In the February 7th edition of the Daily Gleaner, the CEO of NB Power Gaetan Thomas made the case for “smart meters” in New Brunswick. According to the headlines, “smart meters” are vital to our future as a means of both averting the construction of a new power generation station and directing the province away from dependence on fossil fuels. Thomas was endeavoring to build a case for “smart meters” now because NB Power has already made an application to the Public Energy and Utility Board to increase rates and install this new technology at a cost of over $100M. All that remains now is to convince the Utility Board and the citizens of New Brunswick that these costs are worthwhile.
Smart meters, a common form of smart grid technology, are digital meters that replace the old analog meters used in homes to record electrical usage. Digital meters can transmit energy consumption information back to the utility on a much more frequent schedule than analog meters, which require a meter reader to transmit information. I believe most New Brunswickers would agree that this technology is the way to go. But there are so many other variables at play here.
One of the variables, at the top of the list, is the debt of N. B. Power now sitting at $4.6 Billion dollars. Poor planning years ago may be the root cause of this growing debt. At a rate hearing in June 2015 NB Power executives projected those annual increases would be enough to whittle its debt down to $3.95 Billion by March of 2021, an $889 million improvement over six years. Instead, at this year’s hearing the utility now projects its debt in March 2021 will be $4.9 billion, almost $1 billion higher than planned.
What happened is not easily answered. NB Power may have been overly optimistic in their projections. Of late we have seen vicious storm damage, poorer than expected performance at Lapreau following its refurbishment, lower than traditional water flows through hydro dams, fuel fluctuation prices, all of which have taken turns attacking NB Power’s bottom line. And moreover look at the number of mill closure and other industrial plants that has occurred since 2006.
The justification for the $100M purchase of “smart meters” and a rate increase is primarily based in avoiding the need for a new power generation station. NB Power argues that if we don’t spend the money with smarts meters and grids today, the cost of building a new generating plant will be $1Billlion in 10 years or so. It could be true. But what about alternative energy that may be coming on stream?
Alternative forms of electricity generation are obviously possible. While it may be hard to believe, Salim Ismail says in his Ted Talk “How do we fix civilization” that the efficiency of solar cells are doubling every 22 months and at this rate we will have enough solar energy to power the entire planet within 20 years. Oil Industry in western Canada is running scared, and they have reason. Canada relies heavily on the oil industry to create tax revenue. We in New Brunswick are benefactors of this industry through transfer payments. Therefore, all government departments and crown corporations such as NB Power must be more cognizant of their spending habits and “save our money for that rainy day”.
Are there things that NB Power can do to reduce its debt while being progressive with new technology? Without limiting the generality of the foregoing a few suggestions are as follows:
Firstly, the internal operations of NB Power need deep surgery. When the Auditor General of New Brunswick says there are accountants in NB Power who make more money than she does, then it is time to sit up and take notice. A review of all senior positions should take place. It has been shown that 56 top people make $14M which is an average of $250,000 per person. NB power claims they have to pay that kind of salary to attract and retain people. Furthermore when you are operating a nuclear plant you need the best and the brightest at the helm. While that may be true, it has been my observation that overhead within institutions tend to grow exponentially over a span of several years. Lean and mean should be their “modus operandi” for the future.
Secondly, all redundant assets should be sold and the money be used to reduce the debt.
Thirdly, invite other corporations in the energy business to come in as partners by offering incentives or conversely take the corporation public. Time is running out. Last year their debt increased by $212M from the previous year. This cannot continue, for it is a drain on the Province which will ultimately affect our credit rating. The Higgs government set a deadline of 2027 for the utility to pay down $500 million in debt. The 10 year projection shows a debt increase to nearly $5.4Billion.
NB Power does need a rate increase to meet its obligations, as its rates are below other provinces in Atlantic Canada. However, in these tough economic times, it is difficult to pull the trigger. The public can help, by being more energy efficient. We should do our laundry late in the evening, turn the heat down when we are not at home and at night. Provide more insulation where needed. Years ago, people took their baths on Saturday night. My father in his later years said time was moving so quickly that he took his bath on Friday night rather than Saturday night. Today we shower once or twice a day. And teenagers seem to stay in the shower forever.
The optics of NB Power by the public is not good. There needs to be improved communications. It is all about trust. Trust is earned and only forfeited when institutions are perceived to run inefficiently. When NB Power puts forth a new vision showing a profit and a plan for repayment of debt, then the public will be more receptive to bold initiatives. The ball is in their court.
As written before, we are living in a “Brave New World”. We must embrace change for it is moving at an alarming rate. DKB.