Opponents of new gas plant accuse N.B. Power of trying to evade regulatory scrutiny
N.B. Power hopes the new generating plant will be up and running in 2028
Advocates are raising concerns that N.B. Power is looking to shortcut the regulatory process and avoid public scrutiny of its proposed 400-megawatt gas plant.
"It's an attempt to evade the regulatory process and that's unacceptable," said Green Leader David Coon.
N.B. Power is required to get approval from the Energy and Utilities Board for capital projects costing more than $50 million, but are arguing that a $70-million transmission facility required for a new natural gas generating facility in the province's southeast should be excepted from that scrutiny. Normally, that would trigger a review of the entire project.
Coon said it's clear the utility doesn't believe the independent EUB would see the economic argument for it.
"It says to me they don't have much faith in the Energy and Utilities Board deciding that these expenditures would be in the economic interests of New Brunswickers given the alternatives," he said.
"The alternatives are there. I mean, places from the city of Saint John to the state of Vermont are using large battery storage systems on the scale of hundreds of megawatts in the case of Vermont to provide peak power."
N.B. Power's application makes the case that the structure of the deal to build and operate the plant and necessary infrastructure doesn't count as a traditional capital investment.
The new plant will be owned and operated by ProEnergy, which will sell the power generated back to N.B. Power. Because the plant is being built by and will be wholly owned by ProEnergy, the project doesn't require hearings and board approval.
However, the project also includes a $70-million switchyard that ProEnergy has agreed to build. By law, only N.B. Power can own transmission assets in the province, so once completed, it will be sold to the utility for a dollar.
N.B. Power argues that since they aren't building it, the transfer shouldn't count as a capital project and should therefore be shielded from board review and the public hearings that come with it — even though it will show up as a $70-million asset in its capital structure, with the depreciation and liabilities that come with it.
A spokesperson for N.B. Power said in a statement that the application is intended to get the EUB's opinion on how to treat these types of agreements.
"This structure differs from N.B. Power building and operating a long-term asset, where we would assume all operational risks, ultimately borne by the ratepayer. This is a new type of agreement for NB Power, and we felt it was important to seek the NBEUB's opinion," Elizabeth Fraser said in an email.
Fraser added that while a full EUB review would take longer, they believe the plant could still be ready by 2028.
N.B. Power said previously that the plant is necessary to address the growing population and demand for energy in the province and to provide a backup to intermittent renewable power. The utility is also looking to add hundreds of megawatts of wind energy to its generation mix in coming years and says the plant will be a crucial part of ensuring it has the energy it needs when demand dictates.
According to environmental assessment filings, work to prepare the site is intended to start as early as next year, with the plant coming online in 2028. ProEnergy's lead for the project previously told CBC that it's expected the project could result in a 250,000-tonne reduction in N.B. Power's greenhouse gas emissions as the plant would displace more polluting sources of power.
Reduction claims need to be tested
Moe Qureshi, the director of climate change research and policy at the Conservation Council of New Brunswick, said those claims need to be tested in the EUB's public hearing process to determine if the plant, or the deal, is in the best interest of New Brunswickers.
"The EUB is the way to review that information to check if this is really the best choice for New Brunswick and, without that oversight, I think we're going to get into more problems rather than less," he said.
"What if this costs us more down the road than what we think now? And I think if the ratepayers have to pay for this, they have a right to see what's going on."
The EUB filing also provides more details about how ProEnergy will be paid for the facility. N.B. Power will pay for the fuel used to power the plant and purchase the power generated. But they will also make monthly "capacity payments" based on how much power the utility purchased versus what the facility could produce.
Fraser said payments will be based on a "'pay for performance' model, meaning we are only subject to payments when the facility meets a high level of availability."
N.B. Power's EUB filing states they expect the capacity payments will eclipse $50 million over the 25-year lifespan of the agreement.
A pre-hearing conference is scheduled for Aug. 12, with hearing dates set for the beginning of September.
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