New Brunswick Auditor-General Paul Martin. Photo: AG report

New Brunswick Auditor-General Paul Martin issued a report today accusing NB Power of pushing ahead with its proposed gas/diesel generating plant near Centre Village without fully weighing the costs and risks to its customers or considering possible alternatives.

The report also notes that NB Power’s agreement with PROENERGY requires the U.S. company to establish a financial, equity partnership with Indigenous communities, yet the Auditor General found during his investigation that no such partnership had been reached.

The report adds that last December, NB Power amended the agreement to allow PROENERGY to withdraw from the project and recover its costs if it does not form a partnership with Indigenous communities by mid-2026.

The Auditor-General’s report discloses financial details that were kept confidential during hearings before the Energy & Utilities Board.

The Auditor General calculated that NB Power’s partnership with PROENERGY would cost roughly $3.55 billion over 25 years.

Under the partnership model, NB Power would not own the generating station. Instead, it would make long-term contractual payments to PROENERGY’s project partnership in exchange for having the plant built, maintained and available to generate electricity. The utility would also be responsible for other costs, including fuel and certain environmental compliance costs.

Using NB Power’s own annual revenue requirement estimates, the Auditor General calculated that the total cost of the partnership model would be roughly $3.55 billion over the 25-year term of the agreement ($142 million average annual revenue requirement × 25 years = $3.55 billion).

The report cites NB Power figures showing that if the utility owned and operated the plant itself, the estimated cost would be between $2.85 billion and $3.125 billion, or approximately $425 million to $700 million less than the partnership model.

Financial risks

The Auditor General suggests that NB Power faces substantial financial and contractual risks including:

• having to make full monthly payments to the U.S. company even when the gas/diesel plant cannot generate electricity for reasons outside NB Power’s control
• paying for fuel whether or not it is burned
• bearing “construction schedule risks associated with delays in the delivery of equipment without financial remedy.”

The Auditor General also criticizes NB Power for treating its agreement with PROENERGY primarily as a supply arrangement rather than a 25-year capital investment.

“As a result, the project did not proceed through the full Investment Governance Framework (IGF) in the way expected for a major capital commitment,” the report says.

It also notes that the agreement with PROENERGY initially required the company to pay NB Power $46 million in US dollars as a “performance assurance payment” to offset construction risks.

“The performance assurance payment was due on August 1, 2025, but was not paid to NB Power,” the report says.

“An amendment to the Agreement was subsequently approved and dated December 31, 2025 to reduce the immediate security requirement to USD $10 million, with the full USD $46 million becoming payable only upon satisfaction of specified conditions. As a result, NB Power’s contractual leverage to enforce ProEnergy’s compliance with construction milestones and the agreed upon schedule was significantly weakened.”

Risks & benefits of alternatives

While the Auditor General accepts NB Power’s forecast that it would need an additional 400 MW of generating capacity by August 1, 2028, his report says the utility did not conduct a rigorous assessment of the risks and benefits of alternatives to dual-fuel combustion turbines until after it had signed an agreement with PROENERGY.

The report refers to NB Power’s list of possible alternatives in its planning documents including:

• battery storage
• biomass conversion
• demand response
• imported power
• intermittent renewables (wind, solar)
• small modular nuclear reactors

In a response included in the report, NB Power said it faced an urgent risk of winter electricity shortages and argued that delays could have increased the likelihood of blackouts.

The utility also disputed some of the Auditor General’s conclusions, saying the partnership model transferred significant construction and performance risks to PROENERGY.

To read the Auditor General’s report and NB Power’s response, click here.

To read a CBC report on the $3.5 billion cost of the plant, click here.