Canadian government funds wind power

NB Power Pulp and Paper Subsidies lower electricity rates for six New Brunswick mills using firm power benchmarks and interruptible discounts, while government mandates, utility debt, ratepayer impacts, and competitiveness pressures shape provincial energy policy.

Key Points

Provincial mandates that buy down firm electricity rates for six mills to a national average, despite NB Power's debt.

✅ Mandated buy-down to match national firm electricity rates

✅ Ignores large non-firm interruptible power discounts

✅ Raises equity concerns amid NB Power debt and rate pressure

An effort to fix NB Power's struggling finances that is supposed to involve a look at "all options" will not include a review of the policy that requires the utility to subsidize electricity prices for six New Brunswick pulp and paper mills, according to the Department of Natural Resources and Energy Development.

The program is meant "to enable New Brunswick's pulp and paper companies have access to competitive priced electricity,"  said the department's communications officer Nick Brown in an email Monday 

"Keeping our large industries competitive with other Canadian jurisdictions, amid Nova Scotia rate hike opposition debates elsewhere, is important," he wrote, knocking down the idea the subsidy program might be scrutinized for shortcomings like other NB Power expenses.

Figures released last week show NB Power paid out $9.7 million in rate subsidies to the mills under the program in the fiscal year ended in March 2021, even though the utility was losing $4 million for the year and falling deeper into debt, amid separate concerns about old meter issues affecting households.

Subsidies went to three mills owned by J.D. Irving Ltd. including two in Saint John and one in Lake Utopia, two owned by the AV group in Nackawic and Atholville and the Twin Rivers pulp mill in Edmundston.

The New Brunswick government has made NB Power subsidize pulp and paper mills like Twin Rivers Paper Company since 2012, and is requiring the program to continue despite financial problems at the utility. (CBC)
It was NB Power's second year in a row of financial losses, while it is supposed to pay down $500 million of its $4.9 billion debt load in the next five years to prepare for the refurbishment of the Mactaquac dam, a burden comparable to customers in Newfoundland paying for Muskrat Falls elsewhere under separate policies, under a directive issued by the province

NB Power president Keith Cronkhite said he was "very disappointed" with debt increasing last year instead of  falling and senior vice president and chief financial officer Darren Murphy said everything would be under the microscope this year to turn the utility's finances around.  

"We need to do better," said Murphy on Thursday

"We need to step back and make sure we're considering all options, including approaches like Newfoundland's ratepayer shield agreement on megaproject overruns, to achieve that objective because the objective is quickly closing in on us."

However, reviewing the subsidy program for the six pulp and paper mills is apparently off limits.

The subsidy program requires NB Power to buy down the cost of "firm" electricity bought by pulp and paper mills to a national average that is calculated by the Department of Natural Resources and Energy Development.

Last year the province declared the price mills in New Brunswick pay to be an average of  7.536 cents per kilowatt hour (kwh).  It is higher than rates in five other provinces that have mills, which the province points to as justification for the subsidies, even as Nova Scotia's 14% rate hike approval highlights broader upward pressure, although the true significance of that difference is not entirely clear.

In British Columbia, the large forest products company Paper Excellence operates five pulp and paper mills which are charged 17.2 per cent less for firm electricity than the six mills in New Brunswick.

The Paper Excellence Paper Mill in Port Alberni, B.C. pays lower electricity prices than mills in New Brunswick, a benefit largely offset by higher property taxes. It's a factor New Brunswick does not count in calculating subsidies NB Power must pay. (Paper Excellence)
However, local property taxes on the five BC mills are a combined $7.8 million higher than the six New Brunswick plants, negating much of that difference.

The province's subsidy formula does not account for differences like that or for the fact New Brunswick mills buy a high percentage of their electricity at cheap non-firm prices.

Not counting the subsidies, NB Power already sells high volumes of what it calls interruptible and surplus power to industry at deep discounts on the understanding it can be cut off and redeployed elsewhere on short notice when needed.

Actual interruptions in service are rare.  Last year there were none, but NB Power sold 837 million kilowatt hours of the discounted power to industry at an average price of 4.9 cents per kwh.   

