N.B. Power spent $4.6M on failed Moncton 'smart community' subdivision
Utility partnered with Siemens Canada, developer on cluster of 100 homes in Vision Lands
The figure, over a four year period, is disclosed in responses last month to a series of questions posed by the Energy and Utilities Board as part of N.B. Power's request to raise power rates by 8.9 per cent.
Marc Belliveau, a spokesperson for the utility, declined to answer questions about how the money was spent because of the ongoing rate application.
The board is set to hear the request in Fredericton starting Feb. 13.
Plan surfaced in 2020
Initial details of the North Branch smart community plan emerged through an N.B. Power rate hearing in 2020.
The utility had partnered with a local developer, which would build the homes, and Siemens Canada on a planned self-sufficient neighbourhood west of McLaughlin Road.
Details were vague, and landowners in the area said they weren't aware of the plan. City officials said at the time no application had been submitted for such a subdivision.
The contract with Siemens called for construction of 100 high efficiency "near net zero" houses over three years in a single neighbourhood that would operate as an experimental "micro-grid" the utility can study.
Each home was to have solar panels, storage batteries, electric vehicle chargers and technologies installed largely at the utility's expense.
In 2020, the utility had budgeted to spend $10.9 million on the project. Federal funding was expected to offset some of the cost.
But last year, Brent Staeben, the utility's Smart Grid Atlantic director, told CBC the plan had been abandoned.
"Unfortunately, the developer, Solaire Homes, was not able to construct enough homes for N.B. Power and Siemens to conduct the research we intended," Staeben wrote in an email.
A document filed as part of the rate hike application says Siemens was able to construct hardware for the project, but the builder was delayed by the COVID-19 pandemic, resulting supply chain problems and extra materials costs.
Instead, it is focusing its research on a project in Shediac where hundreds of customers are testing various technologies, and a solar farm has been constructed.
The rate application documents show it expects to spend $18.7 million on the Shediac project over four years.
The Moncton subdivision isn't the utility's only "smart community" project that hasn't panned out.
Another plan was to work with a First Nations community to construct a solar farm, install a battery bank, and install "smart" technology like thermostats and water heaters in various homes.
While N.B. Power had an agreement in principle with a First Nations community, documents filed last fall say a community referendum was required.
The filing says the referendum didn't occur and the utility has been unsuccessful in getting a new agreement to proceed. The document doesn't name the community.
The rate application documents don't list any spending on that plan.
The City of Moncton has been seeking development in an area known as the Vision Lands for years. (City of Moncton)
The North Branch subdivision in Moncton was planned in what's known as the Vision Lands.
The Vision Lands covers a largely undeveloped track of about 1,400 acres bounded by Mapleton Road, the Trans-Canada Highway, McLaughlin Road and Wheeler Boulevard.
For decades the city has sought to develop the area.
Municipal planners are now updating the plans for the area in consultation with landowners.
Among the ideas being considered is a regional park. Moncton councillors recently approved spending $150,000 for a consultant to study that idea.
Moncton's Mayor Dawn Arnold has said she would like the city to consider a national urban park in the Vision Lands.
Bill Budd, the city's director of planning and development, said it will likely be well into 2024 before the city has the results of Vision Land studies.
Information Morning - Moncton
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With files from Robert Jones
Net-zero-energy home sits empty as builder struggles to find buyers
Builder says mortgage and appraisal system keeps families out of low energy homes
Please note below the information for the Virtual Public Forum related to Matter 541 – NB Power 2023-2024 General Rate Application.
Also note, that parties are permitted to observe, but the public forum is for those not participating in the hearing.
The first session of the Virtual Public Forum will take place via Zoom videoconference on January 30th, 2023, from 2 pm until 4 pm.
Join Zoom Meeting via telephone: 855-703-8985 Canada Toll-free
Or Join Zoom Meeting via web
Meeting ID: 832 8949 3356
Passcode: 607656
N.B. Power to spend $3.4 million of proposed rate hike on higher industrial subsidies
Utility's planned 8.9 per cent rate increase applies to all customers, except 6 pulp and paper mills
Last week the utility announced plans to raise rates 8.9 per cent "across the board" to all customers to address its rising expenses. Acting N.B. Power president Lori Clark said financial problems the utility faces in the next year are significant and require every customer to contribute equally to address them.
"The 8.9 per cent is to cover our current costs. We are not making significant progress on debt reduction. It is only to cover our costs," said Clark
"We decided it was in the best interests of all of our customers to put an average rate increase in place."
But in a 200-page evidence package submitted with the application to the EUB, the utility revealed it will be using $3.4 million of the $135.8 million higher rates are expected to generate to raise subsidies it supplies to six New Brunswick pulp and paper mills.
