Electrical Business

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New Electricity Act will help NB Power “to operate more efficiently…”


May 8, 2013
By Anthony Capkun

May 7, 2013 – New Brunswick has introduced a new Electricity Act in the legislative assembly that, according to the government, will allow NB Power “to operate more efficiently, increase transparency and continue to provide stable electricity rates”.

The act, introduced by energy and mines minister Craig Leonard, will re-integrate the NB Power group of companies into one main company and one subsidiary, as opposed to seven separate companies. Also, the New Brunswick System Operator and the New Brunswick Electric Finance Corp. will be amalgamated into the new, vertically integrated Crown utility to be called New Brunswick Power Corp.

The changes come following the release of the New Brunswick Energy Blueprint in late 2011, which set out a 10-year energy policy and 3-year energy action plan for the province. Key principles of the blueprint are:

• low and stable energy prices
• energy security
• reliability of the electrical system
• environmental responsibility
• effective regulation

“We are pleased to move forward with the re-integration of NB Power,” said Leonard. “Not only does it make good business sense, but other changes we are bringing forward will help to strengthen the utility’s management and board of directors, require greater transparency at the utility and allow NB Power to pay down debt and operate like a business.”

The entire NB Power organization will be subject to regulatory review and scrutiny by the New Brunswick Energy and Utilities Board (EUB). Today, only two of the seven NB Power companies are subject to review.

The new act will grant NB Power the exclusive right to sell electricity to customers in New Brunswick, with the exception of customers served by the municipal utilities in Edmundston, Perth-Andover and Saint John.

NB Power will also be granted the exclusive right to build new transmission lines in the province. However, it will be permitted to do so via partnerships or joint ventures with other companies to share project costs and risk.

As part of a series of new objectives outlined in the act, a merit-based process for recruiting and selecting candidates for NB Power’s board of directors, as well as for the president and CEO, will be introduced.

NB Power will no longer be permitted to increase rates up to 3% with no hearing. Instead, the utility will be required to defend its rates before the EUB every year, regardless of the amount of increase. The provincial government will no longer have the authority to override an EUB rate decision, giving the board final authority over electricity rates.

In addition, NB Power will be required to develop a long-term Integrated Resource Plan every three years, as well as a medium-term business plan annually with projections of electricity rates and capital expenditures over the 10 years covered by the plan.

The new act enshrines in legislation the government’s policy objectives of permitting NB Power to achieve a capital structure of 20% equity by paying off $1 billion in debt; requiring NB Power to operate its facilities in the most efficient manner possible; and, to the extent practicable, maintaining electricity rates as low as possible and stable from year to year.

As a transitional measure, the act allows NB Power to increase electricity rates up to a maximum of 2% on October 1, 2013, and again on October 1, 2014, if required, while the new re-integrated utility prepares for a number of regulatory matters with the EUB that result from the restructuring. Beginning in fiscal year 2015-16, rates will be set by the EUB every year.

CLICK HERE for the Electricity Act.