Rebuttal (really a rant) to Grahams blog entry

For those who read the Shawn Graham blog entries at the lowerratesnb website. I picked out the meaty part from the middle of Grahams latest post, and added some comments. Not that it's really so meaty, as most would starve trying to digest what he says, but anyway, it's my rant of the week. My comments are in red, as that is the color most people see when talking of this subject. And my rants don't get links to real information. Trust me, it's all out there in the www. The rant starts here.

The first question most people ask me is "Why was this step necessary?"

Yeah, Shawn, why was this necessary? For each of your statements, I have my own. Enjoy.

First, without a plan, rates would continue to increase. This puts a strain on the pocketbooks of our families and means our businesses and industries will be spending more money just to keep the lights on, instead of making their operations more profitable and hiring more workers.
Rates will still continue to increase. Industrial rates will go up as soon as the deal is signed, and will continue to go up forever. RCW rates only get a five year freeze with a substantial jump in year six.
Second NB Power's $4.8-billion debt is not manageable in the long-term, and as we look ahead at the costs of replacing our fossil fuel plants, that debt exposure would grow by at least $10 billion.

Hydro Quebec is adding $25 billion worth of infrastructure in the next four years to their already existing $36 Billion dollar debt. Plus if they add NB Power’s debt, the total could be over $60 Billion by 2013. Almost equaling their asset value today. No different than the situation NB power is in.

And finally over one-third of New Brunswick greenhouse gas emissions come from energy generation. And we're too dependent on coal and oil from foreign countries to heat and light our homes.

Since when is the US a foreign country? Technically, I guess it is, but I would have to say its a reliable source. Most of Belledune’s coal and petcoke supplies come from the US. Why can we not use the 100 million barrels of oil produced in Newfoundland each year? We have a major natural gas pipeline that supplies the US with natural gas to run power plants and the Bayside power plant in Saint John. The McCully Field in the Sussex Moncton area produces about 10% of the gas that flows through the line, and has the potential to supply more than Sable Island. How is that foreign? 10% of Newfoundland’s oil output would keep NB Power’s Coleson Cove station running at full load everyday of the year. To bad we didn’t put together a national energy policy when we had control, instead of giving it away to our southern friends to pad their pocket, and force us to buy our own resources back on the open market at inflated prices. When Hibernia went commercial, the break even price was $ 9 per barrel of oil produced.

What is your next idea to reduce oil and gas consumption for the transportation sector? Oh yeah, you won’t be around long enough to get to that issue, so no need to worry about it.

These three factors must be addressed if we want to achieve our goal of a self-sufficient New Brunswick.

See above to find out how to address your problems.

So early in 2009, our government sought out an opportunity to lower rates, lower debt and lower our dependence on fossil fuels while maintaining control of our energy policies.

Quebec also sought out new customers as they now can’t compete with the cheap natural gas stations in the US. They also lost an aluminum smelter, pulp mills, mines, and other small industries totaling 8.5 TW worth of sales. This is almost equal to the proposed RCW pool in NB. They needed some new customers. The $25 billion in new dams and transmission lines will cost them a fortune in financing, and the need to pay for it somehow. Fortunately for them, along came you, and guess what? They say there is one born every minute.

As for lowering debt, well that’s a joke.

And we looked for a partner who could help us achieve that.

Partner? I guess when you buy a new car, you could call the dealership that sold it to you a partner. Some one who will give you a five year warranty, and then bleed you dry every time you pull in for even a basic oil change. Eventually you will need a whole new car, and they will be glad to sell it to you.

While we have an excellent partner in Hydro-Québec, we have heard New Brunswickers' concerns about protecting our energy sovereignty. New Brunswick will maintain absolute control over our energy policies. Hydro-Québec is a company operating in a highly regulated industry. Here in New Brunswick, we still set the rules and Hydro-Québec must follow them. That's part of the proposed agreement as it now stands but having heard the concerns from New Brunswickers our government is looking at how we can further protect and enhance New Brunswick's energy sovereignty.

Why would you make the statement that “NB will maintain absolute control” and “look at how we can further protect” in the same paragraph when referring to energy sovereignty. Are you doubting your own beliefs?

Our government will continue to decide what the energy priorities are, what kind of power plants can be built here, and where they can be built.

What kind of power plants? Give it a break. Status Quo or not, because of the economic downturn and loss of industry, NB wouldn’t need a new power plant for 20 years anyway. I thought the future was green. NB has 5000 MW worth of wind power potential. So do PEI and Nova Scotia. Partnering with Hydro Quebec for load control and a place to store all the excess wind energy would be a partnership. That would be progressive thinking. Building wind to hydrogen energy conversion facilities to store excess wind energy, and using it on less windy days would be progressive thinking (no I’m not a paid conservative – but will be voting that way). Newfoundland is looking for customers and a route to the US for it's vast hydro power potential. Partnering with them would have been progressive.

And New Brunswick's Energy and Utilities Board will make the final decisions on whether rates can increase.

This, I can’t wait to see. You can’t even stop the price of home heating fuel and gasoline from bouncing up and down. How come you can’t stop NB Power from doing a simple small 3% rate increase? Is this a smokescreen for the bigger 1 cent per kilowatt hour increase that the Quebec Government (notice I did not say HQ) plans to implement to cover their ballooning debt.
This would be a 26% rate increase to the generation portion of their rate. And about a 16% overall rate increase. I’d like to see the look on the NB industrial customers face on April 1, 2010 when this gets implemented, and they kiss their big rate reduction goodbye. You should put this in your NERA formula and see how many Billions are saved over eternity.

When you ask HQ to tender for any possible new load growth, and all the bids come in at a much higher rate than what is currently paid by the heritage pool, how do you regulate that? Either you pay, or you turn off some customers. Right?

See you at the polls in September.

My view - of why it has to be signed by March 31

I have talked on a few subjects, but only last week realized in my own head, how some of the pieces fit together. This may be old news to some, revelations to others, but I'll try to give a little history lesson for the past year and a half. Some information is not linked, as I have previously blogged about it and linked it in previous posts.

In late 2008, the economic collapse started. http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932009
Unforeseen by most. But predicted by a few. http://www.financialsense.com/
Since then Quebec lost an aluminium smelter, paper mills, mines, and others. This resulted in a 8.5 TW loss in load. Data all publicly available published in Hydro Quebec's 5 year strategic plan. This amount of electricity is almost equal to the proposed RCW heritage pool in NB.

HQ also started a $25 billion capital expenditure program to build dams and transmission lines to feed the US. This is to be spent from 2008 to 2013.

Natural gas prices also plunged, http://tfc-charts.w2d.com/chart/NG/W which makes the merchant power plants in the States that use natural gas cheap and very competitive. All these natural gas plants currently are a lot cheaper to run than the new hydro stations coming on line in Quebec. There is a great backgrounder of information published here : http://www.iso-ne.com/nwsiss/pr/2009/final_2009_october_backgrounder_remarks.pdf . This document is from the New England Independent System operator website, so it should be a fairly knowledgeable and objective source.

Here is an excerpt from page 10 detailing the dramatic drop is prices:
"For the entire summer of 2009, average electricity prices were down 63 percent compared to summer 2008. Gas prices were down 67 percent, and oil prices were 40 percent lower. In July 2008, fuel prices were climbing to historic highs and electricity prices followed suit, with an average high at $107.98 per megawatt-hour that month. Fuel prices have dropped dramatically since then. In July 2009 alone, natural gas prices were 70 percent lower than the previous July, and oil prices were 46 percent lower. Wholesale electricity prices were 69 percent lower than in July 2008, at $33.53/MWh."

With wholesale prices at $33.53/MWh, HQ cannot afford the mortgage on those new dams.

HQ's profits in 2009 will fall from over $3B to about $2.4. This is less money available to the Quebec Gov who collected $2.2B from HQ last year. Add this to the $4B deficit that Quebec has this year, and now you have a problem. HQ NEEDS CUSTOMERS. So while all this was happening, along comes Graham and says he needs some cheap power to keep his industrials happy. Mr Charest, knowing he has a problem developing, paints Graham a pretty little picture. The premier jumps up and down with joy as he feels he has just won the lottery. A deal is struck, and the rest is in the papers for all to read.

But where's the catch? Well, heritage pool power rates in Quebec are legislated at 2.8 cents a kilowatt hour. This is under direct control of the government through legislation. Real rates are 2X after adding in transmission and distribution. But still 30 to 50% less than NB. The big rush to have everything finalized is because Quebec plans to legislate a 1 cent per kilowatt price increase to the existing heritage pool customers to cover some of it's $4B budget deficit. This is about a 15% rate hike. A selling feature of the NB power sale, according to Graham, is the lower industrial rates in NB to match Quebec's. A 30% reduction. That will be on March 31, 2010 at midnite. But, when the Quebec Gov passes legislation on April 1 to raise rates 15%. Guess what? All the industrials in NB will get the same rate increase. So that 30 % drop is only 15%. Not such a great selling feature. And then people will be really ticked off. That is why Keir keeps eluding to this window of opportunity. That window will close soon, and once the big rate reduction is gone, then they will have NO friends at all. Plus, if they are spewing a lot of crap now to get us to buy into it, if this Quebec (and NB) rate hike pops up out of nowhere, the backlash will be off the charts.

And that Folks, IMHO, is the why of why Shawn Graham chose the path he did. Inexcusable in itself , but the how is even more inexcusable.