NB Power does not disclose how much of the $22 million or more in savings went to the six mills, but the price was 35 per cent below NB Power's posted rate for the plants and rivaled firm prices big mills receive anywhere in Canada, including Quebec.

Asked why the subsidy program ignores large amounts of discounted interruptible power used by New Brunswick mills in making comparisons between provinces, Brown said regulations governing the program require a comparison of firm prices only.

"The New Brunswick average rate is based on NB Power's published large industrial rate for firm energy, as required by the Electricity from Renewable Resources regulation," he wrote.

The subsidy program itself was imposed on NB Power by the province in 2012 to aid companies suffering after years of poor markets for forest products following the 2008 financial collapse and recession.  

Providing subsidies has cost NB Power $100 million so far and has continued even as markets for pulp products improved significantly and NB Power's own finances worsened.

Report warned against subsidies
NB Power has never directly criticized the program, but in a matter currently in front the of the New Brunswick Energy and Utilities Board looking at how NB Power might restructure its rates, including proposals such as seasonal rates that could prompt backlash, an independent consultant hired by the utility suggested rate subsidies to large export oriented manufacturing facilities, like pulp and paper mills, is generally a poor idea.

"We do not recommend offering subsidies to exporters," says the report by Christensen Associates Energy Consulting of Madison, Wis.

"There are two serious economic problems with subsidizing exports. The first is that the benefits may be less than the costs. The second problem is that subsidies tend to last forever, even if the circumstances that initially justified the subsidies have disappeared."

The Christensen report did not directly assess the merits of the current subsidy for pulp and paper mills but it addressed the issue because it said in the design of new rates "one NB Power business customer has raised the possibility that their electricity-intensive business ought to be granted subsidies because of the potential to generate extra benefits for the Province through increases in their exports"

That, said Christensen, rarely benefits the public.

"The direct costs of the subsidies are the subsidies themselves, a part of which ends up in the pockets of out-of-province consumers of the exported goods," said the report.  

"But there are also indirect costs due to the fact that the subsidies are financed through higher electricity prices, which means that other electricity customers have less money to spend on services provided by local businesses, thus putting a drag on the local economy."

The province does not agree.

Asked whether it has any studies or cost-benefit reviews that show the subsidy program is a net benefit to New Brunswick, the department cited none but maintained it is an important initiative, even as elsewhere governments have offered electricity bill credit relief to ratepayers.

"The program was designed to give large industrial businesses the ability to compete on a level energy field," wrote Brown.
 

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E.ON Digital Transformer Stations modernize distribution grids with smart grid monitoring, voltage control, and remote switching, enabling bidirectional power flow, renewables integration, and rapid fault isolation from centralized grid control centres.

Key Points

Remotely monitored grid nodes enhancing smart grid stability and speedier fault response.

✅ Real-time voltage and current data along feeders and laterals

✅ Remote switching cuts outage duration and truck rolls

✅ Supports renewables and bidirectional power flows

E.ON plans to commission 2500 digital transformer stations in the service areas of its four German distribution grid operators - Avacon, Bayernwerk, E.DIS and Hansewerk - by the end of 2019. Starting this year, E.ON will solely install digital transformer stations in Germany, aligning with 2019 grid edge trends seen across the sector. This way, the digital grid is quite naturally being integrated into E.ON's distribution grids.

With these transformer stations as the centrepiece of the smart grid, it is possible to monitor and control using synchrophasors in the power grid from the grid control centre. This helps to maintain a more balanced utilisation of the grid and, with increasing complexity, ensures continued security of supply.

Until now, the current and voltage parameters required for safe grid operation could usually only be determined at the beginning of a power line, where there is usually a grid substation in place. Controlling current flow and voltage in the downstream system was physically impossible.

In the future, grids will have to function in both directions: they will bring electricity to the customer while at the same time collecting and transmitting more and more green electricity via HVDC technology where appropriate. This requires physical data to be made available along the entire route. To ensure security of supply, voltage fluctuations must be kept within narrowly defined limits and the current flow must not exceed the specified value, while reducing line losses with superconducting cables remains an important consideration. To manage this challenge, it is necessary to install digital technology.

