New Brunswick To Open Electricity Market

FREDERICTON, New Brunswick -- - The government of New Brunswick unveiled new legislation to open the wholesale electricity market and turn its NB Power utility into a commercial venture.

A bill lays out rules to govern an open wholesale market for the eastern Canadian province's three municipal distribution utilities and 42 largest industrial customers directly connected to the transmission system.

Unlike Ontario and California, where privatization efforts failed dramatically, the New Brunswick government said it was not making any changes in the retail electricity market.

New Brunswick said the legislation will give the province's Public Utilities Board authority to license market participants and to regulate and set rates, tariffs and charges. Existing authority over electricity rate increases remains.

"NB Power's remaining 356,000 customers will notice little change. Their electricity rates will continue to be regulated by the Public Utilities Board under the same rules that now exist," said Natural Resources and Energy Minister Jeannot Volpe.

NB Power, which has lost money for four of the past five years, has about CAN$3 billion (US$1.96 billion) of debt.

"The same NB Power name will appear on monthly bills. The same trucks will be on the road, and when customers require service they will call the same phone numbers," Volpe told a news conference in Fredericton.

When passed, the Electricity Act will give NB Power, which exports electricity to the New England states, a new status and transfer its assets and employees to four new divisions.

NB Power Corp. will become NB Power Holding Corp. with four subsidiaries to handle power generation, nuclear power, transmission and local distribution-customer service.

The transmission unit will be a common carrier providing open access to the power grid to deliver electricity within the province or for export.

The four new subsidiaries will remain provincial units because the province will owns all the shares in NB Power Holding Corp., which will hold all the shares in the subsidiaries.

"Over time, these four NB Power subsidiaries will be appropriately capitalized, pay dividends and special payments in lieu of income and capital taxes to the province, and will no longer be dependent on the province to guarantee their borrowings," Volpe said.

"They will operate on a level playing field with other energy providers. These measures will help to ensure that the risk to taxpayers is minimized," he added.