Unfortunately Canada lacks a real Energy Policy. As the largest exporter of crude oil to the largest consumer on Earth ( the US) we have no need to be held hostage to the rest of the planet.
Unfortunatley we don't own our resources, an have a difficult time moving them across the country from the "have" provinces to the "have not" provinces. But, Newfoundland produced 100 million barrels of oil a year for at least the last eight years. http://www.economics.gov.nl.ca/EB-Oil.asp . Enough to keep Irving's refinery going at 300,000 barrels a day.

And there are over 120 to 200 years of coal supplies in North America at current consumption rates.

For those who need more reading material, check this out : http://www.mackinac.org/11309


New Brunswick hasn't even put simple things like air to air heat pumps on their list of things to do. These have advanced a lot in the last few years. And would cut the average bill of an electrically heated house by half. They extract heat for the outside air and dump it in your house. No different than a refrigerator takes heat from inside your fridge and dumps it in your kitchen. On a bigger scale, the average power plant is only 33% efficient at converting fossil fuels to electricity. Natural gas fired stations with co-generation facilites, can operate at 50% efficient. To produce electricity with natural gas, and then use it to heat a house is a waste. If a provincial policy were in place to heat houses with natural gas, the efficiency would be upwards of 97%.

Anyway Folks, I'm drifting off topic. Happy New Years to all if I'm not back before then. Check and support all the other sites I've linked too. And keep up the fight.

"The end of cheap hydro"

I've seen this stated a few times recently, so thought I would post some links.

http://www.quebecoislibre.org/09/090215-3.htm#migbas

http://www2.macleans.ca/2009/10/22/the-end-of-cheap-power-in-quebec/

http://www.montrealgazette.com/technology/Hydro+Qu%C3%A9bec+seeks+rate+hikes/1845406/story.html

http://www.montrealgazette.com/cars/Hydro+hike+CEGEP+tutition+fees+table+Liberals/2038109/story.html

Even Hydro Quebec can be caught blindsided by their government owners:

http://www.montrealgazette.com/news/talks+rate+hikes+Hydro+Quebec/2073781/story.html

http://www.globalmontreal.com/entertainment/Debate+higher+charges+Bachand/2038109/story.html

That should be enough links to fill your brain for now. Goodnite folks.
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Side by Side comparison NB Power and Hydro Quebec

I did a side by side comparison of some of the statistics for NB Power and Hydro Quebec. The picture below is not readable, but when you click on it, it should open a new page with a spreadsheet with a comparison of the major indices of each company. Use your back button to get back to the blog. Of course, anyone can pick a number from one company to compare to another, but I picked 12 of the larger items. Hopefully I can add to it. All items are from Annual reports or other sources that I have previously posted. I also added the provincial population and provincial debt as a starter. Neither provincial debt calculation has the respective power company debt. Quebec has roughly 10 times the population as New Brunswick, so naturally, one would assume that everything else should maintain some resemblance of that 10x ratio. Most items do, with some items favouring Quebec, and some items favouring NB. But our premier should stop it with the "crippling debt" crap. If anyone has a crippling debt, it is Quebec. Oh yeah, that was the subject of a previous post.

One item that is a major item, that i have not included yet, is the percent of renewable fuel source versus fossil fuel source. I won't pretend to argue that one, but New Brunswick played the hand it was dealt. There is just not much hydro left to develop in the province. Grand Falls, could be doubled (60 - 80 megawatts) but besides that, there are only a couple of hundred megawatts of hydro left in the province. NB Power developed Grand Lake to use indigenous coal at a time when it was beneficial to the province. It served a very useful purpose for a lot of years and will be soon be retired.

Happy reading and Happy Holidays to everyone. Except the Grinch who stole Christmas. You know who you are.

EDIT REQUIRED. (Jan 9) I may have to edit the data for the NB debt. I may have forget the debt carried by the New Brunswick Electric Finance Company that had been formed a few years back when the electricty act was changed and NB Power broken into several companies. Seems part of the debt was tranferred to this new entity for some reason. Actual debt per rate payer may approach $16,000 per ratepayer.

Random thoughts

Check this out : NB's debt rating was downgraded a few moonths ago. Seems somebody's noticing all that spending.

http://www.bloomberg.com/apps/news?pid=20601082&sid=afzm7ohRqwF0

Debt per person in NB currently stands at about $10,500 per person.

Debt per person in Quebec stands at about $19,000.

http://www.edmontonjournal.com/business/Gary+Lamphier+Alberta+financial+troubles+would+envy+other+provinces/1934363/story.html
Seems raising power rates will be an easy target for Charest to combat his $4,000,000,000 (billion) dollar deficit this year. I don't like typing those really big numbers. There are so many zero's it easy to get mixed up. Remember folks, that is just the shortfall in income in one year. Two years of Quebec deficit is equal to all of NB's current debt total to date.

I like this example of how the status quo in Alberta resulted in 50% savings in the last year versus those who chose a five year contract. Sound familiar? Gotta be careful what you wish for.

http://www.workingforest.com/content/alberta-power-rates-plunge

It's time for Quebecers to pay the bills.

http://cebl.vmbl.ca/Economics/9/CEQ_02112009_e.pdf

And I really like the icing on the cake in this article. A 1 cent per kilowatt hour rate hike. That's about 15% in quebec terms and 10% for here.

http://www.wsws.org/articles/2009/nov2009/queb-n09.shtml
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Hydro Quebec's Debt in 2013

Shawn Graham, our infamous (or whatever word you want to use) leader has been heard saying many times over how NB Power has crippling Debt. How the debt has to be slashed to save the province the extrutiating turture of having our children's children pay off that debt.

Here's some numbers on Hydro Quebec's debt.

Current year (these are rounded) $36 Billion
Planned capital investments( more debt) 2009 - 2013 - $18 Billion
Acquisistion of NB Power 2010 - $4.75 Billion

http://finance.yahoo.com/news/Fitch-Rates-HydroQuebecs-bw-1426914954.html?x=0&.v=1

Total debt at end of the NB Residential rate freeze will be in the order of $48 Billion. About 2/3 of current asset value of HQ. Of course their assets will grow by the same $23 Billion. Well not True, James at Gov NB on the lower rates site says that NB Power has no value because of it' debt. It's funny how one person's trash is another's treasure. Numbers are from the strategic plan. NB Power debt is about 90% of assets. I hope to be able to show what it would be at the end of 5 years with the status quo.

The strategic plan for Hydro Quebec talks a lot about capital expenditures.
http://www.hydroquebec.com/publications/en/strategic_plan/pop_feuilleter_le.html
The point of view there, is that this will create great ecomonic spinoffs, economic developements, and untold person years of jobs. But in lowly old New BRunswick, heaven forbid we have any of these problems. The HQ Strategic Plan 2009–2013 is a good read.

Back to my big picture theory. HQ has 8.5 Terawatt hours of electricity surplus this year.

http://www.hydroquebec.com/publications/en/strategic_plan/pop_feuilleter_le.html page 3.

8.5 Terwatts of power is 8,500 gigawatt hours or 8,500,000 megawatt hours of electricity.

The projected surplus for the period 2009 to 2013 will total 35.2 Terawatts.

Going rate these days on the open market, well the heck with the open market. Going rate these days in New Brunswick for residential is $95 per megawatt hours. 9.5 cents per kilowatt hour x 1000 to make a megawatt hour.

Lets see: 8,500,000 megawatt hours available in the head ponds doing nothing, is worth , well nothing. 8,500,000 megawatt hours of electricity sold into NB at residential rates is worth :

8,500,000 x 95 = $807,000,000.

Of course, NB Residential did not consume that much last year, so the difference would have to go to small business, who used to pay more for power than residential. I don't know if that rate parity was corrected over the last few rate increases. Subject for another blog.



Some more simple math, Shawn get out your easy button,


$807,000,000 x 5 year rate freeze = Over $ 4 Billion dollars.




I remember a Bill Cosby show from way back when. I remember one day one of Bill's daughter had a boyfreind over. Bill wasn't to struck on him or something he had done. Too make a point he started to describe a wonderful meal. The most succulent, thick, tender, delicious steak that money could buy. Cooked to perfection on a open flame. Served with only the finest sauteed mushroom, and onions. The side servings of vegetables were described as being too die for. The setting was perfect, the company devine. The meal served on the inside of a stinking old garbage can lid. Sounds really appetizing doesn't it. The same thing has been said about this deal on many websites. And there are a few, and all are doing very well what I have been at least attempting to do, giving great information and comentary on this deal. Check out Donald Arsenault getting conftronted in his riding office in Dalhousie on the Save NB Power website.

So Shawn and Keir, at this point, it doesn't matter how good the steak looks, when you serve it on the back of a stinking old garbage can lid, nobody's really going to buy it.

Oh, BTW, I think the steak we being served is as tough as boot leather.
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Got 20 minutes?

Not a lot to post. Busy with the kids and Christmas the past few days. I've been try to see the big picture. But there's a lot of crap to clean off the windsheild and my wipers can't keep up.

