John Chilibeck, Local Journalism Initiative Reporter
New Brunswick’s energy regulator has ruled against NB Power’s attempt to fast-track the building of a new, expensive gas plant in the southeastern corner of the province.
In an oral decision on Thursday, the New Brunswick Energy and Utilities Board said NB Power had to abide by a section of provincial law that states all its capital projects of $50 million or more must be closely scrutinized and approved by the board.
The public utility had argued last month at a special hearing that the project would belong to Rigs, part of the American firm ProEnergy, which would build and run the plant near Sackville, estimated at more than $1 billion.
Rigs would then sell the electricity generated back to NB Power as part of a 25-year tolling agreement.
Christopher Stewart, the chair of the utilities and energy board, told his audience on Thursday the board did not accept NB Power’s arguments.
“Capital projects are not defined by the way in which they are financed,” he said dryly in a decision that took more than one hour to deliver.
“The range and potential of innovative financial arrangements for capital projects is unlimited. In this case, it is clear from the confidential portions of the tolling agreement that Rigs LP’s willingness or ability to finance the upfront design and construction costs of the project depends on a significant extent on NB Power’s status as a Crown corporation and the credit of the province.”
The public did not have access to the confidential agreement or the financial details, but the regulator and several interveners examined them behind closed doors. They were sworn to secrecy to protect the American company’s competitive position. It runs several gas plants in the United States.
NB Power’s application to the board asked for an interpretation of a narrow section of the province’s Electricity Act that applies to big capital projects. Its lawyer argued the Rigs project did not qualify because of the special tolling arrangement.
But Stewart said the board had complete authority to review big spending projects that truly belong to NB Power, regardless of the financial arrangements, and that a proper interpretation of the province’s Electricity Act meant the Rigs project was indeed the public utility’s capital project of more than $50 million.
He said the proposed project exposed NB Power and its 393,000 customers to precisely the kind of risk the law seeks to mitigate.
“The tolling agreement establishes the price NB Power is willing to pay,” Stewart said. “This arrangement does not eliminate the risk of NB Power that the project may later be found to be imprudent. It only captures certain sources of risk and transforms them into a cost for which NB Power will ultimately seek recovery from ratepayers.”
Shortly after the decision, an NB Power spokeswoman said her organization appreciated the clarity provided by the three-member board panel and respected their decision.
The matter will now go before a full public hearing, likely in the new year.
“We are prepared to file evidence in support of this project,” Elizabeth Fraser wrote in an email to Brunswick News. “The hearing will allow us to demonstrate the importance and due diligence of the Rigs Energy Atlantic Project in ensuring energy security and reliability for our customers.”
Interveners in the case praised the board’s decision.
Alain Chiasson, the public intervener for the energy sector, told Brunswick News he looked forward to the hearing.
“It’s a very important project, a big project, a crucial project for NB Power,” he said. “This was a project that was just too big for NB Power to skirt the regulatory process.”
He pointed out that NB Power was the one that issued an expression of interest to build the project, and ratepayers would be on the hook for construction costs through their electricity bills in future years.
The intervener hasn’t decided if the project is good or not because he needs to hear the details in a full public hearing.
However, Chiasson warned opponents that the board would not look at the environmental consequences of building such a plant.
People concerned about the environment and the climate crisis have condemned the project, arguing it will add greenhouse gases to the atmosphere and contribute to the dangerous warming of the planet, threatening life as we know it.
But NB Power says it needs the plant to make sure there isn’t an electricity shortage by 2028 and points out that by using it to backstop wind and solar energy when the weather doesn’t co-operate, it won’t need to use the Coleson Cove Generating Station, which burns heavy oil and spews even more harmful greenhouse gases.
“The board will look if this is prudent for the ratepayers,” Chiasson said. “That’s what the board is mandated to do. It isn’t mandated to deal with the social and environmental consequences of the province. It will only look at the economic consequences.”
Still, the Conservation Council of New Brunswick, which is opposed to the creation of any fossil fuel plants and wants NB Power to install huge backup batteries instead, lauded the board’s decision.
Moe Qureshi, the council’s director of climate research, alluded to NB Power raising electricity rates 24 per cent over the last three years alone, sparking a public backlash.
“The board agreed that NB Power’s deal with Rigs needs a full public review. This is an important win for accountability, ratepayers, and it’s a win for fairness and openness. New Brunswickers deserve to know how big energy projects affect their power bills, especially with NB Power asking for a 4.75 per cent rate increase next year. So, today’s ruling means these kinds of long-term deals can’t be made behind closed doors. It’s a step towards transparency, and hopefully, affordability for our province.”
Qureshi said he was well aware the board can’t weigh in on environmental matters. That’s why his organization is lobbying the provincial government to change the law.
“Some of our longer-term work is to change the Energy and Utilities Board Act. We want to introduce a net-zero emissions mandate or a sustainability mandate, similar to what Quebec has or what Nova Scotia recently included, that goes beyond what are regulator is doing, so it looks beyond economic factors and looks at environmental and social factors, and whether people want this kind of project or not.”
