N.B. Power budget includes plan to violate provincial environmental regulation
'It's extraordinary times and they call for extraordinary measures,' the utility says at rate hearing
"It's extraordinary times and they call for extraordinary measures," said Brad Coady, N.B. Power's executive director of business development and strategic planning.
N.B. Power is in the middle of a two-week hearing in Fredericton looking at its plan to impose an 8.9 per cent rate increase on April 1.
On Tuesday, company executives explained internal budgeting last year initially showed the need to ask for a 12 per cent increase which triggered a hunt for measures that would cut costs.
Coady said one of those measures was to calculate what would happen if the utility ignored its legal requirement to supply a specified amount of renewable energy.
"We looked for creative ideas such as what if we didn't have binding constraints in our modelling," said Coady.
N.B. Power's Brad Coady said the utility has budgeted to sell less than the legal minimum of renewable energy next year because non-renewables is a cheaper option. (John Collicott/CBC News)
He said lowering renewable energy supplies to customers by what would be nearly 700 gigawatt hours of electricity below the legal minimum showed a $14.2 million saving.
It was decided that was worth ignoring the regulation, at least in preparing the budget.
"We need to look creatively at every opportunity to reduce costs in this utility so its not just customers asked to fill in the gaps," said Coady.
EUB lawyer Abigail Herrington questioned the plan in some detail and raised concerns about whether the board could approve a proposal that openly violates a provincial environmental regulation.
EUB lawyer Abigail Herrington questioned N.B. Power executives closely Tuesday on their plan to ignore a rule that requires a minimum amount of renewable energy to be sold to its customers (Jonathan Collicott/CBC News)
"N.B. Power is aware of its requirement to ensure 40 per cent of its total in-province electricity sales are from renewable sources, is that right," asked Herrington.
"Yes, that's correct." said Coady.
He suggested N.B. Power will look for opportunities to raise the figure to the required level during the year if deals on renewable energy from Quebec Hydro or elsewhere become available.
N.B. Power dams, including the one in Grand Falls, have been producing more electricity than normal this year because of increased rainfall. That has boosted the amount of renewable energy sold to N.B. Power customers. (Shane Fowler/CBC)
This year, renewable power has risen to an estimated 51 per cent of what is supplied in New Brunswick, thanks to higher than expected water flows through provincial dams and poorer-than-expected performance at the Point Lepreau nuclear generating station.
That required increased imports of hydro electricity from Quebec.
The utility suggested similar events next year could solve the problem, no matter what the budget projects.
N.B. Power's acting president, Lori Clark, told the utility's rate hearing the Higgs government is being consulted on loosening the environmental rule that requires a minimum of 40 per cent renewable energy be sold to customers each year. (Jonathan Collicott/CBC News)
Failing that N.B. Power acting president Lori Clark said she has been in touch with the Higgs government about rewriting the regulation to allow the violation at least for one year.
"That's our commitment that we will work to find ways to meet that legislation," said Clark.
One idea being discussed with the province is to loosen the requirement the 40 per cent minimum be reached every year in favour of it being achieved over a three-year rolling average.
"Looking at this in a three-year window I think makes more sense," she said. "That is one of the discussions we are advancing with the shareholder (province)."
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"Failing that N.B. Power acting president Lori Clark said she has been in touch with the Higgs government about rewriting the regulation to allow the violation at least for one year."
Oh yeah...they blew off that opportunity a few years back.
ARC's small nuclear reactors won't fill electricity gap left by Belledune
CEO says company’s current plan would still leave ‘shortfall in megawatts’ after coal phaseout
The provincial government has touted SMRs as a key element of its climate action plan to shift away from generation that emits greenhouse gases warming the atmosphere.
"Our mission is to protect the planet with clean energy," ARC Clean Energy CEO Bill Labbe told MLAs on the legislature's standing committee on climate change.
But Labbe said the company's plans do not include enough SMRs to make up for the 450 megawatts of electricity generated annually by the Belledune coal-fired power station.
"No, I think there's a significant shortfall in megawatts," he told reporters. "That shortfall will require hundreds of megawatts of new generation."
Belledune must stop burning coal by 2030, creating a potential gap in the province's electricity generation.
Labbe said ARC is confident its first SMR will be operating at Point Lepreau by then, but it will only generate 100 megawatts of electricity.
The company plans to have eight to 12 SMRs in Belledune eventually, but they probably won't be in place until 2032 to 2036.
And all their output will be for a proposed plant to generate hydrogen power for export — meaning it won't be available for the N.B. Power grid.
The other New Brunswick-based SMR developer, Moltex Energy, says it is "on its way to having an operational reactor by the early 2030s."
Committee already warned
Last year, a former N.B. Power CEO and a vice-president at Saint John Energy both warned the same committee that costs and regulatory processes could prevent SMRs from being ready in time for 2030
Labbe said other SMRs could be set up in New Brunswick to generate more electricity for the grid but there's nothing on the drawing board for that yet, and that means they wouldn't be operating by the time coal is phased out.
And he said because every unit after the first Lepreau unit will be subject to federal, not provincial, environmental assessments, the process will take more time — unless ARC can persuade Ottawa to adopt an accelerated regulatory process.
He said that would not mean cutting corners on safety but perhaps allowing for licensing and permitting to happen for several units simultaneously.
"We believe there's opportunity to make that process efficient, that's all. … but we still want to ensure that we are following all of the expectations," he said. "We just think that we can do it in an efficient sort of way."
Labbe made the comment during the first of four days of meetings of the climate change committee. Two days are being devoted to small modular reactors.
Total of $30M from province
The Higgs government gave ARC $20 million in 2021, adding to the $10 million it received from the previous Liberal government. Labbe told MLAs Tuesday that ARC won't need any more public money from now on.
Tuesday's committee session featured a testy exchange between Energy Minister Mike Holland and anti-nuclear activist Susan O'Donnell of the Coalition for Responsible Energy Development in New Brunswick.
Holland said O'Donnell is proposing an alternative energy plan, renewable power plus large-scale battery storage, that is no more proven or viable than small reactors.
Susan O'Donnell of the Coalition for Responsible Energy Development in New Brunswick got into a testy exchange with Energy Minister Mike Holland. (Jacques Poitras/CBC)
"Storage for renewables is as far out on a trajectory on a cost-effective basis as SMRs," he said.
"So what you're talking about doing is something that is unrealistic for the current day and age."
The CRED-NB proposal is for new battery technology to store electricity from solar and wind power that could then be used on days when it's not windy or sunny.
"The technology is very expensive right now for storage, but the costs are dropping rapidly, at the same time that the costs are dropping rapidly for solar and wind, they're dropping for storage," O'Donnell said.
Holland said O’Donnell is proposing an alternative energy plan that is no more proven or viable than small reactors. (Jacques Poitras/CBC)
Holland argued that each SMR built will be less expensive than the previous unit, driving costs down so that eventually "the nth of a kind" won't be as costly as a first-of-a-kind large battery storage facility.
The minister said both technologies may eventually be viable, so "why wouldn't we go down both tracks simultaneously?"
"Well, minister, you're assuming there will be an nth-of-a-kind [SMR]," O'Donnell said.
"Well, you're assuming there won't," Holland answered.
O'Donnell said experts appearing later at the committee meetings would be better able to answer questions about the cost of a renewable-plus-storage option for electricity generation.
"It's really not up to us, a volunteer group, to come up with a Plan B," she told reporters later. "This is what N.B. Power should be doing. This is what the ministry should be doing."
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