Check out the video posted on the CBC. Tery Seguin interviews Jack Kier, Aylward, NBP, and the Green Party at the same table. And they were nice to each other. It's about 20 minutes long.

http://www.cbc.ca/video/news/player.html?clipid=1355313047

The end of cheap power?? Seems since the signing, Charest may want to rise power rates to offset his $4 billion deficit. Goodbye to the great industrial rates savings. Man, are they ever lining us up to pick our pockets. NB is getting suckered big time on this sale.

http://www2.macleans.ca/2009/10/22/the-end-of-cheap-power-in-quebec/

Something Keir eludes to is the timing. I think the 3% rate hike is a smokescreen for a bigger, darker picture. I still think HQ has a cash flow issue of sorts. Mind you, it's a cash flow issue most wouldn't mind having, but a reduction in cash flow for HQ with their capital intensive hydro stations is not good. Natural gas power stations in the US have been using the depressed gas prices to put lots of power on the grid a decent price lately. Cutting HQ's profits. The shuttering of a few industrial customers in Quebec has left HQ with an excess of generation. (See previous posts on that subject.) That, coupled with the agressive expansion plans tailored to the currently less profitable export market (see link) has left them scrambling for a good base rate source of revenue to cover off their investments.

http://finance.yahoo.com/news/Fitch-Rates-HydroQuebecs-bw-1426914954.html?x=0&.v=1

"Since 2008, HQ has embarked on a major, roughly $25 billion capital program (through 2013), which includes the construction of several large hydropower projects, transmission additions and distribution system upgrades. The projects are in varying stages of development and continue to meet important milestones and commissioning dates. By 2013, HQ is projecting to have another 1,000 megawatts (MW) of new hydro-generating capacity on-line (compared to existing capacity of 36,429MW for 2008). While a portion of the new generation is needed to meet modest native load growth, an increasing proportion will be used to increase exported power sales - a credit concern, as off-system revenues are more volatile and fluctuate based on electricity market prices. On a positive note, given HQ's extensive reservoir capacity and its mainly 'green' (non-carbon emitting) power resources, its power resources are likely to remain in demand, both inside and outside of Quebec for the foreseeable future, particularly as the U.S. and Canada increasingly focus on attaining renewable and carbon emission reduction environmental targets. "
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.I had heard that the first offer by Quebec to Graham and company was rejected, but Quebec came back to the table with more money. Voila, the deal gets signed. With that, I'll leave you to draw your own conclusions. Goodnite folks. The time on my blog is off by 4 hours BTW, need to fix that.

I'm losing it folks.

I have just come to the conclusion that there must be some huge technological breakthrough that the Graham government knows about, but that no one else does. They are doing us all a great favour by selling the whole of NB Power (well most of it) to avoid all the liabilities in the near future. Has cold fusion been perfected at a local university? Has a major breakthrough in solar technolgy come to Grahams knowledge? Something that will allow all houses to go off the grid and not even have a power bill. Matybe a little device in the basement about the size of a freezer that can produce huge amounts of power? More than enough power for your house just from regular tap water. Maybe a new industry is about to be announced converting gasoline and deisel cars to electric cars. They can all be powered from the little box in the basement. NB Power employees are going to be trained to contruct these little devices, patented of course, NB Power Genco Surplus Assets will retain the rights. Other employees will be trained in the conversion process. Installing electric motors and smaller power boxes in the trunk. The customer call centres will be still taking calls, setting up appointments with the nearest generating station to go in and have your vehicle converted. The bigger the better. Big full size trucks especially welcome. Much easier to fit the little bozes. Exports of electricity will be replaced by exports of little boxes the size of freezers. The proprietory and patented technolgy will not be licensed to anyone. Anyone seeking to purchase one will have to come into the province and stay in our hotels, and eat in our restaurants, shop in our stores. They will have to call ahead to schedule their appointment with the customer call centre. All NB Power jobs in the province will be guaranteed until infinity, or death, whichever comes first. But you say HQ will take all the profits. TRUE, but we could have the EUB minimize those profits. And NB will have a lot of jobs. Revenue for the province would come from a new tax on the export of the little box. The tax could be quite large. As soon as the little box is turned on, it will run to infinity on just water. Rainwater included. No maintainence, no future taxes collected. There are only a few billion cars and houses in the world. To convert them all with the limited population in the province, would require that people move here in droves. The profit on each little box would only need to be a few dollars. Maybe even take a loss. After all, the customer call centres will have millions of customer lined up. It will take a long time to process them all. Unemployment in the province will be wiped out. The government coffers will be overflowing from just personal income taxes collected. Workers will be paid based on years of service, experience, and more importantly hours of work. There will be so much work, incentives will be given to go home early to allow other workers with less seniority to come in a get a shift here or there. Vacation entitlements will start at 8 weeks per year. Employees will receive one extra week per year of service until they retire. But what will stop people from opening the little box and learning it's secret. Well folks, that's the little Secret that only Graham and his cabinet know. Apparently it's crackproof. As soon as the little box opens, it shuts down, and cannot be re-activated until it passes through a Surplus NB Power asset. The announcement will be made December 15. Production starts April 1, 2010. Call ahead and book your appointment now folks. The line up starts behind me.

You know if you read this enough times, it's almost beleivable compared to some other stuff I've read lately.


On a side note, I made some changes to the questions thast appears at the bottom of each post. I Think it was confusing. There is limited space and and I didn't realize there was text I could edit.

The "Out" clause

Keir made a comment today on an article about the out clause.

http://www.cbc.ca/canada/new-brunswick/story/2009/12/09/nb-nbpower-out-clause.html

Posted this reply :

"The out clause won't do much good. The government obviously thinks we can't afford to keep NB Power, so how does Keir expect to buy it back (not that he'll ever get that option as a politician) in the future? Are we to borrow more money that the government doesn't have now, and put us all another few thousand dollars per person in debt.? Besides the fact that this is a horrendous deal for NB in the mid to long term, the true facts behind this deal wll only reveal themselves in about 10 years. Then it will blindingly obvious when NBer's are paying high rates. Rates we used to laugh at because those were the rates all our neighbours (except HQ of course) paid. So, whether it has to do with the 7 TWhr surplus that HQ has this year because of the economic downturn, or the blocking of Newfoundland by tying up the grid, or the panic by Graham to finance his aspirations, or the super early positioning to make up for the loss of revenue from Churchill falls, or unknown issues with Lepeau, something big and ugly will rear it's head. The truly sad part is that NB was in the drivers seat. Quebec has a surplus and needs the revenue. Profits were down over $500,000,000 by the third quarter of this year. Shouldn't have been a problem to negotiate a short term ( 5 years or less) power purchase agreement. And for the future, the huge availabilty of wind power (thousands of MW per province) in the Maritimes is a perfect compliment to the vast hydro resources of Quebec. The wind energy can't be developed without a way to store the excess on a windy day, and generate the shortfall on calm day. Hydro does that. With this deal the only benefactor would be Hydro Quebec. And because HQ gets to own the NB system operator, HQ gets to control the dispatch, the players, and the profit."

Year SIX rate increase

I've was away this weekend and need to catch back up, so just a quick post. Get out your calculator.


Year six price increases.

1.) CPI – expected to be 2% (some government documents show it at 2.3%)
2.) Pt. Lepreau deferral – $525 million amortized over 25 years equals 2% rate increase based on current NB Power revenue stream.
3.) Cost of fossil station decommision. (this can be added to rates if goverment legislates it) NPV of $124 million. Amortized over 20 tolling agreement equals 0.6% rate increase.
4.) Unbundled transmission costs plus a ROI. %?? Now remember, NB Power will shut down Dalhousie G.S., but the EEL River and Madawaska HVDC station will need to to be upgraded to get more capacity into the province.
5.) New charge for unbundled distribution ROI. NB Power does not do this now. This is subjet to a “fair and equitable” ROI. So lets call this 9.5% and say it only adds 1 % to rates.
6.) Other legistaled changes, including such things as renewable energy. As an example, Lets say the 200MW of wind power that is legislated to come on line, does so after the MOU is signed. 200 MW at 30% capacity factor would be a steady load of 66MW. Expected cost would be $120 MW hour. 20% higher than residential rates today. 66MW x 365 days yr x 24 hours day = 578,160 MW hrs per year. Total value of about $70 million per year. If this is only applied to the residential heritage pool, the rate difference is $14 million per year. So add another 0.1% to rates to make up difference.




Easy button total is 2% + 2% + 0.6% + ?? + 1% +.1% = 5.7% as a minimum rate increase in year 6.

This is before interest..
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And this thing about the Premier not being able to put it writing that Newfoundland will not be able to push power through the province. I don't get that. He should read the law of his own province. (OK - I can't find my reference - I'll have to update later, but one of the NBSO documents states that anyone can build a transmission line in the province. Of course, you would have to go through the permitting issues, but nothing is stopping you - projected cost = $1Million/km)

BTW, the NBSO has a lot of authority that will be reliquished to Quebec :
http://www.nbso.ca/Public/en/pm/reliability/default.aspx

Impacts of Wind Generation of up to 500 MW in Prince Edward Island. This basically will give Quebec complete control over PEI. The System Operator must receive real-time information from Maritime Electric Company Limited. This information must include status of transmission, reactive resources, and generation resources including wind generator output, curtailment and environmental data.

