report, writes Mr. Wetmore, but when this staff is replaced by temporary consultants at perhaps twice the cost, it raises serious questions. Many competent employees were offered retirement packages to move off the payroll, but the expertise they provided was still required, so their place was taken by consultants.

“The use of consultant firms for a supply of temporary help is a very expensive process,” writes Mr. Wetmore. “With fees ranging from 156 per cent to over 300 per cent of the base salary paid to the firms supplying the staff, over the past five or six years, this practice has cost as much as $45-million above the costs of these same people as casual or term employees.

Mr. Wetmore questions maintenance planning. Last fall’s incident when a piece of wood jammed inside Point Lepreau and “which came within an ace of destroying the plant, was a repeat of a similar incident during construction, when contaminants were left in the system.

Some of the key personnel involved in that incident were still at NB Power last fall. “The corrosion problem which caused the most recent shutdown has been evident for some years. I question why it was not corrected during last fall’s prolonged outage. NB Power has a responsibility to maintain a high level of operational reliability. We have a right to expect a better performance in this area than we are receiving.”

It is a comprehensive report. The areas of waste, inefficiency and mismanagement it highlights are reflected in the power bills that reach us every month. Each of us has a vested interest, as have the politicians, in just how well that utility is run. The newest rate hike will come into effect only after the next provincial election. Surprised anyone?

 

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