FREDERICTON – A contentious multibillion-dollar deal to sell NB Power assets to Hydro-Quebec that was pitched by New Brunswick Premier Shawn Graham as the solution to his province’s energy and fiscal woes is dead, but not before damaging his political image months before an election.
Graham said the tentative $3.2-billion agreement collapsed Tuesday night after the Quebec utility sought changes that no longer made it worthwhile.
“It is with so much regret that I am announcing this morning that we are no longer proceeding with discussions to finalize the energy agreement with Hydro-Quebec,” Graham told the legislature Wednesday.
“Hydro-Quebec has asked for changes to the agreement that would have unacceptably taken away some of the value and increased some of the risks for New Brunswickers.”
Graham said Quebec realized that future refurbishment of the Mactaquac Dam near Fredericton would cost Hydro-Quebec more than originally expected, and wanted to change the value of the deal as a result.
Quebec Premier Jean Charest agreed that his province found unanticipated costs.
“We reached the conclusion that the sale price no longer corresponded with the assets we were buying,” Charest said.
“We didn’t approach New Brunswick. New Brunswick came to us, and it was done in good faith.”
The original plan to sell NB Power, announced last October, would have seen Hydro-Quebec acquire transmission and distribution systems in addition to power plants for $4.75 billion. At the time, Graham touted the deal as one that would have drastically reduced the province’s staggering debt and lower power rates.
But in January, Graham took transmission and distribution off the table, and said the 90-year-old utility would remain a New Brunswick-owned Crown corporation.
He amended the proposal following a public backlash and criticism within his own Liberal caucus. The revised deal was not enough to satisfy one cabinet minister, however, who was booted after calling for a referendum.
“There are lessons to learn from this experience,” Graham said.
“People were not upset with us for taking on the electricity issue. They were angry with us because they wanted to be part of the solution and our process didn’t let them in.”
Opposition Conservative Leader David Alward, who opposed the deal because he felt it didn’t include enough public input, hailed its demise.
“This is a great day for democracy in New Brunswick,” said Alward.
One of the organizers of a coalition opposed to the power deal also expressed satisfaction that the deal broke down.
“Today is a great day for all of the thousands of New Brunswickers who went to town hall meetings, signed petitions and rallied throughout the province,” Tom Mann said.
“New Brunswickers want to be participants, not spectators in the decisions that affect them.”
The collapse of the power deal comes months before an election, scheduled for Sept. 27.
“There has been a lot of talk and speculation about the political costs of attempting this deal and I am sure there will be more talk about the political costs of not doing it,” Graham said.
“Despite this setback, so long as I am premier, we will continue to take on the tough issues. If we want a province that is self-sufficient, if we want to keep our kids at home, we can’t hide from our problems or look for the easy way out.”
Asked about his political future, Graham said he had no intention to resign.
“I’m going to stay premier, and I will be fighting the next election,” Graham later told a news conference in French.
The deal also strained relations with the premiers of Nova Scotia and Newfoundland and Labrador, who expressed concerns that it could detrimentally affect their energy plans.
In St. John’s, N.L., Premier Danny Williams said he was pleased for the people and government of New Brunswick.
“I think they walked away from what would have been, in the long term, a bad deal for them,” Williams said. “My advice, from day one, was beware of Hydro-Quebec. Anybody who deals with Hydro-Quebec, in my opinion, deals with them at their peril.”
Premier Darrell Dexter said the deal’s collapse will renew the opportunity for co-operation between New Brunswick and Nova Scotia to increase transmission capacity to export power to the energy-hungry markets in the northeastern United States.
“I think it’s an opportunity for us … to re-engage on a greater scale with the province of New Brunswick for the mutual purpose of strengthening the regional grid,” Dexter said.
Alward said he’s concerned the province has lost a competitive edge in energy exports to the U.S. because of the negotiations with Quebec.
“They have completely opened up NB Power’s books and their generating stations to the province of Quebec, to a competitor,” he said. “What implication will that have on the future of New Brunswick?”
The chairman of an advisory panel appointed by Graham to study the power deal says he is “deeply disappointed” the deal won’t be going forward.
“We remain convinced that the deal that we were asked to review was in the best interests of all citizens of New Brunswick,” David Ganong said in a statement.
“(But) we are in agreement that if New Brunswick was being asked to assume additional risk or if the rewards for our province were not as substantial as were proposed, it is the right decision to terminate negotiations.”
The deal with Quebec was intended to avoid a three per cent power rate increase from NB Power on April 1.
Gaetan Thomas, NB Power’s interim president, said he has been tasked with trying to find a short-term solution over the next two weeks to prevent that increase.
“The long term is a little more difficult because this deal was the greatest deal we could have come up with at this point in time,” Thomas said.