And Dalhousie was not expected to close, contrary to popular opinion: page 3
http://www.nbso.ca/public/_private/NBSO%2010-Year%20Assessment%202009.pdf

This is a good read as well. I wonder if the Premier read it.
http://www.gnb.ca/0009/0369/0015/0001-e.pdf





And a quick note on the value of the NB Power transmision system. NB Power has 6804 km of transmision system from 69Kv and up. Based on Hydro Quebec published data, this would have a value of $3.29 Billion.
Sources : http://www.hydroquebec.com/transenergie/en/reseau/bref.html
and page 38 here http://www.nbso.ca/public/_private/NBSO%2010-Year%20Assessment%202009.pdf
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Emmisions again - something stinks anyway

Breaking news - Check out AIMS report on the MOU - posted here http://ow.ly/IhEs

And the following was posted on my favorite website :

Total Emmisions from the refinery would be 5.7 MT from the Eider Rock project. Current Emmisions are around 3.0 MT .

Eider Rock projected emmisions : http://www.irvingoil.com/dloads/Chapter07_Atmospheric.pdf

current Saint John refinery emmisions (2007)
http://www.environmentcanada.gc.ca/indicateurs-indicators/default.asp?lang=En&n=8F572EA1-1

I'm not against the second refinery either. I thought the energy hub, and associated jobs, and the vision to have all the players on the same team was a great idea. But to kick a big player off the field in mid game strikes me as odd.

Total provincial emmisions are here :

http://logixml.ghgregistries.ca/New%20Brunswick%20Dashboard%20Solo/rdPage.aspx?rdReport=Dashboard_Provincial

and in the Environmental Implications published in right hand column of this site.

Total from both Refiney(s) with zero emmisions from NB Power, would be (5.7+3.0) 8.7 MT of (18.7-6.4+5.7) 18 MT or 48% of the provincial total.

2020 target is 14.5 MT. I won't add further comment to the fact that NB Power and the proposed refinery have similiar carbon footprints.

I wonder how much effect the carbon cap and trade cost will have on the value of gasoline, home heating fuel, and power produced from natural gas at the various facilities in the province.

And to James, How come the rate that is paid to the windfarms is not published in this province. PEI expects to pay 12 cents/kwhr.
http://www.gov.pe.ca/photos/original/wind_energy.pdf

Ontario plans to pay 13.5 cents/kwhr.
http://www.powerauthority.on.ca/Page.asp?PageID=122&ContentID=6858


Both these rates considerably higher than residential rates paid in New Brunswick today. I can only guess that rates paid to windfarms in New Bruswick are similiar. So no matter who owns NB Power, if the government energy policy dictates more wind power, then all our prices are going up. A problem I see, is that if considerable wind power is implemented during the five year price freeze, and hydro quebec has to absorb that cost differential during those years, then at the end of five years, when the cost of new generation, plus interest gets added on, it will be considerable. I'm quite sure Hydro Quebec will be vocal in telling the outraged public why their rates just shot up. It will be green, but COSTLY.

Still pissed off

Someone sent me some info today. Thanks Mike123. I will repeat it here without editing and let you draw your own conclusions.

"
From this site…

http://www.irvingoil.com/company/erock.asp

go to this link…

http://www.irvingoil.com/dloads/Chapter07_Atmospheric.pdf

go to page 56…

notice that they outline the Proposed, (and environmentally fully approved) GHG emissions of the new refinery… 5.77Mt/yr ! and the Minister on Environment concluded


here… http://www.gnb.ca/0009/0377/0002/0036-e.pdf


3. CONCLUSION

Overall, based on the results of the environmental assessment, it is concluded

that with the proposed mitigation, monitoring and contingency planning, the

residual environmental effects of the Project are rated not significant,


#@$@#$% crooks" (I did edit the swear words)


Now go here and look at the total GHG for NB Power.

http://www.lowerratesnb.ca/downloads/Environmental_implications_En.pdf

Well, I will help you to reach your own conclusions. Basically, for NB Government to meet the 2012 Kyoto agreement on GHG emmisions, and allow the Irving Eider Refinery to be built, NB Power must be shutdown.
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Now I'm really getting pissed off.

Posted today. Good job this James guy at the lowerrates site keeping posting crap. I might not be so motivated.

12.1.2009 at 7:57 pm Northern Tour Guide :

James, You might want to check out an earlier post with the following highlights. The data comes from information published on this site and NB Power.

Electricity consumed in NB consists of:

26% in province renewables,
30% Nuclear: Pt. Lepreau when its operating,
20% contracted: including biomass and other hydro and some natural gas.

The remaining consists of Belledune, Grand lake (closing) and Dalhousie (still very cheap – Keirs words, but closing soon). Dalhousie and Grand Lake seem to be just filling a gap left by the Lepreau shutdown.

So soon the only fossil power generated will be Belledune, and it runs flatout and has been top ranked for numerous awards in North America for low cost and reliabilty. Not to mentions it has the first scrubber installed in Canada. So it’s as clean as the law requires it to be. Even the government used to brag about it.

http://www.gnb.ca/cnb/news/nbp/2007e0464nb.htm

Oh, and by the way, Dalhousie Generating Station greenhouse gas emmisions are the same as the Becancour natural gas facility built in Quebec.

http://www.transcanada.com/company/becancourLanding.html

Becancour = 1.687 MT GHG
Dalhousie = 1.7 MT GHG

http://www.environmentcanada.gc.ca/indicateurs-indicators/default.asp?lang=En&n=8F572EA1-1

So it seems the the reason that Hydro Quebec will be getting all the NB Power greehouse gas credits is to keep it’s own facilities running in the future when the carbon cap and trade comes into play.

Environmental implications

This was posted for James at NB Gov. Could you please review the Environmental Implications document that is published on this website and check into the following possible error:

The 2007 greenhouse gases emmisions levels that NB has to reduce in the future is based on 18.7 MT per year. This has to be reduced to 16.1 MT by 2012. The document states that closing Grand Lake power plant (officially anounced before the MOU) and Dalhousie power plant would reduce the in province emmisions by 2.1 MT. This would put the level at 16.6 MT. (18.7 - 2.1 = 16.6)

Then the document goes on to say : "Eliminating NB Power’s GHG emissions from the Grand Lake and Dalhousie facilities will have the following
effects:
• the province’s annual GHG emissions would be reduced by 11 per cent;
• by 2012, GHG emissions would be six per cent below 1990 levels"

The 11% percent reduction I can figure out. The second statement rational eludes me. 1990 levels are 16.1 MT, yet the math clearly shows that 16.6 MT would be the greenhouse gases emmitted after the reductions by NB Power. If the reductions only reduce GHG emmisions to 16.6 MT, where is the other 0.5 MT of GHG reductions coming from?

Are you assuming that Coleson Cove and /or Belledune will run so few hours between now and 2012 that NB will meet these targets? Has contruction already started on the intertie connections between Quebec and NB to upgrade the HVDC stations to allow Belledune and Coleson Cove to shutdown?

Was there not talk of a second oil refinery in Saint John? Where were the GHG credits for this coming from? If gas turbines are installed in the southern part of the province that could possibly be supplied from the new LNG plant or the incredibly vast natural gas resources in the province, where would the GHG credits for this come from?

As for the rest of he document, it's a good history lesson, but does not really have any bearing the MOU. And I'll say it again, most of the emmisions benefits are the result of the previously announced Grand Lake closure.

MOU

Posted today at that famous website promoting the greatest deal since Churchill Falls.

"I need some help understanding the big picture.

New Bruswick gets their power from NB Power, who gets it from these sources:

Energy generation and purchases
• Renewable energy: 3,445 GWh
• All types of energy: 16,559 GWh
• Proportion of renewable energy: 20.8%

To start, this number is misleading. Because NB only consumes 14,000 Gwh. Right? This is the heritge pool supply from the MOU. Yet here you quote 16,559 (which must include power sold or wheeled through the province.) So does that make renewables a higher source of in province generation?

3445 gwhrs / 14,000 gwhrs = 25% of all in province use from renewables today. In fact it was 26% in 2006/07. Look here : http://www.nbpower.com/html/en/about/operating/holding.html

NB Power Net capacity
• Total: 3,849 MW
• Hydro generating stations (7): 895 MW
• Nuclear generating station (1): 635 MW
• Thermal generating stations (7): 2,319 MW, including 500 MW gas turbines installed by HQ in early 1990's at St. Rose and Millbank that rarely run, and don't even get a mention in the MOU. Also includes Grand Lake (60 MW) that was scheduled to shutdown. Coleson cove is 1000MW and Belledune is 475MW

Other sources of electricity supply
• Wind farm (1): 96 MW
• Natural gas (2): 353 MW
• Other suppliers: 55 MW

There are two wind farms now right? Add another 99 MW for Caribou Mountain that just came on line. That will bump up renewables some. I heard Grand Falls was going to get a capacity increase that would double it's output. Another 66 MW. Again, more renewables added to the mix.

HQ CEO, Mr Vandal, extremely confident Pt. Lepreau will return to service within a month or two of projected date in Jan/Feb 2011. So lots of cheap nuclear for the province there, for 25 years or so.

Belledune fossil station required to stay online for forseeable future to fill gaps in capacity imports to NB from Quebec. Plus it's clean (first flue gas desulpherization unit in Canada - Dalhousie was number 3 by the way.) Belledune has been rated by many independent organizatons as a top plant in North America for reliabilty and costs. Mr Vandal speaks highly of it and plans to keep it running for a long time.

