Survey of New Brunswick’s Changing Energy Economy

Here is an interesting survey of energy developments in New Brunswick. The almost universally accepted policy orthodoxy in N.B. is that province would prosper as an electricity exporter to New England. In almost all cases where the New England electricity market is referred to in policy discussions in the province, the market is described as the “lucrative” .

Directly contradicting popular perception, New England’s current wholesale prices are so low that NB is often better off importing power rather than running its own power plants. Burdened by high debt, high operating costs, declining labour productivity, and many facilities near retirement, NB’s power system is in very poor shape. However, the situation would be far worse had the province gone further down the road referred to there as the “Energy Hub”, building power plants for export.

Another distressing element of NB’s energy economy is the deplorable condition of the province’s gas distribution sector. Consumers face sky-high gas rates and the local utility, Enbridge Gas NB, has accumulated a massive deferral account of unpaid delivery costs which portends high rates in future. The major driver for the province’s sad gas situation is its industrial laterals policy, where the government allowed the creation of single end-use franchises for large industrials accessing the local gas transmission system, operated by Maritimes&NorthEast.

The common thread that draws all of this together is the longstanding effort by NB politician to leverage the energy sector into an employment engine using special rules and programs of one kind or another. Where natural resources are plentiful, the energy sector can stimulate regional economic development, but in New Brunswick, where the easily available energy resources are thin, the strategy has failed.

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