Large industrial companies in New Brunswick are making a push to exit the N.B. Power grid and generate their own renewable electricity in a move the utility says could leave other ratepayers facing higher bills.
The request — delivered publicly by J.D. Irving Ltd. to a committee of MLAs last September — has now earned the backing of the province’s Liberal natural resources minister.
John Herron says high power rates threaten the future of forestry jobs and if companies can generate their own cheaper electricity, the government should remove the legal barriers that now prevent them from doing so.
“It just makes sense for a company, whether it’s J.D. Irving or others, to allow them to defend themselves to keep themselves competitive, allow them to deploy their own capital, to make their own installations in that regard,” Herron said.
N.B. Power says taking some of the biggest electricity customers off the grid could leave the remaining ratepayers having to cover more of the utility’s massive costs via higher rates.
“If large industrial facilities were able to generate their own electricity, there is a possibility it could cause upward pressure on rates for remaining customers if other measures were not taken to mitigate that impact,” spokesperson Elizabeth Fraser said in an email.
One such measure would be an exit fee large enough to blunt the impact on other ratepayers, says Green Leader David Coon.
WATCH | ‘It just makes sense’: Liberal minister backs change:
Province’s biggest forestry company seeks N.B. Power exit
Natural resources minister backs J.D. Irving’s push for renewable generation that bypasses public grid.
Coon worries that figure would not be set at a sufficiently high level.
“The temptation by N.B. Power and the province would be to have the other ratepayers bear some of that so the exit fee wouldn’t be as big as it should be,” Coon said.
In December, N.B. Power signed an agreement with J.D. Irving to buy 200 megawatts of power a year from its Brighton Mountain wind farm, the company’s first venture into wind energy.
The utility is the exclusive buyer of the power from the first phase of the project, which Fraser said will “help make the energy transition more affordable for New Brunswickers.”
The policy change Irving is seeking would made that kind of deal unnecessary in the future.
Irving Pulp and Paper vice-president Mark Mosher told the legislature’s committee on climate change last year the company’s main interest in the Brighton Mountain project wasn’t environmental but financial.
“Our ultimate goal of getting into the wind business is really to basically hedge and drive our internal electricity costs down,” he said.
“Our ultimate goal is to get into the wind business to feed our own internal operations.”
He told MLAs the company would like to see “just a small little change to the Electricity Act” so it wouldn’t need to go through N.B. Power at all.
An N.B. Power spokesperson said taking some of the biggest customers off the grid could increase costs for remaining customers. (CBC News)
The legislation allows industrial players to generate their own electricity, but only at the site where it will be consumed.
“If I move 10 feet outside the boundaries of my property and do the same thing, by law I’m not allowed to do that,” Mosher said in September.
The company plans another 150 megawatts at Brighton Mountain eventually.
Herron said another argument for the change is the potential shortfall in electricity generation N.B. Power is facing in 2028, which has prompted it to propose a controversial 400-megawatt natural gas generating station in Tantramar.
“N.B. Power would have the advantage of not having to deploy their capital, taxpayers’ and ratepayers’ capital, for additional generation which they’re arguing that they need,” he said.
Herron said he supports the idea as the minister of natural resources, whose job is to look out for a forestry sector that plays a vital economic role around the province.
Asked what the Liberal government’s position is on the issue, he said Premier Susan Holt is aware of the discussion but he would let her speak for herself.
Energy Minister René Legacy “very much understands this particular issue,” Herron said, but “doesn’t want to presuppose the outcome of the comprehensive review with N.B. Power.”
In a statement, Legacy said he recognizes “challenges” for large industrial companies that export products, including energy costs.
“Government is aware of JDI’s interests in this file, but no decision has yet been made,” he said, adding that big industrial customers met with the three people leading the independent review of N.B. Power to make their case.
Coon said he favours the idea of decentralized generation if it is fair to everyone — allowing individuals and smaller institutions to also produce their own power.
“In a sense, this is the future,” he said.
Herron said the need for residents to exit the grid isn’t as dire because their power rates aren’t as onerous as those on big industry.
Last year Mosher cited “the impact of soaring electricity costs” when Irving closed one production line at its paper mill in Saint John, eliminating 140 jobs.
Coon disputes that, however, pointing out the forestry sector benefits from provincial legislation that allows it to sell electricity it generates onsite to the grid and then buy it back at a cheaper price — a de facto subsidy.