Coleson Cove is a peaker and will be for forseeable future. Again to fill gaps in capacity import restrictions from Quebec. This plant has had major overhauls recently in preparation for Orimulsion, so is ready for a long 25 year run. Especially if it designed to run several thousand hours a year, but only runs for several hundred as a peaker during the cold winter months using expensive bunker. Plus it has one unit converted to run partially on petcoke. These are the leftovers from the oil refinery process, and are available cheap. Fossil, but cheap. Currently also used in Belledune mixed with coal. Again cheap.

The other sources of electricity supply
• Wind farm (1): 96 MW + 99 MW + another 200 MW announced
• Natural gas (2): 353 MW - contracted out, fossil ,but cleaner and more efficient combined cycle units that will run for a long time into the future.
• Other suppliers: 55 MW - this would have to include the biomass unit owned and operated by Frasers.

I know this may be longwinded, but so far, I see no differnece between the stations that NB Power currently runs, and stations that HQ plans to runs in the future. Exception is Dalhousie. And yes, when it's cheap fuel runs out, it would have to be replaced with something, but that's what all this renewables and capacity increases at Grand Falls is for isn't it? Yet, NB Power runs with a "crippling debt", but yet Quebec Hydro can run all the same facilities with a 10% return on investment on a 4.75 billion dollar investment. Meanwhile, the NB goverment racks up a large annual loss from various dividends from NB Power.

Please help me to understand this."

Added this later :

"With renewables making 26% of in province supply now and growing, Pt. Lepreau to make 30% of in province supply soon, contracted others supplying another 20% that consist of clean or renewables, and Belledune (cheap and reliable) basically making up the difference for a long time, (whether under HQ or NB power) what’s the rush???"

Great little article by CBC explaining what most people have aleady figured out.
http://www.cbc.ca/canada/new-brunswick/story/2009/11/27/nb-nbpower-savings.html#socialcomments


Also Found these today. I agree with them for the most part.


http://jvadserve.com/MOUtruth2.pdf

http://jvadserve.com/MOUbetweenthelines.pdf

Be...in dis-grace.wmv Song on youtube - Brilliant

If you have been following the nb power sale closely, you'll love this song.

http://www.youtube.com/watch?v=x1F3si9CXBg

Fortunes in Cap-and-Trade

I got this today from an industry newsletter that I receive via email. Basically explaining how a large nuclear power producer in the US will make a small fortune off of the future carbon credits cap and trade system. Hydro Quebec will be poised to be in the same situation with any surplus power that they sell into the open market. Including markets they obtain through US interconnections through New Brunswick. This underlying reason is that nuclear and hydro don't produce greenhouse gases as defined by the "clean energy" regulations and because most older hydro stations can get on the grid at a fairly low price, they get the going market rate as higher priced producers get on the grid to meet demand. And remember, many beg to differ on whether hydro is clean, and that can be found on an earlier post. The flipside of the article, is that the current going rate is only $3/tonne. So maybe those dirty old fosil plants won't have much to worry about after all. Happy Reading folks.



Fortunes in Cap-and-Trade November 25, 2009 Written by : Richard Schlesinger

"Although the electric industry has endorsed the concept of cap-and-trade as the least onerous approach to carbon regulation, at least one major company endorses it with unalloyed enthusiasm. Exelon not only supports the idea, it stated in a second-quarter conference call to analysts, which it posted to its Web site, that it expects to see a "$1.1 billion and growing annual upside to Exelon revenues from implementation of Waxman-Markey." Is that number real or simply wishful thinking? Does Exelon know something that's escaped the rest of us?

Actually, if one makes a couple of assumptions, the potential earnings boost is very real. Here's how it works. Exelon's 17 nuclear plants, the largest nuclear fleet in the country, generated just over a record 132 million megawatts-hours of power in 2007. That's fact. Assumption number one: The Senate follows the House and passes an unchanged version of the Waxman-Markey bill.

At the start of the program, about 85 percent of the permits would be given away. Over time, the percentage of free permits would decline. About 15 percent of the permits would be auctioned off to begin with, and that percentage would increase over time. What concerns us is the value of these permits, because that value translates into increased costs for generation. Which brings us to assumption number two: The EPA estimates that during the early years of the program, a permit to emit one ton of CO2 would cost approximately $15.

In the unregulated markets where Exelon operates, the price of power is set by the last power plant dispatched to meet demand. In the Philadelphia area, for instance, one of Exelon's markets, the last power plants to be dispatched tend to be gas-fired plants, according to Hugh Wynne, senior research analyst at Sanford C. Bernstein & Co. On average, Wynne said, gas-fired plants emit one-half ton of CO2 per megawatt-hour generated. Assuming the EPA's estimate of $15 per ton, that means an incremental cost for gas-fired plants of $7.50 per megawatt-hour.

Coal plants emit twice the carbon as gas-fired plants, or one ton per megawatt-hour generated. In order to level the playing field, Waxman-Markey grants coal-fired plants a half-ton of CO2 for free for every megawatt-hour produced. In other words, coal- and gas-fired plants would each incur an additional cost of $7.50 per megawatt-hour. All things being equal, that means the price of power sold into unregulated markets would rise by $7.50 per megawatt-hour.

Multiply Exelon's nuclear generation of 132 million megawatt-hours by the price increase of $7.50 per megawatt-hour and -- voila! -- you get a revenue increase of $990 million. Call it a billion dollars. As time goes on and the carbon cap gets smaller, the price per ton should rise accordingly.

Tim Winter, utility analyst at Gabelli Funds, noted another possible boon to companies with nuclear fleets. Certain coal-fired plants, particularly those older plants that operate inefficiently, could find that once the price of carbon allowances goes beyond a certain point, the price of power might fall below their cost of producing it. In that case, the plant would shut down, tilting the supply/demand equilibrium, creating a shortage of power, and pushing the price of power even higher. Again, Exelon, as the lowest-cost producer in the Northeast, would benefit.

Many Variables

So Exelon, as the low-cost producer, would benefit from the increased price of power under a cap-and-trade scheme, which helps to explain the company's enthusiasm for cap-and-trade. One would expect that companies such as Florida Power and Light and Entergy, with nuclear capacity and markets that are, at least in part, unregulated, would share Exelon's enthusiasm.

And so they do. Brent Dorsey, director of corporate environmental programs for Entergy, endorses cap-and-trade as a "good first step" in regulating greenhouse gas emissions, although from a strictly environmental perspective, he would rather see a shorter timeline than Waxman-Markey proposes. FPL Group's chairman and CEO, Lewis Hay, endorses cap-and-trade, adding, "The sooner we can establish a price on carbon dioxide, the sooner we can tackle climate change and begin the transition to the clean-energy economy of the 21st century." And the sooner FPL can enjoy the benefits of an increase in the cost of power cap-and-trade would deliver.

But even non-nuclear facilities could benefit under this scenario. Assuming the relative prices of gas and coal remain as they are, the extra cost incurred by coal should encourage companies that can to shift more of their production toward gas, thus increasing margins.

While utilities may be motivated to switch to cleaner burning fuels, some doubt they will be inspired to actually trade the credits. Edward Tirello, managing director and senior power strategist for Berenson & Co., is one such person. "The big money will be made by those that put up the capital, trading folks like Goldman Sachs and Morgan Stanley."

But any kind of trading assumes a price that makes any risk involved worthwhile. And although the EPA assumes a price of $15 per ton during the early years of the program, the market doesn't support that price, at least not today. The limited experience gleaned from the small volume of trading that's taken place so far, such as what the Regional Greenhouse Gas Initiative has sponsored, certainly doesn't come even close -- $3 a ton last spring.

The political odds are also at play here, meaning no bill has yet to pass. So the forecast by Exelon remains, at this point, wishful thinking. Whatever profit actually materializes will depend on the price the market sets for carbon, and on whether cap-and-trade ever becomes more than a theoretical scheme to address the issue of global warming."

More information is available from Energy Central:

Cap and Trade Is Not Enough: Adopt Carbon Emissions Portfolio Standards, EnergyBiz, Jul/Aug 2009

Flaws in Carbon Principles - We Don't Need Financial Engineering, EnergyBiz, March/April 2009

Carbon on the Block - Industry Watches RGGI, EnergyBiz, Jan/Feb 2009

Subscribe to EnergyBiz magazine today.
EnergyBiz magazine is the thought-leading, award-winning publication of the emerging power industry. This article originally appeared in the November/December 2009 issue.

No time for research - just venting

posted on lower your pants and bend over:

to raymond. I like your comments. I come here for basically the reasons you give. And I pick up some great info here and there.

Yes, Lepreau and Mactaquac should produce the same billions in profits over the next 25 years. replacement costs for Lepreau are 16 million a month. Page 68 here: http://www.nbpower.com/html/en/about/publications/EngCombined.pdf

Ultimately, I would think that would turn into about the same profit after Lepreau is back up and running.
16m/month x 12 months x 25 yrs = 4.8B without inflation tacked on.

Rate payers will be payng the same costs under the terms of the MOU with HQ as they are now. HQ is definitely not going to buy NB Power and then pass infrastructure costs onto quebec customers while nb ratepayers get a rate freeze. That would be just silly, wouldn't it James from NB gov. So if Mactaquac needs rebuilding, then the costs will be rolled into the rates. No different than any other business. HQ does it now. NB Power does it now. Just that HQ will have the option to say the don't want or need the dam, give some reason ludicrous reason why they don't, replace it with power from northern quebec and stick NB taxpayers with the bill to decommision it while they dump 2 billion into a project in Quebec. At least if NB Power was to rebuild it, it would create construction jobs in the province, and employ many people for another 100 years after.

