EUB Chair Christopher Stewart
The Chair of New Brunswick’s Energy & Utilities Board (EUB) has promised to make a decision “as quickly as we possibly can” on NB Power’s application to avoid the regulator’s financial scrutiny of the proposed 500 MW gas/diesel generating plant on the Chignecto Isthmus.
Christopher Stewart made that commitment at the close of a two-day EUB hearing in Saint John.
He noted that the legal issues are significant and any EUB decision may set a precedent.
“So, the Board will consider the matter carefully,” he said.
Power purchase agreement
NB Power lawyer John Furey
During the hearings, which concluded on Friday, NB Power’s lawyer John Furey argued that the EUB has no jurisdiction over plans for the generating plant that would cost hundreds of millions to build and operate.
New Brunswick’s Electricity Act states that the EUB must approve any NB Power capital project over $50 million, but Furey said the law doesn’t apply because the American company PROENERGY will be taking on the financial risks of building and operating the plant.
Therefore, he argued, the plant will be PROENERGY’s capital project, not NB Power’s.
Under the proposed 25-year contract, PROENERGY would not be allowed to sell the electricity the plant produces to anyone other than the power utility.
NB Power calls the contract a “tolling agreement” and Furey said it would be similar to a power purchase agreement that the utility routinely enters into with firms that own and operate wind turbines.
Municipal utilities urge EUB review
Ryan Burgoyne, lawyer representing smaller municipal utilities
The lawyer representing New Brunswick’s three smaller municipal utilities in Saint John, Edmundston and Perth Andover, urged the EUB to subject the proposed gas/diesel plant to a full financial review.
Ryan Burgoyne referred to a July 14th news release in which NB Power President and CEO Lori Clark is quoted as saying the proposed gas/diesel plant is required to address “the pressing need to enhance our grid’s reliability and security to meet the unprecedented growth in energy demand.”
“It would be a very large hole in the regulatory scheme if generation facilities that NB Power refers to as critical and addressing a pressing need are not being reviewed,” Burgoyne told the EUB.
“If they are not reviewed prior to construction, there would be no oversight for ensuring that the generation facilities meet the goal stated by NB Power and in the Electricity Act to have a reliable and safe supply of electricity as well as the most efficient supply,” he said.
“Once they are built, there is no turning back,” he added.
Customers will pay
Moe Qureshi of the Conservation Council of New Brunswick
“From a ratepayer’s perspective, it makes no difference what label NB Power chooses,” Moe Qureshi of the New Brunswick Conservation Council told the Board.
“Whether one calls it a tolling agreement, a power purchase agreement, or a capital project, the economic reality is the same,” he said.
He added that NB Power would be required to make monthly payments to the operators of the gas/diesel plant for 25-years with a possible eight year extension whether it needs the electricity it produces or not.
“The present value of those payments alone exceeds $50 million, and the total nominal commitment is several times higher,” he said.
Qureshi argued that under its contract with the American company, NB Power would take ownership of a new $70 million switchyard that would connect the plant to the grid and would also be required to supply gas and diesel fuel to operate the plant.
“In addition, NB Power has already purchased and assembled hundreds of acres of land to host the facility,” he said, adding that NB Power customers would have to pay for everything.
Qureshi urged the EUB to assert its jurisdiction and subject the proposed project to what he called “a full prudence review.”
Public intervener pushes for review
Alain Chiasson, Public Intervener
In his closing arguments, New Brunswick’s Public Intervener for the Energy Sector repeated his argument that the gas/diesel plant qualifies as an NB Power capital project and therefore, needs EUB approval under section 107 of the provincial Electricity Act.
“The project costs exceed the $50 million threshold in the Act,” Alain Chiasson said.
He added that the $70 million switchyard that will be added to NB Power’s books as a capital asset exceeded that threshold alone.
Chiasson referred to an affidavit submitted to the EUB by accounting expert Dustin Madsen who acknowledged that the law’s definition of “capital project” is ambiguous, but said the average NB Power customer would expect a full financial review of a project this big.
“The fact is that from a technical accounting perspective, Mr. Madsen’s evidence is clear that a capital asset and a capital project are the same thing,” the Public Intervener argued as he again urged the EUB to hold public hearings as part of a full financial review.
To read a transcript of the hearings, click here.
Demonstators campaign Wednesday against Chignecto Isthmus fossil fuel plant outside EUB hearing in Saint John. Photo: Juliette Bulmer