The possibility of remotely controlling grids also reduces downtimes in the event of faults and supports a smarter electricity infrastructure approach. With the new technology, our grid operators can quickly and easily access the stations of the affected line. The grid control centres can thus limit and eliminate faults on individual line sections within a very short space of time.

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Ontario Global Adjustment Supreme Court Appeal spotlights a constitutional challenge to Ontario's electricity charge, pitting National Steel Car against the IESO over regulatory charge vs tax, procurement policy, and renewable energy feed-in tariff contracts.

Key Points

An SCC leave bid on whether Ontario's global adjustment is a valid regulatory charge or an unconstitutional tax.

✅ Appeals Court revived case for full record review

✅ Dispute centers on regulatory charge vs tax classification

✅ FIT renewables contracts and procurement policies at issue

The Ontario government wants the Supreme Court of Canada to weigh in on a constitutional challenge being brought against a large provincial electricity charge, a case the province claims raises issues of national importance.

Ontario’s attorney general and its Independent Electricity System Operator applied for permission to appeal to the Supreme Court in January, according to the court’s website.

The province is trying to appeal a Court of Appeal decision reinstating the challenge from November that said a legal challenge by Hamilton, Ont.-based National Steel Car Ltd. should be sent back to a lower-court for a full hearing.

Court reinstates constitutional challenge to Ontario's hefty ‘global adjustment’ electricity charge
National Steel Car appealing decision in legal challenge of Ontario electricity fee it calls an unconstitutional tax
Doug Ford’s cancellation of green energy deals costs Ontario taxpayers $231 million
National Steel Car launched its legal challenge in 2017, with the maker of steel rail cars claiming the province’s global adjustment electricity charge was a tax intended to fund certain post-financial-crisis policy goals. Since it is allegedly a tax, and one not imposed by the provincial legislature, the company’s argument is the global adjustment is unconstitutional, and also in breach of a provincial law requiring a referendum for new taxes.

The global adjustment mostly bridges the gap between the province’s hourly electricity price and the price guaranteed under contracts and regulated rates with power generators. It also helps cover the cost of building new electricity infrastructure and providing conservation programs, but the fee now makes up most of the commodity portion of a household power bill in the province.

Ontario argued the global adjustment is a valid regulatory charge, and moved to have National Steel Car’s challenge thrown out. An Ontario Superior Court judge agreed, and dismissed the challenge in 2018, saying it was “plain, obvious and beyond doubt” it could not succeed. However, an appeals court judge disagreed, writing in a decision last November that the “merits should not have been determined on a pleadings motion and without the development of a full record.”

In filings made to the Supreme Court, both the IESO and Ontario’s Ministry of the Attorney General argued their proposed appeals raise “issues of national and public importance,” such as whether incorporating environmental and social policy goals in procurement could turn attempts by a public body to recover costs into an unconstitutional tax.

Most applications for leave to appeal to the Supreme Court are dismissed, but the Ontario government claims the court’s guidance is required in this case, as it could lead to questions being raised about other fees or charges, such as money raised from fishing licences.

“A failure to dispose of this claim at the pleadings stage may well result in such uncertainty that public authorities across Canada decline to incorporate the kind of environmental and social policy goals objected to in this case into the decisions they make about how to spend funds raised from regulatory charges,” the filing from the attorney general states. “Alternatively, it may induce governments not to engage in cost recovery in connection with publicly supplied goods and services, which can otherwise be sound public policy.”

The government has so far had to pay National Steel Car $250,000 in legal costs “to avoid responding to the credible claim that the Global Adjustment is an unconstitutional tax,” said David Trafford of Morse Shannon LLP, one of National Steel Car’s lawyers.

“The application for leave to appeal is the next step in this effort to avoid having to respond to the case on the merits,” Trafford added in an email.

The application for leave to appeal is the next step in this effort to avoid having to respond to the case on the merits

David Trafford of Morse Shannon, one of National Steel Car’s lawyers
 
National Steel Car has particularly taken issue with the part of the global adjustment that funded contracts for renewable energy under a “feed-in tariff” program, or FIT, which the company called “the main culprit behind the dramatic price increases for electricity.”