And To Linda Keirstead : Go girl, you always have great posts.


Anyway, back to reality. If anyone want some heavy reading, try out the New Brunswick system operator website media section.

http://www.nbso.ca/public/en/pm/news/news.aspx

They have agreat colection of reports commisioned to determine the future direction of power supply and demand in the province. These are long comprehensive reports, unlike what you'll find on your government one sided websites. Seems demand will start to creep up again as soon as the five year rate freeze is over. Apparently NB has 5000 MW of wind power potential. Greater than all capacity in the province now. Another 340 MW of small hydro potential. About 1/2 of the Mactaquac capacity. The say wind potential is apparently good for 1 to 2 billion annually to the province.

Conspiracy theory

OK. Here is the way I see it now. Hydro Quebec has a huge surplus of power. This, the result of the great economic downturn that has plagued the whole of North America. Even little old Dalhousie. Apparently they have about 7 terawatts of surplus this year alone. That's about 1/2 of what New Brunswick consumes. Check out the full article here : http://www.montrealgazette.com/business/Hydro+Qu%C3%A9bec+seeks+rate+hikes/1845406/story.html.

Now why is that a problem? Well hydro stations are immensly capital intensive. It takes massive amounts of money to build a hydro station in the upper reaches of Quebec where not too many people live. Of course the fuel is free, but at the end of the month, the big bad banker from Montreal still wants his mortgage payment, and of course the Government of Quebec wants their 150 million (per month that is) to keep up their social programs. All is fine and dandy as long there is some rain in the summer and some snow in the winter and some large industrial customers to smelter some aluminum. But take away an aluminum smelter here, and a pulp mill there, and now you have a surplus. And when you have a surplus, that means you are not generating electricity. And when you are not generating electricity with a hydro station, you are not making money. In fact, your probably hemoraging a few million a week. So, how will Hydro Quebec ever make a mortgage payment without raising in province residential rates. They take a chapter from NB Power, or maybe NB Power took a chapter from them, but either way HQ sells it to the states. Our freinds south of the border need lots of cheap, renewable power. But in the ever changing economic world, I think a conversation similiar this happened:

"But wait, what's that you say, our transmision lines are full". "Well build some more."

We are Mr CEO, but we can't build them fast enough.

"Well charge our American freinds more".

We can't Sir, the North American Free Trade agreement, Article 605, states that we can't charge our American Freinds more for Power than what we charge our domestic customers. Sir, the phones for you, it's Premier Charest.

"Bonjour Premier, How are you today? (in French of course)"

Very good Terry, hope business is well, we're looking forward to a great dividend check on our investment this month.

"Well Sir, business is down, and so are profits.

Unacceptable Terry, we have fireworks displays to put on. I want a plan on my desk by the end of the day.

"Yes Sir. Well people, you heard the Premier, how can we raise profits in these tough economic times?"

Well sir, all our surrounding provinces have higher rates than us. Why don't we just sell more to them.

"You know we can't. We're already maxed out on what we can sell to our neighbours. Wait !! If our neighbours have higher rates than we do, then how can we make them our domestic customer? Then we can charge more to our American Freinds."

Sir, we'd have to own them. Hydro One in Ontario is too big to buy, plus they have too much debt, and NFLD hates us now, they'll never sell. There is just NB Power left. They're too smart to sell. They'd see right through our plan. But their rates are 40% higher than ours. Then we could charge our American freinds 40% more.

"Well, we'll just have to buy them without them knowing, then won't we. Get their Premier on the phone, what's his name. Now!!. Hello , Jean, oh sorry Shawn, have I got a deal for you"

And the rest, as they say, is history.

Of course all this is hypothetical.

BTW Article 605 is here : http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/texte/chap06.aspx?lang=en

Where are the facts ?

Posted today on other places on the world wide web.

11.24.2009 at 6:29 pm | Immediate costs to taxpayers :

Upon taking a look at the MOU, and the 2009 NB Power financial statement published last week on their website, I have the following observations.

It’s easy to see the short term costs that the Government of NB will have to assume.

1. $20 million to decommission Dalhousie (NB Power annual report shows all 5 fossil stations at $124M)
2. March 31, 2009 NB Power liabilities $5.19 Billion difference from selling price (5.19-4.75) = $ 440 million
3. Annual revenue paid by NB Power to NB Government = Average of $100 million – verified by Auditor General
4. Costs of Pt Lepreau from April 1, 2010 to Feb 1, 2011 = $110 Million. This is shown as $10 million a month from page 68 of 2009 NB Power financial statement.
5. Loss of taxes collected from no 3% rate increase during first 5 years Residential portion only = $24 million dollars
6. Estimated tax loss from Industrial customers = 8% part of GST of $ 79 million in first year = 6 million. Lets say about 1 million less per year to year 5. = 6+5+4+3+2 = 20 million total over first five years

Total cost to TAXPAYERS from day 1 and over first five years of rate freeze = $1.11 Billion dollars.

It will be more, because NB Power will accrue more debt refurbishing Lepreau during 2009/2010 fiscal year, that could add another $400 million to the debt before anything is signed.
Lepreau replacement power cost is $16 million per month (Again shown on page 68 of financial statement) that is accruing now (16 x 12 = 192 million for 2009/2010 before agreement signed? This could be added to the $1.11 billion.

To Shawn and Jack and James at GNB – Where are these tax dollars being made up? Where is your business plan? Where is the written commitment from industry players who say they are coming to invest in the province to make up for this loss of revenue?

Where are the facts?

Posted this today on give away your freedoms.com , I mean "lowerratesnb.com:



To James at Gov NB

"Concerning this question – Are there assurances of job creation?"

The Government of New Brunswick has been told by a number of businesses, on a number of different occasions, that this proposed deal between Hydro-Quebec and NB Power will have a positive effect on jobs here in the province.

Another way to look it :

I, Shawn Graham, duly elected to represent the people of NB , promise NOT to sell NB Power.

Later on ........ I Shawn Graham, announce today that NB has entered into a historic agreement to sell NB Power.

See Shawn - business don't have to keep there promises either. They'll gladly take your government handout and RUN.

ANOTHER ONE


TO James at GNB

Seeing as you're on here quite a bit today, maybe you can answer this:

Concerning these questions : What will be the total provincial debt on April 1, 2010 after this deal goes through, and what percentage of the provincial debt will be wiped out? And, what will be the provincial debt on April 1, 2011 after the taxpayers pay for the completion of the Pt. Lepreau overhaul? The government is quite willing to shows calculations out to the year 2040 and beyond, so this exercise in only looking 1-1/2 years out shouldn't be a big problem.

As for the costs of decommisioning the thermal stations, under the status quo, would not these costs would be paid by all Ratepayers. Like how current ratepayers paid for taking down the Chatham plant. Instead the government is moving these costs over to all Taxpayers. Kinda like deciding to keep paying the registration and PLPD insurance on an old truck you keep behind the barn, but decide not to drive. Doesn't make much sense.

"Put that in your assumptions and smoke it"

I just stuck this up on the lower rates site. Update : it got deleted so I posted it again. But removed the smoke it part. Interested to see if it stays.

Has anyone read the new NB Power combined financial statement for 2009? It's available here : http://www.nbpower.com/html/en/about/publications/EngCombined.pdf
Second page shows March 31 2009 liabilities at $5.19 billion. I assume thats because of the investment in Lepreau. What will it be on March 31, 2010 when Graham sign on the bottom lne. Add another 1/2 billion?? That would put the debt at about 1 BILLION more than the selling price. I assume that debt goes on the bottom line for the province. Then it takes another 10 months to finish Lepreau with NB taxpayers footing the bill. From the same NB Power financial statement, delay costs for Lepreau are $10 million per month. This is just capital costs, not even the replacement power costs. A total of $100 million soon to be paid by government, not a self sustaining NB Power. On top of this the NB government loses $100 million per year from special payment by NB Power. So total increase in provincial debt over fist 5 years while residential rates are frozen is around $1.6 BILLION. Way to go Shawn, we can wait until year 30 to infinity to get that back. Put that in you assumptions and smoke it."


There is also a great article here: http://nbbusinessjournal.canadaeast.com/journal/article/864699 that explains how the new generation coming online in Quebec will be quite expensive compared to rates paid today by HQ customers and even cost more than rates paid by current NB Power customers. The days of cheap hydro are over.

Found this too, but don't know how to watch it " Monday night at 6pm on the Quebec run french news channel LCN there is a special about NB Power/Hydro Quebec. It will be interesting to see Quebec media's point of view!"

Great Post from Lower Rates NB

This post was taked from the Lower rates NB website. It has some good arguments. Because of all the posts that get removed from the lower rates site, I copied it here.


11.21.2009 at 10:06 am | Expert panel :
Interesting info off of face book

Background: To fully understand the gravity of this MOU, there are a few things we need to know. I called Marketing to get some ideas on the cost of replacement power and learned this. Power is bought and sold, on an open market. If there is an excess of power, you may get rates cheap, but if demand is high, and power becomes short in supply, prices rise, and sometimes to unbelievable levels.

