N.B. Power budget includes plan to violate provincial environmental regulation

N.B. Power came under questioning Tuesday about plans it has to lower the amount of renewable energy it sells to New Brunswick customers next year to 35 per cent, despite a legal requirement imposed by the province that at least 40 per cent of what it supplies come from green energy.

"It's extraordinary times and they call for extraordinarymeasures," said Brad Coady, N.B. Power's executive director of business development and strategic planning.

N.B. Power is in the middle of a two-week hearing in Fredericton looking at its plan to impose an 8.9 per cent rate increase onApril 1.

On Tuesday, company executives explained internal budgeting lastyear initially showed the need to ask for a 12 per centincrease which triggered a hunt for measures that would cut costs.

Coady said one of those measures was to calculate what would happen if the utility ignored its legal requirement to supply a specified amount of renewable energy.

"We looked for creative ideas such as what if we didn't have binding constraintsin our modelling," said Coady.

He said lowering renewable energy supplies to customers by what would be nearly 700 gigawatt hours of electricity below the legal minimum showed a $14.2millionsaving.

It was decided that was worth ignoring the regulation, at least in preparing the budget.

"We need to look creatively at every opportunity to reduce costs in this utility so its not just customers asked to fill in the gaps," said Coady.

EUB lawyer Abigail Herrington questioned the plan in some detail and raised concerns about whetherthe board could approve a proposal that openly violates a provincial environmental regulation.

"N.B. Power is aware of its requirement to ensure 40 per cent of its total in-province electricity sales are from renewable sources, is that right," asked Herrington.

"Yes, that's correct." said Coady.

He suggested N.B. Power will look for opportunitiesto raise the figure to the required level during the year if deals on renewable energy from Quebec Hydro or elsewhere become available.

This year, renewable power has risen to an estimated 51 per cent of what is supplied in New Brunswick, thanks to higher than expectedwater flows through provincial dams and poorer-than-expected performance at the Point Lepreau nuclear generating station.

That required increased imports of hydro electricity from Quebec.

The utility suggested similar events next year could solve the problem, no matter what the budget projects.

Failing that N.B. Power acting president Lori Clark said she has been in touch with the Higgs government about rewriting the regulation to allow the violation at least for one year.

"That's our commitmentthat we will work to find ways to meet that legislation," said Clark.

One idea being discussed with the province is to loosen the requirement the 40 per cent minimum be reached every year in favour of it being achieved over a three-year rolling average.

"Looking at this in a three-year window I think makes more sense," she said. "That is one of the discussions we are advancing with the shareholder (province)."