The FIT program has been ended, but contracts awarded under it remain in place and form part of the global adjustment. Ontario’s auditor general estimated in 2015 that electricity consumers would pay $9.2 billion more for renewable energy under the government’s guaranteed-price program, a figure that later featured in a dispute between the auditor and the electricity regulator that drew political attention.

National Steel Car said its global adjustment costs grew from $207,260 in 2008 to almost $3.4 million in 2016, reflecting how high electricity rates have pressured manufacturers, to almost $3.4 million in 2016. For 2018, there was approximately $11.2 billion in global adjustment collected, according to the IESO’s reporting.

A spokesperson for the IESO said it “is not in a position to comment” because the case is still before the courts.

Electricity prices have been an ongoing problem for both Ontario consumers and politicians, which the previous Liberal government tried to address in 2017 by, among other things, refinancing global-adjustment costs through the Fair Hydro Plan and other measures.

Since National Steel Car filed its lawsuits, though, the Liberals lost power in the province and were succeeded in 2018 by Premier Doug Ford and the Progressive Conservatives, who made changes to the previous government’s power policies, including legislation to lower electricity rates introduced early in their mandate.

The province has also pursued interprovincial power arrangements, including building on an electricity deal with Quebec as part of its broader energy strategy.

“The present government of Ontario does not agree with the former government’s electricity procurement program, which ceased awarding new contracts in 2016,” Ontario’s attorney general said in a filing. “However, Ontario submits that (the lower-court judge) was correct in holding that it does not give rise to a claim susceptible to being remedied by the courts.”

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Taltson Hydro Electric Heating directs surplus hydro power in the South Slave to space heat via discounted rates, displacing diesel and cutting greenhouse gas emissions, with rebates, separate metering, and backup systems shaping adoption.

Key Points

An initiative using Taltson's surplus hydro to heat buildings, discount rates replace diesel and cut emissions.

✅ 6.3 cents/kWh heating rate needs separate metering, backup heat

✅ 4-6 MW surplus hydro; outages require diesel; rebates available

✅ Program may be curtailed if new mines or mills demand power

A Northwest Territories green energy advocate says there's an obvious way to expand demand for electricity in the territory's South Slave region without relying on new mining developments — direct it toward heating.

One of the reasons the N.W.T. has always had some of the highest electricity rates in Canada is that a small number of people have to shoulder the huge costs of hydro facilities and power plants.

But some observers point out that residents consume as much energy for heat as they do for conventional uses of electricity, such as lighting and powering appliances. Right now almost all of that heat is generated by expensive oil imported from the United States.

The Northwest Territories Power Corporation says the 18-megawatt Taltson hydro system that serves the South Slave typically has four to six megawatts of excess generating capacity, even as record demand in Yukon is reported. It says using some of that to generate heat is a government priority.

But renewable energy advocate and former N.W.T. MP Dennis Bevington, who lives in the South Slave and heats his home using electricity, says the government is not making it easy for people to tap into that surplus to heat their homes and businesses, a debate that some say would benefit from independent planning at the national level.

Discount rate for heating, but there are catches
The power corporation offers hydro electricity from Taltson to use for heating at a much lower price than it charges for electricity generally. The discounted rate is not available to residential customers.

According to the corporation, consumers pay only 6.3 cents per kilowatt hour compared to the regular rate of just under 24 cents, while Manitoba Hydro financial pressures highlight the risks of expanding demand without new generation.

But to distinguish between the two, users are required to cover the cost of installing a separate power meter. Bevington, who developed the N.W.T.'s first energy strategy, says that is an unnecessary expense.

Taltson expansion key to reducing N.W.T.'s greenhouse gas emissions, says gov't
"The billing is how you control that," he said. "You establish an average electrical use in the winter months. That could be the base rate. Then, if you use power in the winter months above that, you get the discount."

Users are also required to have a back-up heating system. Taltson hydro power offers heating on the understanding that when the hydro system is down — such as during power outages or annual summer maintenance of the hydro system — electricity is not available for heating.
The president and CEO of the power corporation says there's a good reason for that. "The diesels are more expensive to run and they're actually greenhouse gas emitting," said Noel Voykin. "The whole idea of this [electric heat] program is to provide clean energy that is not otherwise being used."

