NB Power first full rate hearing gets questions about big paper mills

Multi million dollar subsidies NB Power is forced to provide the province's big paper mills took centre stage at the utility's rate hearing Monday with a retired NB Power engineer criticizing the practice as thinly veiled corporate welfare.

"I'd like to understand the program and I would like all the documentation that's available on the program that will explain it to people," said Gregory Hickey as he questioned a panel of NB Power executives about the practice of buying renewable energy from paper mills and reselling it back to them at a substantial loss.

"I think the people of this province deserve to know,"

NB Power is in front of the New Brunswick Energy and Utilities Board for its first full rate hearing, where all of its operations are open to scruitny, since 1993.  

The utility has applied for a modest two per cent rate hike beginning on July 1, but for the first time in 22 years the application requires full disclosure and that is subjecting the utility to some tough questioning.

Hickey registered to participate as a concerned citizen and was given wide latitude by EUB Chairman Ray Gorman to ask NB Power any questions he had, with the same standing as the corporate lawyer for Enbridge who went before him and the corporate lawyer for JD Irving who came after.

Hickey made the most of his chance.

I think the people of this province deserve to know.- Gregory Hickey

He was especially curious about NB Power's Large Industrial Renewable Energy Purchase Program which was unveiled by the Alward government in 2011.

It requires NB Power to buy renewable electricity generated by paper mills at a high price - mostly hydro and biomass - and then sell it back to the companies at a low price to help bring their power costs down.

NB Power says in the first 27 months of the program it bought 858.9 thousand megawatt hours (mwh) of electricity from the mills for $81.6 million and then sold it back to the mills at $57.2 million.

NB Power lost $24.2 million on those transactions and Hickey told the hearing if the utility is rich enough to subsidize industry, it should be denied a rate increase. 

Forestry company JD Irving Ltd. is one of the biggest users of the program and its lawyer at the hearing Gary Lawson tried to argue the $95 per mw/h mills are paid for power is the going rate - and a fair price - for renewable energy.

But NB Power has already disclosed in the hearing it only pays $84 for wind energy and NB Power's director of strategic planning and regulatory affairs, Neil Larlee, hinted current renewable prices are much lower than that.  

"The price has actually come down in the last couple of years," said Larlee.