Prices depend on many factors, Like when its bought, and demand. Prices on Power usually range from $40/MW and up, even as high as $1000/MW or higher. Keep in mind, how long you want the power for, also affects cost. Example, if you buy power 1 day in advance, for the day, you can get a cheaper rate than if you want that amount for a month. The increase in cost over longer purchasing times, is due to the risk that the supplying power company has to assume, to guarantee that they will have this power available a month down the road.

Power also has a charge added to it called tolling charges, which is the cost to send the power down utilities lines. These charges are affected by when the power is sent, called on and off peak. In New Brunswick, off peak, or when demand is usually lower is @$2.88/MW and on Peak, Like Breakfast and Suppertime is @$6.07/MW.

So, now let’s look at the facts, and where they relate to our rates:

FACT: MOU PG5, HQ has placed a 14TWh Limit for residential and industrial use/yr to NB Customers.
FACT: New Brunswick’s use last year 07/08 was 14.25TWH. NB Power Financial report on NB Powers web site.
FACT: Residential Rates Frozen for 5 years at rates MOU was signed then increased at the rate of the NB CPI.
FACT: NB CPI as per statistics Canada web site for last 5 yrs was, 1.5, 2.4, 1.7, 1.9, and for 2008 1.7.
FACT: As per MOU Section 2, HQ will be allowed to recoup extra power charges plus interest above the 14TWH, for this 5 yr term and EVERY year after. This will be recovered after the 5 year freeze.
FACT: MOU page 8 section 3 (Vi) NB Government can recoup decommissioning costs of all 5 thermal plants, through regulatory charges to electricity customers.
FACT: NB Power Financial report PG52 , Decommissioning costs were to be a liability until 2035. So the money is obviously not there and will need to be recouped.

New Solar Panel production plant In Miramichi has been rumored to need 1.2TWH/yr. Also any increased load, NEW plants, new houses etc will be more.

So from all this info. It is a fact, that the rates will be where they are for 5 yrs . but on the 6th year WATCHOUT.

(It will go from the 9.8 cent/KWH) + (increase based on CPI NB @1.8% avg last 5yrs) + (the deferral costs we will have to pay back for extra power above 14TWh + the interest on this extra amount) + (any costs to repair and upgrade infrastructure) + (decommissioning costs for 5 thermal plants, recouped by NB Gov, estimate from Liberals to be over $110million).

NOTE: This will be like this FOREVER after year 5!!!
Still think 3%, or ¼ of 1 cent /KWh increase NB Power was to add was bad?

So Lets estimate cost:

Approximate Cost of Heritage Pool Excess:
Power in Jan and Feb, Runs Approx: $75-85/MW when booked a day in advance. $100+/MW when book for a month in advance.
Tolling Cost To run a MW of power on the lines: During Off Peak Times $2.88/MW. During on Peak Times $6.07/MW

Now During the Past 5 years we have exceeded the 14TWh cap 4 Times by @0.25TWh.

Here is a quick calculation, AT THE LOWEST NUMBERS, for the cost associated with going over the Cap by 0.25TWh:
Replacement power Cost
0.25TWh = 250 000MW
250 000MW X $75/MW = $18 750 000.

Tolling Charges
$2.88/MW X 250 000MW = $720 000.

Penalty/yr during first 5 years
$18 750 000 + $720 000 = $19 470 000.

So as NB’ers we will have to pay $19 470 000./year + Interest for 0.25TWh excess power

That’s right!! Just under $100 Million to be paid by the power consumers of the province over 5yrs.

On top of our current rate ($0.098/KWh) + increase to CPI (@1.8% on average) + increase for repairs to infrastructure + NB Gov add on to Decommission the 5 Thermal Plants Left, estimated at @ $110million by liberals.

Remember Also, we will have this $19.5 Million Penalty + Interest, every year after also, forever. Assuming NO In province electrical growth or increases in purchasing costs for the power.

So $97.35Million divided by 370 000 NB Customers = $263.11 Each, for the first 5 yrs
And $19.47Million Divided by 370 000 NB Customers = $52.62/yr Each, Forever, Pay Up.

One More Consideration, New Plant in Miramichi, which is to make solar panels, has supposedly made a request to NB Power for 1.2TWh/year. This Combined with the 0.2 we are already over would make prices even more absurd. 1.4TWh at $75/MW would equal $105Million, Tolling charges at $2.88 would be just over $4 Million. So this would cost NB’ers Over $109 Million/yr + Interest. So after 5yr Freeze we would have to pay back over $500Million + Interest. Costing Every Customer $1351 each. So Much for any $1400 savings. Plus the extra $110million every year thereafter, costing $297/yr each.

All This because NB Power may Raise the power rates another 3% or to put it in Dollars, From $0.098/KW to $0.100/KW. That’s right from 9.8 cents to 10cents/KW.

Keep in Mind this is only ONE part of the MOU. But it will cripple New Brunswick. Doing exactly the opposite of what the Liberals are saying it will do. I see rates rising uncontrollably after the 5 year freeze, and because of the heritage pool 14TWH amount we will be penalized for ANY in province growth, industrial or residential. It is just not worth the short term gain to be crippled over the not so long term. Vote NO to the sale, and sign a petition, PLEASE!!

What Other thing are bad in the MOU?:

-HQ sub. Keep in Mind that HQ sub, in the MOU is actually NB Power, but owned by HQ. Any mention of charges or costs associated with HQ sub, will be charged to NB’ers, AS I SEE IT. So read the MOU and decide for yourself. This is bad as upgrades, repairs and decommissioning costs, will actually still be on Tax payers of NB, NOT HQ, as we are the customers of HQ sub.
-Loss of carbon tax credits for thermal plants NB Power still owns. Ridiculous. They don’t want the plants, but take our tax credits so we can’t run them. Plus these credits can be bought or sold across North America. The liberals think HQ will use the credits for new industry in NB. Common, where does it say that in the MOU? HQ will surly use the credits for growth in their own province, to create jobs and income from taxes, not in NB as the Liberals have suggested. More lost revenue to NB.

-Pensions, another touchy one. It is a great thing to keep the pensions and it is only fair to the employees who have been paying into it. Unfortunately over the next 10 years they expect 1500 more employees to retire. With no new employees paying into the fund, this will become a large burden on NB’ers to pay for this.

-Revenue. According to the NB auditor general, NB Gov has been paid over $100million/yr by NB Power in taxes and fees, which NB Gov has used to pay for other programs and their debt. Selling NB Power, will actually lose this revenue, making NB’s debt worse. He also stated this doesn’t actually pay down ANY of NB Net debt, at all. As suggested by liberals, listen here: http://www.youtube.com/watch?v=OVMvcp-iI8M

-NB Power debt is getting worse, False. NB Power has paid down over 250million/yr the last 5 years and $1.3billion total over the last 5yrs. Credit rating has gone from a 4ish number down to the 3’s. All this even with NB government taking money, good job David Hay.
-Rates. The Liberals have assumed a savings on rates, based on NB Power raising rates 3%/yr forever. Who said this? NB Power said there would be a 3% increase in the next 2 yrs, NOT EVERY YEAR FOREVER.

-Taxes. Quebec has been given a pass on any taxes paid on revenues in NB. NB Power paid over $100million/yr to NB. Where are we going to recoup this cost? Maybe if NB Power had been given such a break, the 3% increases they are imposing would not have been required. MOU section 7.1 .
- Book value – NB Power was sold for basically what is owing $4.7Billion, ridiculous. Here is an example of book value: NB Power pays off a truck in 3 yrs but may keep it for 10.
Example: Truck new$50000 Paid Down $0 Book Value $60000
Year 1 Paid Down $20000 Book value $40000
Year 2 Paid Down $20000 Book Value $20000
Year 3 Paid Down $20000 Book Value $0
This Depreciation is done because you pay less taxes on the assets. So after year 3, truck on the books, has a book value of $0.00. But in reality it does have a value. The sale of NB Power is based on the book value, not the actual value. BAD DEAL!!

-Pointe Lepreau. We are giving it away. It has been estimated that Lepreau can earn over $6 billion in profits over the next 25yrs, assuming no increase in rates.

-Increases will be controlled by EUB. Please read the MOU section 3.1B “The regulatory framework governing the generation, transmission and distribution of electricity in NB will be altered to conform to the framework currently in effect in Quebec. So all the rate increases agreed to in the MOU will be uncontrollable as listed above. The only increase I see them controlling is the increases to upgrades and repairs, everything else was agreed to in MOU and they can them have uncontrollably.

-Extra $5 Billion. This is assumed with predictions over 50yrs. Comon, Even with a mistake of 1% raise on fuel costs this can make a difference of $2 Billion dollars lost on rates. So actually this $5 billion is nothing but a farce. Base it on existing rates or something, just give us facts.
-Fear mongering? Don’t just accuse us of something, PROVE US WRONG. We are presenting the facts, Debate them.

-Platform of Liberals. They said they would not sell NB Power, a change of mind is fine, but it is only democratic to do a re-election. We are not a communist society yet Shawn Graham. If its such a good deal, let it stand on its merits and give NB’ers a vote. PLEASE!!!!

To infinity and beyond

Has everyone seen the new publications this week. Graham and company released "Assessment of the rate Impacts of the Memorandum of Understanding Between New Brunswick and Quebec Regarding NB Power".. Wow long title. Check the top of page two. "Terminal value" means from year 30 to infinity. So rate payers will see 70% of the benefit over the first 30 years, and the remainder from year 30 to infinity. Wow that's a loooong time. They do explain it page 8, see item 12.

