Submission to the NB Power panel
As you know I have pretty strong feelings about NB Power and its future. I had hoped to speak with the new panel stood up to make recommendations but I haven’t heard from them and likely won’t so to save them and me a step here is my submission.
I only want two outcomes: 1) NB Power to become a plain vanilla electricity utility and 2) New Brunswick to be a place where over the next 10-15 years a massive amount of clean energy is produced to attract new energy-intensive industries.
That’s it.
Firstly, I want the panel to come up with a solution that ensures NB Power can provide reliable electricity and related services to households, businesses and institutions at reasonable costs and with annual cost increases in line over time with the national inflation rate. I think any proposed model that includes 5-7% increases every year in perpetuity will be politically toxic and a serious drag on economic development not to mention its negative impact on poor households.
This little whisper going around that New Brunswickers are going to have to pay a lot more for electricity to get up to rates found in New England and elsewhere is problematic. We shouldn’t make future ratepayers pay for the mistakes of past taxpayers (i.e governments not making tough decisions in the past for political i.e. taxpayer reasons leading to where we are today). We should make future taxpayers pay for the mistakes of past taxpayers. I have written a lot in the past about the difference between a taxpayer and ratepayer - they are not the same in many respects the most notable being in their ability to pay - ratepayers pay the same rate for electricity -tax payers face a graduated income tax rate based on their ability to pay.
Some will say put up the rates 5-7% per year and then implement an aggressive and ultimately complicated scheme for the taxpayer to subsidize poor ratepayers in perpetuity (i.e a $100 million - maybe in the future even more - program using tax dollars to reduce the bills of middle and lower income households). I would much prefer the taxpayer take over a large chunk or even all of NB Power’s debt if it resulted in my plain vanilla utility with reliable service and modest annual rate increases (as a reference NB Power paid $259M to service its debt last year).
As for all the other ideas floating around - sell to Emera or Fortis or even HydroQuebec - or breaking up the utility, etc. again I refer you to my desires for my a plain vanilla utility. This doesn’t mean it can’t be innovative but I want the thing run efficiently, debt amortized/paid in a timely fashion, etc. Going forward ratepayers should pay full freight for the purchase of electricity.
Second, I stubbornly hold on to the idea that New Brunswick should be able to produce clean energy at competitive rates when comparing to other jurisdictions in North America (mostly wind and nuclear). I’m not suggesting we can compete with nat gas-fired generation in Alberta but I hold on to the notion that the large electricity users - particularly those in tech - will want clean energy in the the 2030s and 2040s. New Brunswick has vast areas with no or limited population (2/3 of the land area of the province is either Crown land or industrial freehold), pretty good transmission infrastructure already in place, cheap land for data centres, green manufacturing, etc. and ports to get stuff in and out.
You can’t make the large electricity users (current and future) pay for the mistakes of the past. You will hurt your current and future economic development. You may think you can squeeze them harder because they have steel and concrete that is hard to relocate. This is bad thinking either a) they will retire that infrastructure early or b) when it comes up for renewal they won’t renew. Companies from sole proprietors to multi-billion dollar corporations are trying to make a reasonable return on investment. For energy-intensive businesses - consistently raising costs above what they would pay in competitor jurisdictions is a recipe for long term de-industrialization.
That’s it. Simple. A plain vanilla electricity utility offering highly reliable services and reasonable costs and a framework to make New Brunswick a clean energy powerhouse.
Actually really quite hard.
I also have very strong feelings about NBPower. I commend David for his two succinct goals for that utility - and I am on the same page. However I am very interested in the details of the current situation. I preface my remarks by saying that the missed opportunity with HydroQuebec haunts NB as it should - a very political decision not based on facts on the ground imo. Anyway, while I applaud the government putting the inquiry into the future of NBP it has struck me as a rather thin effort to address one of the biggest challenges; 3 people of which 2 are local and one is a consultant from outside the province. To me this effort should have more people that are highly qualified to dig deeply into this issue. Two areas in particular need very deep research: 1) a thorough combing thru the history of both NBP and the Provincial governments over the past 50 year. Identifying the key decision makers that got us into this hole is key to getting out of it and staying out. As is typical of monopolies, neither of these takes any real responsibility for making any mistakes that got us here, both claim that they did a great job but the other caused the problems . This is just typical bureaucratic tail covering that serves no purpose than defending the status quo. IMO, there is lots of blame to go around and inquiry commissioners need to be very honest and blunt in their assessment if real change is to happen. If the problem is not crystal clear, an effective long term solution is unlikely. 2) the inquiry commissioners need to look at utility structures around the world in the hopes of finding new business models that may not have been considered here. This is not to say that the current 3 commissioners are not knowledgeable but they are just 3 people and it is a very big world. Again this is too serious an issue to rush to any solution about. So those are my wishes and concerns. My hope is that whatever comes out of g to his results in the organization David wishes for but my fear is that it can only be achieved thru a totally arms length organization that is beyond the political reach of government and beyond the reach of the NBP culture which is that of entitlement, ironclad job security no matter the mistakes, and no private sector experience in real accountability. Getting past those hurdles in a province that never really gives up true control of anything will be interesting to watch.
I asked ChatGPT and this was an AI Answer. Go figure..
How did power companies in huge debt from other countries make it out ok?
ChatGPT said:
That’s a big question, but a really interesting one. Power companies (whether utilities, state-owned, or private) often accumulate huge debts because they need massive upfront investment in generation plants, transmission lines, and fuel. When they get into trouble, they don’t usually just "go bankrupt and vanish" like a regular business. Instead, governments, lenders, and regulators step in.
Here are the main ways power companies in heavy debt have “made it out ok”:
1. Government Bailouts & Guarantees
Many power utilities are considered “too essential to fail” because electricity is a basic service.
Governments often inject cash, restructure debt, or provide guarantees to keep the lights on.
Example: South Africa’s Eskom has repeatedly received bailouts from the government despite being tens of billions of dollars in debt.
Example: US utilities in the 2000s energy crisis received regulatory relief and state backing.
2. Debt Restructuring / Refinancing
Companies negotiate with banks and bondholders to extend repayment deadlines, lower interest rates, or swap debt for equity.
This spreads out financial pain and allows operations to continue.
Example: CEZ (Czech Republic) and Enel (Italy) have used refinancing to handle debt-heavy expansion phases.
3. Tariff Adjustments
Regulators may allow higher electricity prices to give utilities more revenue.
This is politically sensitive but sometimes unavoidable when debt threatens supply security.
Example: India’s state electricity boards often ran massive deficits until tariff reforms and subsidies helped stabilize them.
4. Privatization or Asset Sales
Governments sometimes sell parts of utilities or allow private players in, raising capital and reducing debt.
Example: Brazil privatized parts of its power sector in the 1990s–2000s to relieve state burdens.
Example: Greece’s Public Power Corporation (PPC) sold stakes in subsidiaries to reduce liabilities.
5. International Aid & Multilateral Support
The World Bank, IMF, and regional development banks often step in with loans or restructuring plans.
Conditions usually include reform packages (better management, reduced losses, modernization).
Example: Pakistan’s power sector repeatedly receives IMF and World Bank-backed reform programs.
6. Operational Fixes
Cutting transmission losses (theft, inefficiency), improving bill collection, and upgrading old plants can improve cash flow.
Some debt-heavy utilities slowly dig out not just through bailouts, but by becoming more efficient.
🔑 The takeaway:
Unlike regular companies, power companies rarely “collapse.” They survive through a mix of government support, international financing, restructuring, and sometimes painful reforms—because without them, a country’s entire economy could grind to a halt.