03 December 2009

The NB Power deal: AIMS releases comment

The Atlantic Institute for Market Studies today released its assessment of the NB Power/ Hydro-Quebec memorandum of understanding. 

The author is Gordon Weil, an energy consultant in Maine with decades of experience in electricity issues.

The conclusions:

  • The cash price of $4.75 billion to be paid by Quebec to New Brunswick is subject to reduction if the Lepreau nuclear generator does not return to service and because of additional debt that New Brunswick must assume.
  • NB Power customers will receive significant rate relief in the initial five-year period following the sale of NB Power’s assets, but the promised additional benefits are considerably more speculative and will be received over a period extending more than 30 years. The initial benefits may be as much as $1.25 billion.
  • Transmission and distribution rates will be based on actual cost plus several surcharges and can be expected to increase after the initial period much more than they have in the past.
  • NB Power will retain and close, mainly at its own cost, five major generating stations with the future of the nuclear facility in some doubt. HQ will acquire only the Mactaquac hydro station, three combustion turbine facilities and possibly the Lepreau nuclear facility.
  • HQ will obtain, manage and control the NB Power transmission and distribution system, which can enhance its ability to exploit its own generation resources.
  • The size of the HQ power supply and its control of an extensive transmission system may cause anti-competitive concerns for entities outside of the two provinces.
  • Utility regulation in New Brunswick will be required to follow the Quebec regulatory system and be subject to specific legal requirements limiting its discretion. Such a transfer of regulatory control is unprecedented.
  • New Brunswick customers will continue to deal with NB Power, the HQ subsidiary.
  • Full impacts, both positive and negative, will depend on a host of variables that are impossible to forecast with reasonable certainty.

-srbp-

19 comments:

David said...

Welcome to the game Ed. Glad to see you're catching up.

Edward G. Hollett said...

Thanks David but I have been in the game for a while.

Hopefully, the more info that is out there the less of the hysterical bullshit that has dominated thus far will have an impact.

David said...

Actually its been quite civilzed here. 60% of New Brunswickers think the government sold the farm for a bag of magic beans. 22% are dazzled by the magic beans. And everytime a cabinet minister opens his mouth about the deal, he lodges his foot firmly between his molars (there's only one woman in cabinet - Health Minister Mary Schryer - and she's been smart enough to stay out of the news about the deal).

Other than that the weather was great in November and we'll have a new government next year.

What was the hysterical part?

Edward G. Hollett said...

Hysterical would be those 82% who think this is all about magic beans, fantasy stories, paranoia and anything but the substance of the proposal.

I seen plenty of the comments and also plenty of the stuff that picks up on the fear-mongering and misrepresentations coming from this province.

If you don't think referring to the proposal as magic beans is hysteria, you are evidently part of the partisan problem and not part of the solution.

David said...

Actually the basic issue is that most New Brunswickers no longer have confidence in the current government. I really mean that. They just shake their heads at whatever rolls off the PR wagon each morning.

It's resignation rather than anger. Even life-long Grits will tell you they just don't understand how it came to this. The problem for the gov't is that they have been trying to tear a page from Danny's playbook and make the opposition the issue. It doesn't seem to be having any effect.

When I say its civilized, it is. People are just waiting for the next vote at which point they will do one of two things: vote for an opposition party or stay home. The Grits will still get 125,000 votes at a minimum, but that's 50,000 fewer votes than they received in 2006: an election the Grits won with fewer votes than the Tories (the NDP vote collapsed, which may have cost the Tories a few seats).

In 2008, 40,000 NB Liberal voters stayed home which allowed the federal Tories to pick up three seats. If the same thing happens to the provincial LIberals in 2010, they'll be lucky if they win 5 of the 55 seats in the Leg.

As for NB Power, its a bad deal on the merits. It's $3-4 billion in cash short of being a good deal. The Weil report just highlights some of the questions that need to be answered before going forward. Personally, I don't expect the gov't to address Mr. Weil's ccncerns. It's not in the character of the premier or his cabinet. In four years they have only demonstrated a mastery of two gears - full speed and reverse. To that end I expect them to go out in a blaze of glory, or to back down. Either way, it works out badly for them come election day.

Edward G. Hollett said...

Ultimately Weil doesn't do much beyond repeat what is already know of what the MOU itself says and note that some of the longer term issues remain to be seen since they are far away and information hasn't yet been pulled together.

There has been a huge amount of partisan -driven bullshit flying about this deal and the outside forces have leaped in to exploti that for their own purposes.

What I have seen online does not speak of a group of people in quiet resignation waiting for their chance to turf a bad government. (Your description and anonymity reak of a complete partisan appraisal incidentally, so I think people can put you down as something other than a Grit. They'll can therefore judge your commetns accordingly.)