Also in the news, NB Power published 2008/2009 Combined Financial Statements. On page two, NB Power shows the companies liabilities. For 2008 it was $4.674B. Close to the selling price. For 2009 it has $5.190B. Up a 1/2 billion or so. What will it be on March 31, 2010, up another 1/2 billion?? That would put the selling price about a billion shy of the liabilities. Where are these dollars coming from.??

This financial statement is a completely different format from previous annual reports. I wonder if there is a regular annual report to foollow soon.?

Save NB Power Rally at Legislature

I attended the save NB Power rally in Fredericton yesterday along with about 700 hundred other people. I have a few pictures and videos to show. You will have to forgive the picture quality. I was using a borrowed camera, but very compact, as mine has a busted screeen and I really don't know what it's doing. Several speakers were on hand, including a local high school student who gave a hell of a speech. Well written and well spoken. Unfortunately I did not record it. Gail Levesque spoke on behalf of the Dalhousie staff, Ross Galbraith spoke on behalf of union and people NB in general. Video is posted on IBEW website at http://www.youtube.com/ibew37 . Jeannot Volpe spoke. David Aylward and another Conservative MLA spoke. Bethany Dykstra gave a very powerful and emotional speech on behalf nbpoeplefirst. She has been in the news as critical to the sale. She claims we can get a plebiscite if we can convince the liberal mla's to hold one. The NDP leader and Green Party leaders both gave speeches. David Coon was there. His words "I'll probably be as popular as a skunk at a picnic for what I am going to say". True. He cut up NB Power, but no one threw anything at him. Other than that, I really don't remember what he said. Couldn't have been that important. There were two really popular chants yesterday. One was "Hey Hey, Ho Ho - Shawn Graham has got to go !!" Recreated here for your veiwing pleasure. (Technical difficulties are preventing the video from uploading)
The other was "what kind of power do we want - NB POWER!!" Someone felt that the NB Government had a fire sale and had to let everyone know.

Lots of signs were made up by some generous bunch. Not sure who, but I got handed one when I got close to the crowd. The NDP had one as well, but I don't have a picture of it to show.

This next item I have to post to youtube, but am posting it here for now. Apparently Jack Keir was asked how many people he thought was at the rally. His Answer was: " A cup a hund, ahh a cup a hund..." Apparently he was unable to estimate the crowd size and suggested someone else do a head count and let him know. The question I have been asked to post is " How many people do you beleive were at the rally, and what do you believe the media is doing to the public perception." Check out this video at http://www.savenbpower.org/ and you decide. Looks like more than a "cup a hund" to me. Thanks got to Art Mckay and whoever else over there who is volunterring to create such a great website.

More info on rally can be found here: http://www.newbrunswickbeacon.ca/2009/11/protest-transcript/3230

So much has been going on

I see it's been a few days and I have not posted. I have been commenting on the lower rates site and on some newspaper articles, but have not updated here in awhile. I'm glad to see the auditor general has made some comments, expousing the lost benefits to NB tax payers over the sale of NB Power. Numbers are even better that what I have been saying. Lets hope some more of the truths come out.

I have added a link to the IBEW 37 website. Lots of info and links there.

An update on the rally in Fredericton tomorrow at the opening of the legislature. It's from Noon til 2:00. I guess there will upwards of 15 speakers, including Ross Galbraith.

Hope to see you all here. Hopefully enough people show up to clog up the downtown of Fredericton. That should send some sort of message. Maybe not one that's gets interpreted by the right people, but a message just the same.

I'm quite sure Charlie the blogger will be there. Check out his site at
http://charlesotherpersonality.blogspot.com He seems pretty non supportive of the sale of NB Power. Even has some current pics of the legislature building..

Dress warm, it will be chilly and windy.

Lower Rates NB site

I just posted this on the lower rates site. As I have not said much else lately, I will post it here as well.

I continue to be thoroughly impressed by the questions and comments forwarded on this blog. Not so impressed by the answers, but I digress....

Jack Keir said "It's an open-access opportunity for anybody to get in the business of generating electricity and it would go to the low bidder,"

From my understanding of the partial deregulation of NB Power a few short years ago, this is the way it is now, is it not??? Does not HQ enjoy the fruits of all the NB Power labour in being able to wheel their power through NB and into the US through the new transmission line that was built not too long ago. Seems they own most of this new capacity. Seems that keeping the profit from that deal in NB is the wrong thing to do.

When the wholesale consumer municipalities of Saint John or Edmunston went out for bid for a power supplier, did HQ submit a bid? Are they still with NB Power? Seems large wholesale is allowed to arrange for their power from another supplier besides NB Power, but have they found someone with a cheaper rate in the past? How long will the HQ cheaper rate last?

As for rates in the future, of course the new generation will go to the lowest bidder. I beleive it does now too. But there is nothing that says that the lowest bidder will not be asking 10 times the current rate. Will the EUB be able to refuse someone because their bid is too high, if there is no other supplier. Even HQ could submit an artificailly high bid. I'm quite sure they know the pecking order of the forms of power generation. At the present, doesn't NB Power have the mandate to provide power to all customers in the province. Will HQ have that same mandate, or will, when the rates get too high, the EUB just say " no, we can't afford more power. The rates are too high. We'll just turn the power off to someone so we can stay under the heritage pool allotment."

"I'm glad I invited my mother"

I don't have a lot to say today. My heads still kinda spinning from trying to digest all the information out there. The more I read the MOU, the more I shake my head.

To BH, I guess Hydro quebec power was recently given a thumbs up by the FERC, so now Obama can use it as part of his "clean energy". So much for that.

I see the NB Power assets are about 4.7 Billion according to the annual report. So not much profit there for the NBGov. Just a bunch of unfunded decommisioning costs.


I was reading about the HQ layoffs today. 250 in a call center. Seen some more links where there was a walkout planned at another station. And there were two fatalities at another hydro station. So HQ's having an eventful week. Seems there was a couple of deaths a few years ago at another hydro station. Sounds like a great company to work for. Oh yeah, surplus employees may not have that luxury.

One last note. I heard that Graham gave a speech at a Salmon Federation dinner last nite. You know, one of those $150 dollar a plate fundraisers. Apparently at the end of the speech, only one person applauded. Shawn was later overheard saying, "I'm glad I invited my mother"

Have a great weekend!!

Hydro Power's dirty little secret

Someone brought something to my attention today. Thanks BH. Seems hydro power has a dirty little secret. I know that's way off topic of the intention of this blog, but... Studies done in the past few years are revealing that hydro power may, in some cases, cause as much greenhouse gas as fossil fuel generators. I posted a link in the links section. The main cause is the decaying vegation causing the formation of methane. Methane creates 20 times as much greenhouse gas as the CO2 emitted from a fossil fuel power station.

I also seen some infomation on the Lowerratesnb site that I grabbed for some links. Seems within the last few months the government was doing a decent job of promoting the province as an energy hub. The links to Jack Keir are at the bottom. So kinda strange to see the about face. I read the paper written about the reasoning behind the Churchill Falls agreement. The paper can be found in the Free Newfoundland and Labradour website link. Possibly there was some "economic duress" at the time over the whole project. It may have been a case of leaked financial information, and basically sign or the whole thing wouldn't have been completed. Would have left newfoundland with a several hundred million dollar hole in the ground. Maybe there is some of that going on today. Maybe the premier signed this MOU under economic duress?? Who is to know.....??

Again, I’ll reference the lowerates site, as there are a lot of smart people posting on there. Credit for this goes to Crop circle. This person has it right. But here is a different twist. All numbers are from 2008 NB Power annual report.

$519,000,000 in revenue for 306,000 residential customers. = an average bill of $ 1696 per year.

If you look at some other utility websites, they show, if you heat with electricity, that your bill on an annual basis is roughly %50 for the electric heat. So lets double the annual total for people who heat with electricity. That puts the total at $3392. Fairly close to the figure used on the lower rates site as demonstrated by Crop Circle.

That means for the rest of the customers who do not heat with electricity, their bill is now about 2/3 of the $1696 or $1119 per year. A little less than $100 per month. In line with what some people in the commentary have quoted for heating with something besides electricity, and in line with people I have talked to who heat with wood, etc.

These people save 3% or 33.58 per year for 5 years. Yeah!!!

And For the average rate payer – savings are $50.88 for the first year. Or roughly $4 per month.

For someone heating with electricity, his or her savings is by this example, $101. Again fairly close to what is shown on the lowerrates site. This post has been edited here to correct a math error. I did a excel spreadsheet, and the rate freeze has to continue for 15 years to make up the $2 Billion in expected residential customer savings. If that’s the case, why didn’t they freeze rates for 15 years, not 5.

Even using Shawn Graham’s math of everyone saving $1400 over 5 years, with 306,000 customers, the savings is only $428,000,000.

A 60 watt light bulb that is on for 4 hours per day consumes 72 cents of electricity per month. So lets switch 5 bulbs in our house to fluorescent and save the same amount.

A lot of people have phone bills, cable, satellite, Tim’s, etc. higher than their power pills. Maybe NB Power should sell out to Tim’s and we can get a daily dose of electricity when we stop for our morning coffee.

WEll folks, Happy hunting............and that can have a lot of different meanings this time of year.