Dear Mr. Matthews:
Thank you for your message about the proposed agreement the New Brunswick government has reached with the Province of Québec regarding the future of NB Power.
I agree that we have been in the middle of the toughest economic times in decades. Many industries are struggling and too many New Brunswickers are looking elsewhere for jobs. Fortunately, this proposed agreement will help industries employ thousands of New Brunswickers because it is part of a bigger plan.
In addition to households benefiting from a five-year rate freeze, large industries, the major employers in our communities, will receive an instant rate decrease of up to 30 per cent. Combined with the tax reductions of more than $380 million featured in the government’s Plan for Lower Taxes in New Brunswick, this will give our province a competitive edge in sustaining existing industry and attracting new investments to the province. This means more jobs for New Brunswickers.
It is important to note that the intrinsic value associated with NB Power assets is derived, not simply from the long-term incremental revenues of aging generating facilities or tariffs collected for accessing our transmission grid, but rather the long-term financial stability and synergies to grow our energy hub and the significant environmental benefits gained from the partnership.
As the largest utility in North America, Hydro-Québec has the scale to absorb considerable financial risk. NB Power’s current debt of about $4.8 billion represents about 40 per cent of New Brunswick’s provincial debt or $6,500 per person which is a huge burden for current and future taxpayers. Replacing aging facilities over the next decade will add further billions to the debt. Meanwhile, under the proposed agreement, we would stabilize rates and use greener energy. The proposed agreement will also reduce New Brunswick’s need to import dirty coal and oil from abroad in the long term, which of course is of concern to everyone.
Please note, Mr. Matthews, we are not “selling New Brunswick” but entering into a win-win economic partnership with a neighbouring province to gain access to a reliable supply of hydroelectricity. NB Power, while owned by Hydro-Québec, will still be called NB Power. The same dedicated employees will continue to work there. In fact, our skilled workers were a significant asset in negotiating this deal. Under the proposed agreement, we are protecting jobs not cutting them. It is important to Hydro-Québec to retain the continuity of the services now in place and ensure a smooth transition should the deal go through.
Hydro-Québec is also interested in investing in the New Brunswick Energy Hub where we have made major advances in renewable energy generation in the last three years. In addition, our electricity generation and transmission would remain a regulated industry in New Brunswick, just as in other provinces like Nova Scotia and Newfoundland which do not own their electric utilities. NB Power’s headquarters will remain in Fredericton and I will not conclude a final agreement unless New Brunswick’s interests are protected into the future.
Further to your request to post a plan on the government website (www.lowerratesnb.ca) please see the recent NERA report posting. The international economic consulting firm’s report estimates that ratepayers would receive about $5.6 billion in rate savings under the proposed agreement. The report confirms that residential and other small business ratepayers will reap close to two-thirds of the savings under the proposal. An independent Advisory Panel, chaired by Mr. Ganong, Chairman of Ganong Bros Ltd. and comprised of business and academic leaders has been appointed to examine the proposed agreement. The six-person panel has been directed to submit a report examining the benefits of the proposed agreement, which will be tabled in the Legislature, by January 15th, 2010.
Your government has been meeting with New Brunswickers to ensure people have all the facts. We are listening to people’s concerns and are open to ideas and alternatives. Thank you for writing about the proposed agreement and for taking part in this discussion.
Sincerely,
Shawn Graham
Premier
Tags: Hydro Quebec, Lower Rates, NB Power, New Brunswick, Response