Province imposes greater financial burden on N.B. Power than carbon costs do, evidence shows

The New Brunswick government is blaming federal carbon pricing for deepening the financial troubles at N.B. Power but the utility itself has recently debunked that claim.  

The utility has also supplied evidence to the New Brunswick Energy and Utilities Board showing that fees and charges imposed on it by the provincial government are by far a heavier financial burden.

"They pay a significant amount of revenue to the province," said New Brunswick public intervener Alain Chaisson.  

Chiasson has been probing the issue of N.B. Power costs in pre-hearing questions he has been submitting in advance of an upcoming rate hearing.

Electricity prices for the utility's residential customers are set to jump 13.8 per cent on April 1, pending a full hearing by the Energy and Utilities Board in May.   

The April 1 jump includes a 9.8 per cent increase in rates, a three per cent surcharge to recover previous over-expenditures and the expiry of a one per cent rebate on bills that has been in place for the last 12 months.

Those three increases have triggered political controversy over who is to blame and what, if anything, should be done.  

On Wednesday in question period, Natural Resources and Energy Development Minister Mike Holland made his case that federal carbon charges are largely responsible.

"Let's muse a little bit about what provincial power bills would look like if N.B. Power weren't hit with a crushing $110-million worth of extra fuel costs directly connected to the carbon tax that the federal government supplied," said Holland. 

"When we see carbon taxes put hundreds of millions of dollars worth of extra costs on our public utility, we know that New Brunswickers are going to suffer."

It is not clear what figures Holland was quoting from in making those comments and on Thursday his department did not respond to a question asking for clarification about why numbers he used about carbon charges facing N.B. Power differ significantly from those published by the utility.

This year N.B. Power estimates it will pay $16.8 million in carbon charges mandated by the federal government.

Every one per cent increase in N.B. Power rates is worth about $18 million.

However, in an appearance in front of the legislature's Crown corporations committee last month, Brad Coady, N.B. Power's vice-president of business development, told MLAs carbon charges are not a significant issue for the utility because everything collected is rebated to N.B. Power to finance its energy efficiency projects.   

He said eliminating carbon charges would likely produce no savings because that would also eliminate the rebates.

"There's a recycling of that money that's happening," said Coady.  

"That money is, you know, going out one side and coming back in the other side of the door."

However, financial recycling is not the case with a number of much larger provincial charges N.B. Power is faced with from the New Brunswick government that have been emerging as a potential issue at its approaching rate hearing.

In preparation for that review, Chiasson has been asking the utility to detail the value of what it pays to the New Brunswick government in property and utility taxes, debt fees and other charges, and said if there is any room to have them reduced he'll advocate for that to happen.

 "We want to know what the province charges to N.B. Power," said Chiasson.

"We want to know how much those amounts are."

The list supplied by the utility in response to Chiasson's questions show it is required to pay $35.2 million this year to the province for it to guarantee and manage N.B. Power's more than $5-billion debt burden.

That fee is in addition to debt interest and principal payments that N.B. Power makes to its lenders separately.   

N.B. Power is also required by the province to pay $24.2 million in provincial utility taxes on its transmission system.  

Also, unlike a number of New Brunswick industrial operations that are exempt from paying provincial property taxes for being "important to economic development," N.B. Power facilities are charged in full.

The single largest provincial property tax bill issued by New Brunswick this year was $5.2 million to N.B. Power on the Point Lepreau nuclear generating station. That includes a $54,000 cost-of-assessment fee.  

N.B. Power was also billed $2.4 million in provincial property tax on the Belledune coal-fired generating station on top of municipal property taxes, $1.76 million on the Coleson Cove oil-fired generating station in Saint John and various smaller amounts on hydro dams and other generating stations.

Not included in the list to Chiasson are political mandates imposed on N.B. Power by the province, such as a requirement that it subsidize electricity prices for five pulp and paper mills.   

By regulation, N.B. Power is made to buy renewable energy produced by the mills and instantly resell it back to them at a loss. The utility estimates that scheme will cost it $12.6 million next year, a 46 per cent increase over the $8.6 million it is costing this year.

Chiasson acknowledges N.B. Power must pay all costs imposed on it by the New Brunswick government, but he says it is important those costs are public so N.B. Power customers can fully understand what their electricity rates are paying for.

"Part of our job is to raise the issue. That's why we are asking," said Chiasson.