The New Brunswick government has unveiled its action plan following the review of NB Power, which defers much of the large scale financial restructuring and sustainability recommendations.
It said it has accepted all the recommendations, acting on 44 of them in the immediate, short and medium term, while six others require further analysis.
“Over a year ago, we noticed that New Brunswickers were facing two significant challenges when it came to power bills … and we knew we had to act,” said Premier Susan Holt during a conference with reporters last week.
Three individuals, Michael Berstein, Anne Bertrand and Duncan Hawthorne, led an independent review of the province’s largest utility.
The 70-page report outlines 50 recommendations about the operation of the Crown corporation, noting there are no easy solutions.
“Let us start with the bad news: there is no silver bullet or easy answer to achieve the overriding goal to have affordable, reliable and sustainable electricity while meeting New Brunswickers’ expectations,” the report said back in March. “Electricity rates will inevitably rise due to the need for significant investments in new generation capacity and the upkeep of ageing infrastructure.”
Several key recommendations were around the financial sustainability of NB Power, including reducing its debt and corporatizing the utility. It also suggested separating the Point Lepreau Nuclear Generating Station and adding a reward structure for employee performance.
The utility’s debt is around $5.9 billion.
Holt said the government would defer recommendations 7, 19, 20, 33, 43 and 44 for further analysis.
“The biggest part of those, oftentimes, is sequencing,” Rene Legacy, the Minister of Energy, said. “Just writing down the debt, with NB Power, was never acceptable to us or to NB Power. We have to see some of the changes happen first so that we don’t fall back into the same situation that we’re in now.”
He said the reviewers wanted a carrot-and-stick situation when it comes to compensation — one of the recommendations that the government says requires further analysis.
“The metrics and all the criteria have to be in place for the organization to become high-performing and then we could look at potentially adding the carrot,” he said.
The three-person panel also recommended writing down some of NB Power’s debt, which would reduce pressure on rates.
Point Lepreau’s separation from the Crown corporation was also deferred for further analysis.
“We are recommending that a new entity, Point Lepreau Nuclear, be set to have its own governance arrangement specifically focused on nuclear plant performance,” the report from the comprehensive review said in March. “There should be an operating board populated by experienced nuclear professionals in non-executive roles and with sufficient gravitas and structure to satisfy the regulator of their ability to assume the Nuclear Site License under their purview.”
The review panel, at the time, did not provide specific recommendations on how to make that change, saying there are different options available to the utility.
“Our view is that the relationship between Point Lepreau and NB Power should be more contractual than it is governance,” Hawthorne, who is an industry expert in nuclear power generation, said.
The panel also said a second nuclear facility is needed.
“We recommend that the Government of New Brunswick (GNB) consider initiating the planning assessment phase for an additional large scale, proven-technology nuclear plant to be sited alongside the Point Lepreau facility,” the report said back in March.
According to the report, that analysis would be complete by 2029, the year after the end of the Liberals’ mandate.
Legacy wouldn’t confirm whether the recommendations that were deferred would be completed, only saying it depended on the progress of other recommendations.
It has introduced an advocacy office who would address concerns from residential and small business customers with energy concerns.
“That was recommendation number nine,” Legacy said. “We are keenly focused on governance and accountability as it relates to government and NB Power management and the board, with the ultimate goal of improving performance, which was recommendation number two.”
NB Power president and CEO Lori Clark said she is concerned about the utility’s debt overall, but the focus has been on keeping rates affordable and predictable.
“There is debt on NB Power’s balance sheet and we do need to worry about that in the future,” she said.
Clark said there are opportunities to look at regional opportunities — something both the review panel recommended and the government hopes to take action on.
“All of the regional jurisdictions are facing the same things that New Brunswick and NB Power are facing,” she said. “There is a lot of opportunity with the rising cost of electricity, the rising demand for electricity, new assets that need to be built in the future, and looking at it from a regional basis makes a lot of sense.”
Clark said NB Power will be working to achieve the outcomes and deadlines set out in the action plan.
The government said it expects to see quarterly reporting on the plan’s progression. Legacy said if things fall behind, it would “need to take corrective action.”
“The expectation is that actions are going to be taken and with diligence to make change,” he said. “If you fall behind on one or two recommendations, it might have an impact on three or four more, so I think there is going to have to be quite a bit of discipline there. “And part of the reporting there is, if any corrective actions have to be taken to get back on schedule, it will be reported on.”
