N.B. Power disputes Irving claim industrial power rates are uncompetitive
Utility answers criticism that it's to blame for job losses in Saint John
J.D. Irving Ltd.'s claim that "uncompetitive" electricity prices charged by N.B. Power is exclusively responsible for forcing it to close a production line at its east side Saint John paper mill has pushed the provincial utility and its rates into the spotlight.
And N.B. Power is not taking the criticism quietly.
"N.B. Power offers a competitive large industrial rate," spokesperson Dominique Couture said Tuesday in an email directly contradicting the company's claim.
"N.B. Power large industrial rates are lower than Nova Scotia, P.E.I., HydroOne (in Ontario), Alberta and are on par with Saskatchewan."
On Monday, J.D. Irving announced it was permanently closing down half of its production at Irving Paper and eliminating 140 positions.
In a statement company vice-president Mark Mosher blamed "the impact of soaring electricity costs" for the decision.
N.B. Power did raise industrial and residential rates 13 per cent in the past year and has plans to raise them more than nine per cent again this year, beginning on April 1.
Still N.B. Power disputes that has made electricity pricing uncompetitive in New Brunswick.
To bolster its claim, it has been circulating an annual publication by Hydro Quebec showing New Brunswick's large industrial electricity rates, even after this year's increase, still rank well below North American averages.
That publication, which compared rates for different customer groups in 22 Canadian and U.S. cities as of April 1, 2024, places N.B. Power industrial rates eighth overall, with prices 18 per cent below the average of the group.
But the utility notes that comparison involves the standard large industrial rate offered by N.B. Power.
It does not include the application of an additional 22 per cent discount N.B. Power is compelled to provide to provincial pulp and paper mills, including the Irving Paper mill.
That rate discount, estimated to be worth $12.6 million this year, is mandated by provincial regulation.
This year the program had N.B. Power buying renewable energy generated by the six mills at 12.2 cents per kilowatt hour and instantly selling it back to them at 9.3 cents.
The utility is required to engage in those transactions until it loses enough money to the mills to achieve the targeted discount amount.
Named the Large Industrial Renewable Energy Purchase Program, the scheme has cost N.B. Power more than $138 million since its inception in 2012.
Applied to the six mills, it moves their large industrial rate to fifth lowest among the 22 jurisdictions in the Hydro-Quebec study, better than seven of 12 Canadian cities in the survey and all 10 American locations.
Couture said the program helps the "competitiveness" of New Brunswick pulp and paper mills by providing them rates that are lower than most in North America.
The Hydro-Quebec survey mirrors information published by the Energy Information Administration in the United States. It shows that in November, only Louisiana out of 50 states was charging a standard industrial power rate below what N.B. Power charges New Brunswick pulp and paper mills.
However, J.D. Irving Ltd. is less concerned with those averages, than it is with rates charged by jurisdictions with significant pulp and paper operations.
More than 60 per cent of pulp and paper production in Canada is based in Quebec and British Columbia. Both provinces have substantial hydroelectric production and offer industrial power rates to mills between 10 and 28 per cent below N.B. Power's subsidized rate.
The company did not respond Tuesday to a request for information on what power rates it believes are required to keep Irving Paper competitive.
ABOUT THE AUTHOR