According to the corporation, there have been huge savings for the few who have tapped into the hydro system to heat their buildings, and across Canada utilities are exploring novel generation such as NB Power's Belledune seawater project to diversify supply.

It's being used to heat Aurora College's Breynat Hall, and Joseph B. Tyrrell Elementary School and the transportation department garage in Fort Smith, N.W.T. Electricity is also used to heat the Jackfish power plant in the North Slave region.

The corporation says that during a four-year period, this saved more than 600,000 litres of diesel fuel and reduced greenhouse gas emissions by about 1,700 tonnes.

Bevington says the most obvious place to expand the use of electrical heat is to government housing.

"We have a hundred public housing units in Fort Smith," he said. "The government is putting diesel into those units [for heating] and they could be putting in their own electricity."

Heating a tiny part of energy market
The corporation says it sells only about 2.5 megawatts of electricity for heating each year, which is less than four per cent of the power it sells in the region. It says with some upgrades, another two megawatts of electricity could be made available for electrical heat.

Bevington says the corporation could do more to market electricity for heating. Voykin said that's the government's job. There are three programs that offer rebates to residents and businesses converting to electric heating.

If you build it, will they come? N.W.T. gov't hopes hydro expansion will attract investment
There are better options than billion dollar Taltson expansion, say energy leaders
There may be a reason why the government and the corporation are not more aggressively promoting using surplus electricity in the Taltson system for heating, as large hydro ambitions have reopened old wounds in places like Quebec and Newfoundland and Labrador during recent debates.

It is anticipating that new industrial customers may require that excess capacity in the coming years, and experiences elsewhere show that accommodating new energy-intensive customers can be challenging for utilities. Voykin said those potential new customers include a proposed mine at Pine Point and a pellet mill in Enterprise, N.W.T., even as biomass use faces environmental pushback in some regions.

The corporation says any surplus power in the system will be sold at standard rates to any new industrial customers instead of at discount rates for heating. If that requires cutting back on the heating program, it will be cut back.

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Ontario Global Adjustment Deferral offers COVID-19 electricity bill relief to industrial and commercial consumers not on the RPP, aligning GA to March levels for Class A and Class B manufacturers to improve cash flow.

Key Points

A temporary GA deferral easing electricity costs for Ontario industrial and commercial users not on the RPP.

✅ Sets Class B GA at $115/MWh; Class A gets equal percentage cut.

✅ Applies April-June 2020; automatic bill adjustments and credits.

✅ Deferred charges repaid over 12 months starting January 2021.

Manufacturers welcome the Government of Ontario's decision to defer a portion of Global Adjustment (GA) charges as part of support for industrial and commercial electricity consumers that do not participate in the Regulated Price Plan.

"Manufacturers are pleased the government listened to Canadian Manufacturers & Exporters (CME) member recommendations and is taking action to reduce Ontario electricity bills immediately," said Dennis Darby, President & CEO of CME.

"The majority of manufacturers have identified cash flow as their top concern during the crisis, "added Darby. "The GA system would have caused a nearly $2 billion cost surge to Ontario manufacturers this year. This new initiative by the government is on top of the billions in support already provided to help manufacturers weather this unprecedented storm, while other provinces accelerate British Columbia's clean energy shift to drive long-term competitiveness. All these measures are a great start in helping businesses of all sizes stay afloat during the crisis and, keeping Ontarians employed."

"We call on the Ontario government to continue to consider the impact of electricity costs on the manufacturing sector, even after the COVID-19 crisis is resolved," stated Darby. "High prices are putting Ontario manufacturers at a significant competitive disadvantage and, discourages investments." A recent report from London Economics International (LEI) found that when compared to jurisdictions with similar manufacturing industries, Ontario's electricity prices can be up to 75% more expensive, underscoring the importance of planning for Toronto's growing electricity needs to maintain affordability.

