Energy plan calls for NB Power overhaul

The Progressive Conservative government is planning to regroup NB Power into a single company, seven years after it was unbundled into competing subsidiaries, as a part of a major shift in energy policy.

Energy Minister Craig Leonard announced the provinces new energy strategy in a broad energy plan on Wednesday.

NB Power will be turned back into an integrated utility.

"NB Power will remain a Crown corporation owned by the province of New Brunswick. However, the utility will be renewed and reorganized as a vertically integrated electric utility with a mandate to operate on a commercial basis in a market structure that appropriately reflects New Brunswicks unique opportunities and limitations," the report said.

NB Power chairman Ed Barrettwho once voted to endorse the sale of NB Power to Hydro-Quebecsaid the government's new direction looked good to him.

"I'm delighted with it," Barrett said.

"This will ensure it provides reliable service to New Brunswick families and businesses while focusing on debt reduction, efficient operations and stable rates."

The Liberals, however, were not as quick to praise the document.

Opposition Leader Victor Boudreau said it would take time to examine the energyreport.

"Obviously we're going to have to take the time to digest this and we'll have a much more prepared response once we've had time to digest this," Boudreau said.

CBC News reported on Wednesday that the New Brunswick System Operator will be folded back into NB Power, which will undo the changes implemented by Bernard Lords Progressive Conservative government seven years ago.

The NBSO is a separate, independent agency that allows all power utilities to bid for space on New Brunswick's transmission lines. Leonard hinted at thesepossible reforms in Septemberwhen asked whether the NBSO would be cut.

The changes come several months after Premier David Alward received alengthy report from an energy commissionthat he appointed shortly after coming into office in October 2010.

The energy commission, which was led by Jeannot Volp, a former PC finance and energy minister, and Bill Thompson, a former deputy minister of energy, did not make any explicit recommendations on the NBSO. However, it discussed the need for more regional co-operation.

NBSO scrapped

The provincial government plans to follow the example of British Columbia, which merged its transmission operator with B.C. Hydro last year.

The decision to reintegrate NB Power and the NBSOmust be done carefully to comply with American regulations on energy exports.

Those regulations say that a Canadian utility wanting to sell electricity in the United States must give its competitors fair access to its transmission lines.

B.C. Hydro continues to deal in the U.S. market suggesting it can be done without a stand-alone agency.

Under the current structure, NB Power has to bid openly for transmission access. The energy report said the changes will give NB Power more influence.

"NB Power will become the sole developer and owner of the transmission system in New Brunswick, thus maximizing our geographic advantage in the international northeast region," the report said.

"Reserving the right for NB Power to provide new interconnection transmission capacity, rather than market participants from outside New Brunswick, will maximize the benefits to New Brunswick on energy deals being transacted through the province."

Also under this plan, NB Power will be able to seek "higher rate of return on transmission facilities that are built for interconnections."

The NBSO found itself amid a political storm earlier this year when it initially refused to turn over areport into executive compensation.

The system operator finally handed over the documentation to the Energy and Utilities Board, which outlinedsalary increases to many of its top executives.

When the Lord government unbundled NB Power in 2004, the system operator was taken out of the Crown corporation as a way to ensureindependent and open access to the transmission system.

The decision to merge the NBSO back into NB Power comes after the Crown corporation released itsown set of energy reformslast yearthat did not include taking overthe system operator.

Energy market hasn't materialized

When Lord unbundled NB Power in 2004, the intent was to make the Crown corporation run more like a business.

However, the new energy report said the markets have not materialized as predicted almost a decade ago.

"In particular, the competitive market has not developed in New Brunswick as anticipated, and given what has occurred in British Columbia, Ontario and elsewhere where competitive electricity markets have also failed to thrive, there is little likelihood that it will happen," the report said.

The provincial government will create a customer service unit that will include NB Power Distribution and NB Power Transmission.

NB Power Generation will include the NB Power Nuclear Co. and NB Power Generation divisions.

The provincial government said in all future rate reviews by the Energy and Utilities Board that the entire company will be subject to review.