What I have seen online is a raft of hysterical, exaggerated fear-mongering and simple nonsense. Admittedly I am not on the ground to hear it for myself but that online world is likely a very clear reflection of what is driving the public reaction. At the very least it reflects the wider public discussion.

So if things play out as you suggest, NBers next year will have a massive Tory majority and exactly the same financial problems with NB power they have now.

Now if the populist hysterics on your side of the Gulf are like the ones over here, you can get ready for a bunch of people who will have no idea how to solve NBs considerable financial problems.

And before you try to claim otherwise by comparing over here, understand one thing: the NL economic miracle was produced entirely totally and completely from oil revenue deals signed between 1990 and 2002.

If NB has THAT kind of revenue stream then anyone can fix the current mess.

Since you and I both know NB doesn't, people need to get voer the silliness and think long and hard about this proposal. They need to see what can be fixed and clarified if that's what is needed and if the deal can be sweetend with cash, then so beit.

But flat out rejecting it, whipping up all sorts of fear and read and then looking forward to a new government ain't gonna solve the problem.

Jingles said...

"I seen plenty of" Mr. Hollett please, I teach English and when someone in your position uses such English as I seen, it makes my job so much more difficult. I have seen, I had seen or I saw...

Edward G. Hollett said...

Oh dear, Jingles, when you and the Fan Klub have to resort to pedantry, then the rest of us can only laugh, y'know, on a go forward basis.

But thanks for pointing out the typo.

Wm. Murphy said...

I think you gave that same speech to Greg Malone and Sue Dyer a few years back as you drank the Hydro privitization Kool-Ade from the 8th!

Those were the days

Murph

Edward G. Hollett said...

If by speech, you mean the one about being hysterical and relying on fear-mongering, then that would be a yes, .

And of course it doesn't take a glass of Koll Aid to get someone in the mood to reject hysterical, emotional tripe of the sort Greg and Sue were peddling.

Do you recall that fellow who used to hang around the galleries of the legislature, too?

Used to deliver pizza.

Wm. Murphy said...

hysterical, emotional tripe of the sort Greg and Sue were peddling.


Good thing they peddled. If not, our Hydro would be privitized now.

Sounds like you wish it was so,,,

Wm. Murphy

Wm. Murphy said...

Btw, I never stepped foot in the legislature and I certtainly didn't realize that they eat pizza in there

Murph

Edward G. Hollett said...

The provincial debt would be lower today by a considerable amount and trhe Lower Churchill would already be developed or on the way, with all the jobs and money for the provincial treasury that means.

Of course it would have robbed some people of their great political prop but then again that's no loss...unless you believe the public should spend their precious money to support political platforms for populist demoagogues of all political stripes.

Wm. Murphy said...

It's good to know. I didn't realize that you are tying our provincial debt to the fact that we didn't privitize NL Hydro.

What do I know; but I suspect that many people are glad to have the debt than to have a hydro owned by a private operator.

It is good to get things straight. I wouldn't want to take your points out of context

Wm. Murphy

Ed Hollett said...

Well, if you had read the post on hydro privatization, you would have realised that we carry around - each taxpayer - a chunk of debt from Hydro and now Hydro and all its bits and pieces.

If the LC goes ahead, we will carry some portion of the LC.

I am surprised too that you didn't recall the post about Frank Moore's comments when he died. Buying BRINCO - nationalising, in effect - was something he greatly regretted if for no other reason than it added so greatly to the provincial debt at the time.

I didn't link it: the debt (a chunk of it) is connected to Hydro/NALCOR.

As for a private company, I am not sure why you think private companies are so bad. Do you work for a private sector company or the provincial government?

Don't you think Newfoundlanders and Labradorians can run a successful private sector company?

Wm. Murphy said...

I work for myself. I have my own company. Absolutely, we can run successful companies, but that isn't the point.

The point is... do I want a successfull, compentent and qualified company operating NL Hydro?

No thanks, I will deal with the debt rather than have someone else own the company.

Frank Moores? WTF,

Wm. Murphy

Ed Hollett said...

Well since you don't own the company now, that's an interesting perspective. As a shareholder of a private sector company you'd actually have some control and would receive disclosure.

NALCOR is owned by cabinet, for all practical purposes and they incur debt on your behalf without you having much direct say.

But anyway...

And yes, Frank said that before he died. Interview with Doug Letto. Biggest regret of his term as Premier.

Wm. Murphy said...

Well since you don't own the company now, that's an interesting perspective.

What company are you talking about?
I own my company, lock, stock and warts

Asd for Frank Moors...now that's rich. Please direct me to one person who cares a fiddlers fuck about Frank Moores regret.

Wm. Murphy

Ed Hollett said...

NALCOR.

You don't own a thing of it and have not a peep of a voice in its direction, unless you happen to sit in cabinet or on its board.