To provide companies with temporary immediate relief on their electricity bills, the Ontario government is deferring a portion of Global Adjustment (GA) charges for industrial and commercial electricity consumers that do not participate in the Regulated Price Plan (RPP), starting from April 2020, as some regions saw reduced electricity demand from widespread remote work during the pandemic. The GA rate for smaller industrial and commercial consumers (i.e., Class B) has been set at $115 per megawatt-hour, which is roughly in line with the March 2020 value. Large industrial and commercial consumers (i.e., Class A) will receive the same percentage reduction in GA charges as Class B consumers.

The Ontario government intends to keep this relief in place through the end of June 2020, alongside investments like smart grid technology in Sault Ste. Marie to support reliability, subject to necessary extensions and approvals to implement this initiative.

Industrial and commercial electricity consumers will automatically see this relief reflected on their bills. Consumers who have already received their April bill should see an adjustment on a future bill.

Related initiatives include developing cyber standards for electricity sector IoT devices to strengthen system security.

The government intends to bring forward subsequent amendments that would, if approved, recover the deferred GA charges (excluding interest) from industrial and commercial electricity consumers, as Toronto prepares for a surge in electricity demand amid continued growth, over a 12-month period beginning in January 2021.

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Europe EV Sales Slowdown signals waning incentives, economic uncertainty, and supply chain constraints, threatening climate targets and net-zero emissions goals while highlighting the need for charging infrastructure, affordable batteries, and policy support across key markets.

Key Points

Europe's early-2024 EV registrations fell as incentives waned and supply gaps persisted, putting climate targets at risk.

✅ Fewer subsidies and tax breaks cut EV affordability

✅ Inflation and recession fears dampen car purchases

✅ Supply-chain and lithium constraints limit availability

A recent slowdown in Europe's electric vehicle (EV) sales raises serious concerns about the region's ability to achieve its ambitious climate targets.  After years of steady growth, new EV registrations declined in key markets like Norway, Germany, and the U.K. in early 2024. Experts are warning that this slump jeopardizes the transition away from fossil fuels and could undermine Europe's commitment to a net-zero emissions future.

Factors Behind the Decline

Several factors are contributing to the slowdown in EV sales:

• Reduced Incentives: Many European countries have scaled back generous subsidies and tax breaks for EV purchases. While these incentives played a crucial role in driving early adoption, their reduction has made EVs less financially attractive for some consumers, with many U.K. buyers citing higher prices even after discounts.
• End of ICE Ban Support: Public support for phasing out gasoline and diesel-powered cars by 2035, a key European Union policy, appears to be waning in some areas. Without robust support for this measure, consumers may be less inclined to embrace the transition to electric vehicles.
• Economic Uncertainty: Rising inflation and fears of a recession in Europe have made consumers hesitant to invest in big-ticket purchases like new cars, regardless of fuel type. This economic uncertainty is impacting both electric and conventional vehicle sales.
• Supply Chain Constraints: Ongoing supply chain disruptions and shortages of raw materials like lithium continue to impact the availability of affordable electric vehicles. This means potential buyers face long wait times or inflated prices even when they're ready to embrace EVs.

Consequences for Europe's Green Agenda

The decline in EV sales threatens Europe's plans to reduce carbon emissions and become the first climate-neutral continent by 2050, aligning with a broader push for electricity to address the climate dilemma across Europe. The transportation sector is a major contributor to greenhouse gas emissions, and the rapid electrification of vehicles is a pillar of Europe's decarbonization strategy.

The current slump highlights the need for continued policy support for the EV market, as EVs still trail gas models in many markets today, to ensure long-term growth and affordability for consumers. Without action, experts fear that Europe may find itself locked into a dependence on fossil fuels for decades to come, making its climate targets unreachable.

A Global Concern

Europe is a leader in electric vehicle policies and technology, during a period when global EV sales climbed markedly. The recent slowdown, however, sends a worrying signal to other regions around the world aiming to accelerate their transition to electric vehicles, including the U.S. market's Q1 dip as a cautionary example. It underscores the importance of sustained government support, investment in charging infrastructure and overcoming supply chain challenges to secure a future of widespread electric vehicle use, with many forecasts suggesting mass adoption within a decade if support continues.

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