Under
a mandatory provincial requirement, N.B. Power has lost more than $100
million buying electricity from pulp and paper mills at high prices and
reselling it back at a discount over the past decade. (Mike Heenan/CBC News file photo)
Part of that will cover an expected increase in the consumption of power by the mills next year, but some will partially shield facilities from having to pay the full cost of increased rates.
The mills include three owned by J.D. Irving Ltd. in east Saint John, west Saint John and Lake Utopia, two owned by the AV group in Nackawic and Atholville and the mill in Edmundston owned by Twin Rivers.
According to N.B. Power's evidence, transfers to the mills will increase 30 per cent, from an estimated $11.3 million this year to $14.7 million next year. That will help keep the price of "firm" power supplied to the mills from rising as much as it does for other N.B. Power customers.
The subsidies are the responsibility of N.B. Power to finance, but the payments are required by provincial regulation, and the increases are not the result of business decisions made by the utility.
"It is not discretionary," N.B. Power communications officer Dominique Couture noted in an email to CBC News.
The
Irving Pulp and Paper mill overlooking the Reversing Falls in Saint
John is one of six New Brunswick facilities that has electricity costs
subsidized by N.B. Power. The group qualified for $10 million last year,
but that will jump to $14.7 million next year. (Roger Cosman/CBC News)
The transfers occur under a ten-year-old policy the province calls the "large industrial renewable energy purchase program" that despite its name serves only pulp and paper mills.
The regulation requires N.B. Power to buy green electricity the companies self-generate at elevated prices, and then sell it back instantaneously at a discount.
Most of the power is supplied from generators fuelled by the burning of biomass in mill boilers, with a portion also supplied by J.D. Irving Ltd.'s hydro electric dam in St. George.
Twin
Rivers operates a paper mill in Edmundston. It pays power rates that
are tied to a Canadian average calculated by the New Brunswick
government. The arrangement helps shield mills from rate increases that
hit other N.B. Power customers. (CBC)
This year, N.B. Power is paying $110.54 per mega watt hour for what it buys. It then sells it back to the mills at an average of just over $77 per mega watt hour, according to information the Crown corporation has filed with the EUB.
The utility is made to buy and sell at those price differences until it has lost enough money on the transactions to effectively subsidize the total power costs of the six mills, down to a level the province has declared to be a national average for pulp and paper facilities.
The transactions are mostly on paper since electricity generated at the mills is consumed onsite and does not actually enter N.B. Power's transmission system.
Last year the scheme cost N.B. Power $10 million. This year that has increased an estimated 13 per cent to $11.3 million, and next year is budgeted to increase a further 30 per cent to $14.7 million.
According to Couture, N.B. Power has to increase amounts it buys and sells with the mills to accommodate both higher electricity prices and the growing consumption of power by some of the facilities.
"Firm sales to program participants are increasing due to electrification and other growth, and the targeted amount of reduction is increasing, therefore increased purchases are required in order to satisfy the regulation," wrote Couture.
When
he was the New Brunswick energy minister in 2012, Craig Leonard
introduced subsidies for pulp and paper mills in 2012 to help companies
he said were facing 'severe challenges.' Ten years later the department
won't say if any updated studies have been done into whether the help is
still required.
According to the province, the subsidy program is meant to help New Brunswick mills compete against facilities in other provinces that have access to lower power costs, especially in Quebec and British Columbia.
"The purpose of the Large Industrial Renewable Energy Purchase Program is to make New Brunswick's export-oriented pulp and paper sector competitive with their competitors in other Canadian provinces," the government explains in an online information sheet about the program.
The program only concerns itself with electricity costs and does not attempt to evaluate other expenses of pulp and paper mills, such as wages, wood costs, property taxes or other expenses, to assess if there might be offsetting benefits to operating in New Brunswick.
The Department of Natural Resources and Energy Development oversees the policy but it did not respond to questions about its increasing costs last week.
Last year, J.D. Irving Ltd. issued a statement in support of the program, calling it "critical to the long-term viability of New Brunswick's pulp and paper industry."
Last week, the company's vice president of communications, Anne McInerney, said electricity costs remain a concern. McInerney noted N.B. Power passed along large price spikes this year in the cost of normally cheap non-firm "surplus" energy large industrial customers often access to supplement their firm supplies
"In some of our operations, we're paying as much as $60 million every year," wrote McInerney in an email to CBC News.
"In fact, this summer, (non-firm) rates increased so sharply, four times higher than normal, Irving Paper temporarily ceased operations."
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