The Mysterious East

Now that the early gut reaction to the sale of NB Power to Hydro Quebec has flared up and seems to be burning out in some places and reduced to a slow burn in others, a real discussion is emerging in New Brunswick on the streets and online about the deal. An example of the emerging reasonable discussion can be found on David Campbell’s excellent blog, maybe not so much on the Facebook site that is gathering opposition to the deal. There’s too much name calling and cynicism over there on Facebook to allow for a real discussion of the facts.

My recommendation is that people inform themselves by reading the Memorandum of Understanding signed by Premier Shawn Graham and Premier Jean Charest, and calmly asking questions and listening to all sides of this discussion. Of course the government should be doing the same, because there will be more negotiations as we move from the MOU to a final, legal deal.

Get informed and in the process ask yourself about the alternatives should this deal not proceed. It is not a question of protecting our heritage, or our identity as a province. NB Power has been a financial and political liability during the 20 years or so that I have been writing about New Brunswick politics. There hasn’t been a Liberal or Tory government that has found a solution to NB Power’s many problems, which have resulted in crippling power rates and unmanageable debt. We are not, and have never been, defined as a people or place by owning this troubled utility. Opposition to this deal requires a hard look at what the future will look like with the status quo. Here are some of my notes about the deal after a period of watching and listening:

• First, the obvious: the deal significantly lowers power rates for industry and freezes rates for five years for residential users. The alternative, should the deal not go through, is the continuation of rate increases for all of us. When we are debating the merits of offering most of the savings to big industry, we should consider the impact of industrial power rates on preserving existing jobs and future economic development. Mill owners in New Brunswick have for years been arguing that the future of the forest industry demands that we deal with the power rate issue. The collapse of the forest industry during the past five years is evidence that these mill owners weren’t crying wolf.

This deal could be the salvation of rural New Brunswick communities. For example, the reduction in power rates could save the Fraser Papers mill in Edmundston, which employs 350 people. Fraser is now in creditor protection. If the deal were to save the Edmundston mill, we could argue that the deal is saving the economy in northwestern New Brunswick. It’s one thing to be an opponent of the deal if you have a safe job in Saint John, Moncton, or Fredericton. It’s a different story in mill towns. This deal may transform mills with co-generation capacity into viable operations. As we emerge from the collapse of the forest industry and search for ways to rebuild rural economies in New Brunswick, we need to remember that our current power rates are a show stopper for many industries that might consider setting up shop here.

• The sale removes 40 per cent of the province’s debt. This will be the single largest debt payment in the history of the province. The significance of removing this exposure to debt can’t be overstated. Opponents of the deal, like Tory leader David Alward (who runs a “Shawn Graham” debt clock on the top of his party’s website, and apparently has not seen the irony in this) have not explained how this debt will be managed in the future without significant power rate increases. How can we afford to continue to own this utility? If the Tories are going to lead the opposition to this deal, we need to see a plan, a multi-year projection of where we will be as owners of this debt-ridden utility.

Owning NB Power is like being house poor, living in a big old house that needs an upgrade. Every year the house gets more expensive and we keep taking second and third mortgages just to keep it running. Now we can’t afford to keep the roof from leaking, and we can’t afford our mortgage payments. The deal removes risk of further exposure to debt, for example the inevitable refurbishment of the Mactaquac Hydro dam, which would add billions to the debt of NB Power.

• The deal will lead to the closure of dirty generation plants such as those at Coleson Cove and Belledune. New Brunwick will meet and exceed emission targets when these plants are closed. This will improve our air quality and quality of life. We will be operating off green hydro power, imported from Quebec. We often argue that what defines New Brunswick is our quality of life. We improve that quality of life by protecting the environment.

• The deal will give New Brunswick real incentives to conserve power. This is where the deal gets interesting. The deal allows for a “heritage pool” of power guaranteed by hydro Quebec. That heritage pool is basically the amount of power we are using now. Should we exceed that amount, we will buy the additional power we need on the open market. This creates a tremendous opportunity in the province to conserve energy. The government would be able to run programs to make industry and residences more energy efficient. The more efficient we become, the more we expand the capacity of the heritage pool to meet our needs without creating the need to purchase for more power.

NB Power has been advocating energy conservation, which always appeared to be a contradiction from the utility that is selling power, and it made a kind of perverse sense only in that NB Power wasn’t charging the true cost of electricity and therefore it was losing more money the more it sold. The proposed deal will create a real incentive to conserve and create green industries in the province.

• The deal doesn’t limit opportunities for future power development. For example, we could build another transmission line and sell it to Newfoundland. Or we could develop wind or tidal power.

• There is a lot being made about the fact that Shawn Graham broke an election campaign promise not to sell NB Power. This is true. What are we to make of that? For one thing, we need to consider that the world shifted under our feet in 2008. It would be irresponsible for our elected representatives not to respond to the world financial collapse. I have argued in the past that breaking election promises, knowing that there is a political cost in this, is a sign of courage. Years ago, I urged Tory Premier Bernard Lord to break his election promise and keep the tolls on the Fredericton to Moncton highway. Instead, Mr. Lord kept his promise and saddled taxpayers with about a billion dollars in debt to pay shadow tolls. We took off the tolls that would have been paid by those who use the highway and transferred the cost to our children and their children. Premier Shawn Graham could have walked away from this deal because it represented a broken election promise. Instead, he has proceeded with this deal and taken on the huge political risk associated with it. There are times when a broken promise is politically courageous, whether we agree or disagree.

These are some of my thoughts to date. What’s interesting is that out of this debate a picture of the province of the future is emerging: a place that has low taxes, green energy, clean air, reasonable power rates, bilingual workforce, universal high speed internet, incentives for energy conservation, real management of our debt. If you were cynical, you might say this is spin, or overly optimistic. I say it’s something worth striving for. David Alward and his followers who are opposing this deal may yet convince me that we are on the wrong track, but I am going to need to see a vision of my province of the future and a plan to get there, not just angry words, general cyncism and sophistry.