N.B. Power's debt, costly capital projects provoke warning from auditor general

New Brunswick's auditor general is warning the provincial government could be faced with the difficult decision of bailing out the province's Crown electric utility company if it doesn't take meaningful action to reduce its debt and turn a profit.

N.B. Power will either need to rely on government help, raise rates for customers, or find operational savings to tackle its growing problems with debt and consistent year over year losses, Paul Martin said Thursday, after presenting part of his annual report to members of the legislature's public accounts committee.

"I'm most concerned because N.B. Power in their own strategic plan doesn't seem to have a plan," Martin said, speaking to reporters.

"They have significant investments that are going to have to be made here in the next six-plus years, and these are not, you know, insignificant purchases."

Those investments Martin refers to are the multi-billion-dollar upgrade and retrofits to N.B. Power's Mactaquac hydroelectric dam, as well as the Belledune coal-fired generating plant.

The Mactaquac Dam is in need of a $3 billion refurbishment if the company wants to extend its life to 2068, which is crucial as N.B. Power aims to rely more on renewable energy sources, such as hydro and wind, over the next decade.

Meanwhile, N.B. Power's Belledune plant would need to undergo costly retrofits to use another fuel source — or get shut down — ahead of a federally imposed phaseout of coal in 2030.

Amid those looming costs, Martin pointed out the utility's $5.4-billion debt, and its debt to equity ratio, which most recently rose to 94 per cent — above the 80 per cent threshold required under the Electricty Act.

Martin also highlighted the company's net loss of $43 million for the fiscal year ending 2023, making it the sixth consecutive net loss it's incurred.

"If N.B. Power can't pay its bills, they are owned by the province. That's who's going to pay, is all of us as taxpayers."

Rate increase request expected Friday

Martin's report comes on the eve of what's anticipated to be N.B. Power's latest efforts to tackle its debt.

Friday is the deadline for the company to file a request with the province's Energy and Utilities Board to raise rates for customers.

CBC News asked for an interview with N.B. Power CEO Lori Clark about what can be expected Friday, and spokesperson Dominique Couture said in an email that the utility would not be making anyone available Thursday.

In 2019, Natural Resources and Energy Development Minister Mike Holland issued a mandate letter ordering N.B. Power to increase earnings enough to achieve a target of 80 per cent debt and 20 per cent equity in its capital structure by March 31, 2027.

That has prompted N.B. Power to seek rate increases, including a proposed 8.9 per cent hike proposed last year.

The Energy and Utilities Board ultimately rejected that request, with N.B. Power ultimately imposing a smaller, 4.8 per cent rate hike, which took effect this past spring.