NB Power fiscal report reveals major losses

FREDERICTON - - Strife in a far-off land and soaring prices for natural gas and fuel oil combined with other factors causees major financial losses at NB Power, New Brunswick's publicly owned utility.

The Crown corporation released a dismal financial report Monday for the 2002-03 fiscal year, recording a net loss of $77 million - a far cry from the optimistic $20-million surplus it predicted at the start of the year.

Sharon MacFarlane, vice-president of finance at the utility, said unforeseen and uncontrollable factors threw NB Power's plans dramatically out of whack, including a general strike in Venezuela that affected fuel exports, rising natural gas prices and low water levels that reduced hydro output.

"It was a very disappointing year," she said.

Nevertheless, MacFarlane said the utility is optimistic about the future and is not, at this time, planning a major rate hike.

"It's our objective to keep our rates stable and as low as possible. We hope to spread the impact of this over several years."

The Crown agency does not have to go before the Public Utilities Board for rate increases below three per cent. MacFarlane said the utility expects to stay within the three per cent bracket.

Opposition Liberals in New Brunswick were curious about the timing of the report, coming just three weeks after the provincial election in which the governing Tories managed to squeak back into power with a bare, one-seat majority.

"Happy Canada Day New Brunswickers but, guess what, that surplus we expected is really quite a deficit," said Rick Doucet, Liberal energy critic.

"How long has the government known about this? Why was it kept from us until after the election?"

NB Power, a virtual monopoly in New Brunswick with a net debt of almost $3 billion, is a winter-peaking utility and relies on excess power in the summer to generate export sales.

Those sales subsidize in-province rates by 10 to 15 per cent.

MacFarlane said the main problem last year was the decline in profits on export sales - an estimated $82-million loss.

"The plant we use for export is Coleson Cove which runs heavy fuel oil," she said.

"World markets for heavy fuel oil exploded this year. Our costs went up some 40 per cent for heavy fuel oil and that made a huge difference."

MacFarlane said the utility is planning to decrease reliance on heavy fuel oil by switching Coleson Cove to Orimulsion, an inexpensive fuel from Venezuela.

However, political instability in that South American country cost New Brunswick at least $20 million last year when it had to switch one of its plants off Orimulsion and back to heavy oil due to the prolonged strike.

MacFarlane said the utility also lost money during a planned outage at the Point Lepreau generating station, Atlantic Canada's only nuclear power plant.

The extended maintenance shutdown at the nuclear plant coincided with some of the coldest days of last winter, forcing NB Power to spend millions purchasing electricity from neighbouring jurisdictions.