If you live in Saint John, a recent decision by N.B. Power impacts a major local employer. The New Brunswick government is standing behind N.B. Power as the utility sells its surplus electricity to out of province buyers at market rates. This decision sparked a major conflict with J.D. Irving Ltd. The forestry giant is threatening to permanently close its east Saint John paper mill if the utility does not restore cheaper interruptible service rates.

According to a report from CBC News, N.B. Power previously offered discounted surplus power to large industrial customers in the province. A ruling in April by the New Brunswick Energy and Utilities Board changed the rules. The board granted N.B. Power permission to sell this surplus energy outside of New Brunswick at higher market prices.

The Financial Hit to Local Industry

This policy shift narrows the supply of surplus power available to local industrial plants and drives up the price. J.D. Irving relies heavily on this surplus supply. Last year, the company purchased three quarters of the electricity for its two Saint John paper mills through this interruptible power program.

Mark Mosher is the executive vice president of Irving Forest Services. He stated the company expects at least a $10 million increase to its annual electricity costs. He warned this financial strain will force the company to shut down its electricity dependent east Saint John paper mill.

“This change, coupled with the significant increases in energy rates from the ongoing operational issues at the Point Lepreau generating station will lead to the closure of Irving Paper Limited,” Mosher wrote in a letter to the Energy and Utilities Board.

Government Defends the Move

You will notice the provincial government has no immediate plans to step in and force N.B. Power to offer local industries a discount. Energy Minister René Legacy defended the utility in the legislature. He argued the open market sales provide a clear benefit to N.B. Power and its everyday customers.

“We could reverse this, and it could be changed, but somebody else would be impacted,” Legacy said.

N.B. Power generates more electricity than New Brunswick needs on most days. Selling this surplus energy at higher rates helps the Crown corporation manage its significant financial challenges.

What Happens Next

Christopher Stewart chairs the Energy and Utilities Board. He responded to J.D. Irving with a promise to hold a hearing into the company concerns as quickly as possible. He noted a comprehensive review will take weeks or months to complete.

The provincial government will wait for the board to finish its review before taking any further action. Legacy confirmed the province will not comment on the process until the board reaches a conclusion.

Frequently Asked Questions

Why is N.B. Power selling electricity outside the province?

N.B. Power generates more electricity than the province needs on most days. The utility sells this surplus power to out of province buyers at higher market rates to help ease its financial problems.

How does this impact J.D. Irving?

J.D. Irving previously relied on discounted surplus power for its Saint John paper mills. The company expects its annual electricity costs to increase by at least $10 million due to the recent changes.

Will the Irving Paper mill in Saint John close?

Company executives warn the east Saint John paper mill will close if N.B. Power does not restore the cheaper interruptible service rates.

What is the government doing about this?

The provincial government is waiting for the New Brunswick Energy and Utilities Board to conduct a formal review of the situation before taking any action.