10 Myths About this Deal
10 Myths About this Deal
Friday, 11 December 2009 18:53 | 
Written by Whipsaw | 
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When the deal is all done, the documents all signed and the photo op over, what’s left for New Brunswicker’s? The answer is very simple …
All the risks, All the cost and No Assets!
This is all spelled out, well maybe not so clearly in the Liberals Memorandum of Understanding. Let’s examine some of the main statements of this wonderful and mythical tale as outlined in the Governments “Answers to your questions” mailed to every New Brunswick household.
Liberal Myth 1: The $4.75 billion dollars received from HQ would reduce the provincial debt by 40%!
Fact: New Brunswick’s Auditor General, Mike Ferguson has stated “Actually there will be no impact on the provinces net debt because the province has always been deducting NB Power’s debt anyway” and saying “that’s not something the taxpayers have to pay.”
In addition, NB Power between 2005 and 2009 contributed $540 million to the province in profits, taxes, fees and income charges. These payments which help in paying down NB Government’s debt whose interest alone totals close to $600 million per year will be lost.
Liberal Myth 2: The average household heating with electricity would save nearly $1,400 over the next five years.
Fact: A five year rate freeze at first glance appears attractive but at what cost? Using the governments example you would save approximately .75 cents and if you don’t heat with electricity probably closer to .35 cents a day. For a few pennies a day is it worth our future and the future of untold generations to come? This deal is forever.
Liberal Myth 3: Don’t worry, after five years your rate increases are tied to inflation. Independent expert forecasts inflation should remain under two percent over the next 20 years.
Fact: Most economic experts can’t predict when we’ll come out of the current recession let alone predict what inflation will be in 20 years! Looking back in history is no help if going forward we are looking at $140.00 barrel oil!
Mike Ferguson our Auditor General has said “ordinary rate payers have been told that their rates will be frozen for five years and will only increase by the Consumer Price Index after that.” He continued on to say, “The province needs to be clear about whether NB Power customers might face higher bills through other charges.”
Liberal Myth 4: Hydro Quebec will not have control over our future rates. These will be controlled by the New Brunswick Energy and Utilities Board.
Fact: Selling anything is relinquishing control. To have the Liberal government try and convince us that in selling NB Power we still maintain total control is ludicrous!
The MOU clearly states (3.1) the Government of New Brunswick will change the regulatory framework governing the generation, transmission and distribution in New Brunswick to conform to the framework currently in effect in Quebec.
Where does control lie … with Hydro Quebec!
Liberal Myth 5: New generation needs won’t mean larger rate increases because these will be controlled by the EUB.
Fact: The MOU limits the amount of power available in the heritage pool to 14 TWh for New Brunswick’s residential and industrial customers. According to NB Power’s 2007-2008 financial report we used 14.25 TWh of power which already exceeds the heritage pools allowance. This pool only covers current existing customers and industrial users and penalizes future growth in NB.
According to the MOU section 2.2(b)ii the incremental cost of any power used over the allotted heritage pool will be deferred or set aside until the 5th anniversary when all costs plus interest will be recovered by Hydro Quebec by adjusting the rates. This is over and above the annual rate increase based on changes to the Consumer Price Index. Remember those supposed savings in Myth 2, forget them.
Liberal Myth 6: It’s OK to rely on another province for our energy needs because we have a long history of co-operation with the Province of Quebec.
Fact: Hydro Quebec is owned by the Quebec government which is made up of officials elected by the people of Quebec. Their allegiance in attracting new business and looking after the welfare of the people lies in Quebec not New Brunswick.
Quebec has already proved that cheap power is not the sole solution in attracting or maintaining industry. Even with the cheapest electrical rates in North America Quebec has suffered many mill closures in the past few years.
Quebec will not be looking out for the interest of New Brunswick when it comes to new business and this is vividly emphasized with an artificially low heritage cap which allows no growth at favorable power rates now or in the future. The new solar panel plant in the Miramichi has supposedly requested a 1.2 TWh supply from NB Power. How much will New Brunswick tax payers have to subsidize this rate to attract and keep this new industry?
Liberal Myth 7: Don’t worry, New Brunswick would continue to have absolute control over energy policies and the agreement identifies New Brunswick as an energy hub.
Fact: New Brunswick’s energy hub will be owned by Quebec along with the 20,030 km of transmission lines and the crown land they sit on. The strange thing is that they didn’t need to buy the farm to have access to this energy hub. Access is guaranteed under existing open access agreements.
But how could they pass up this deal! Being offered most likely $20 billion or more in assets for a mere $4.7 billion! Plus the people of NB pay help HQ pay off this debt through their rates and take care of any of the nasty details like decommissioning any assets that HQ doesn’t want. Just to sweeten the deal we’ll throw in that new $8.5 billion nuclear plant, after completion of course.
Now the only kicker in the whole deal is that Quebec will have to face our fearsome EUB when they want to raise the rent every year. That’s our guarantee of total control over our energy policies.
Liberal Myth 8: This agreement is beneficial because Hydro Quebec is responsible for such costs as upgrading and maintaining aging NB Power facilities.
Fact: Hydro Quebec demands (MOU 2.5) by contractual or a legislative guarantee a fair and reasonable return to the owner of the assets through transmission and distribution rates! This is over and above the CPI rate increase.
In addition within 12 months of Quebec’s demand we must shut down and pay the decommission costs of Belldune, Coleson Cove as well possibly Mactquac and Lepreau.
Who really benefits … Hydro Quebec!
Liberal Myth 9: We are told not to worry our power supply is secure and our NB Power employee’s jobs are secure.
Fact: Union leaders have raised concerns that the MOU between the two companies and governments don’t leave them convinced that job or labour agreements are safe.
When all New Brunswick’s thermal power plants are shut down as suggested in the MOU power will have to be imported from Quebec’s James Bay or NewFoundland and Labradors Churchill Falls generating plants. These plants are more than 1250 km from Fredericton. One doesn’t have to go too far into the past to see that greater distances increase the risk of supply.
Liberal Myth 10: Will New Brunswicker’s be consulted? Yes your government is listening and urges you to join the conversation on the government’s website www.lowerratesnb.ca
Fact: An overwhelming majority of responses to the government’s site are totally against the sale of NB Power and are demanding a vote through a referendum or early election. All indications are that the Liberal government is not listening to the people that elected them.
You can read the MOU over and over, listen to the Liberal spin and hype but you will keep coming to the same conclusion.
This deal was not well thought out, was poorly or not negotiated, and represents very short term thinking with short term solutions for a very select few.
The problems this agreement creates are serious long term problems which will negatively impact untold generations that follow us.
This deal is bad and no amount of tweaking will ever fix it.
Last Updated (Wednesday, 06 January 2010 06:08)