Auditor general reproaches N.B. Power for financial barriers to energy efficiency

New Brunswick's auditor general says N.B. Power needs to do more to address barriers for low- and middle-income New Brunswickers who don't have the money up front for energy efficiency upgrades.

"Moderate-income households may have difficulty accessing NB Power's energy efficiency programs, due to lack of financing mechanisms," Paul Martin says in a report tabled at the legislature Thursday.

It faults the Department of Natural Resources and Energy Development for not requiring N.B. Power to create a loan program when it folded energy efficiency programs into the utility in 2015.

"Low-income households are really being left out if they cannot obtain that funding mechanism to even consider these programs," Martin said while presenting his report to the legislature's public accounts committee.

New Brunswick is one of only two provinces with no financing mechanism in its energy-efficiency programs. Residents must spend the money up front and then get a rebate for part of the amount.

Martin said N.B. Power doesn't need to be the organization providing the loans as long as they're available somehow.

"Being one of only two province not doing it — there must be a way," Martin said. "Almost everybody else is doing it, so why is this an issue?"

Financing mechanisms "are a widely used and a cost-effective tool to make energy efficiency more accessible to moderate and low-income households," says the report, Martin's first since becoming auditor general on Jan. 1. 

It quotes N.B. Power replying that it doesn't have the funds to provide loans because of its focus on debt reduction. The utility also pointed out that the federal government announced a major loan program for energy retrofits in its budget last year.

N.B. Power spokesperson Marc Belliveau said in an email the utility's low income energy savings program provides free energy efficient upgrades to eligible homeowners and 466 homes were retrofitted last year.

"N.B. Power is looking at options to expand this program," he said.

The audit says people who don't heat with electricity aren't using the energy-efficiency programs at the same level and that N.B.Power doesn't believe it has to fund them. 

It also says the department hasn't given  N.B.Power any energy efficiency targets and hasn't provided enough oversight of the program.

Martin's report calls for "a plan" to address the issue.

The utility says as part of its response in that it will conduct a "barrier study" by June 2023 looking at other provinces to come up with recommendations "to increase participation" by low- and middle-income households. 

"You're asking for a plan and implementation, and you're going to get a study," Liberal MLA René Legacy told Martin.

"We would always like to see our recommendations addressed faster, and as fast as possible," Martin answered.

Highest executive salary

The report also includes a chapter on salaries at provincial Crown agencies that highlights N.B. Power CEO Keith Cronkhite's $560,000 salary as the highest among any head of a provincial Crown agency.

The utility also has the highest average salary among Crown agencies and is the only one to offer a generous "executive retirement supplement" to everyone in the position of vice-president or higher, like the one availabe to deputy ministers. 

For employees earning $100,000 a year or more, the utility's salaries also rise at a faster rate than civil servants working for government departments.

The report recommends the government set out what it means when it says salaries in Part IV of the government, Crown agencies, should be consistent.

"A lack of clear expectations from government increases the risk of government intentions not being carried out," the report says.

"In our view, government should clearly define what it expects of Part IV Crown agencies with regards to non-bargaining salary and benefits practices."

Martin acknowledges N.B. Power and other Crown corporations don't work directly for the government and each organization is allowed to set its own policies.

But the audit says the province provides "some direction" through memoranda of understanding it issues to the Crown agencies every three year.

Executive retirement benefits

While executive salaries at N.B. Power are higher than normal, the utility has less generous health and dental benefits and lower travel expense allowances than other parts of the provincial public sector.

The report also looks at the New Brunswick Financial and Consumer Services Commission, the Research and Productivity Council, Opportunities New Brunswick, the two regional health authorities and others.

But N.B. Power is the only one to offer the executive retirement benefit to senior officials.

If they work for five years or more, senior executives get a retirement supplement of one per cent of their annual salary for every year worked, up to 10 per cent.

For example, an N.B. Power executive with an average salary of $200,000 per year over 10 years would get an additional $20,000 a year during retirement. 

That's on top of the regular provincial pension under the New Brunswick Public Service Pension Plan.

Belliveau pointed out the report acknowledges that the utility sector "is a complex one" and N.B. Power has to offer "a competitive compensation package" to attract qualified executives.

He said the retirement supplement is designed to make up for higher salaries and bonus programs that other utilities offer and that N.B. Power doesn't have.