Under new ‘blueprint,’ NB Power to become sole developer, owner of transmission system in New Brunswick

Under New Brunswick’s newly released energy blueprint, which outlines a 10-year vision and a three-year action plan, NB Power will become the sole developer and owner of the transmission system in the province.

New Brunswick will combine the NB Power group of companies into a single vertically integrated Crown utility, according to “The New Brunswick Energy Blueprint.”

In October 2004, the Electricity Act divided NB Power into five companies, providing a legal and financial structure to support a decentralized organization: NB Power Holding Corporation, NB Power Generation Corporation, NB Power Nuclear Corporation, NB Power Transmission Corporation and NB Power Distribution and Customer Service Corporation. NB Power Generation had two subsidiary companies: NB Power Coleson Cove Corporation and NB Coal, now known as Mine Reclamation.

New Brunswick Electric Finance Corporation and the New Brunswick System Operator were also created as independent organizations, the blueprint added.

Within this organization, NB Power Transmission is the only subsidiary with a commercial capital structure that includes debt and equity. It generates revenue from the open access transmission tariff, which is regulated by the New Brunswick Energy and Utilities Board and provides the foundation for the basic conditions and rates for use of the transmission system, according to the blueprint.

The major elements of the proposed NB Power structure include that the customer service business unit will comprise NB Power Distribution and Customer Service Corporation and NB Power Transmission Corporation.

Specifically, transmission revenue requirement will be separated from the consolidated NB Power and submitted and reviewed by the New Brunswick Energy and Utilities Board as required in order to maintain compliance with FERC rules for exporting electricity to the U.S. Furthermore, the transmission business will be granted a deemed capital structure with a regulated rate of return on transmission equity (ROE). An ROE greater than the current range of 8.5% to 10.5% will be requested for new interconnects in order to maximize the advantage stemming from New Brunswick’s geographic location as an energy hub in the international northeast region, the blueprint added.

Reserving the right for NB Power to provide new interconnection transmission capacity will maximize the benefits to New Brunswick on energy deals being transacted through the province. Furthermore, NB Power will be allowed to seek a higher rate of return on transmission facilities that are built for interconnections, similar to what FERC has allowed in the U.S. to stimulate interstate transmission construction, the blueprint added.

National Grid plc subsidiary National Grid USA and Emera subsidiary Bangor Hydro Electric Company are working on the proposed Northeast Energy Link transmission project that would stretch about 220 miles from northern Maine to northeastern Massachusetts by 2016.

According to a July 11 statement, the new line, which is expected to have a capacity of about 1,100 MW, will provide a connection to the renewable and carbon-neutral energy resources of northern and eastern Maine and eastern Canada. The companies have made a filing with FERC for approval of the funding approach for the proposed project, which is in the preliminary stages of development and is being proposed as an underground, high voltage, direct-current line.

“The blueprint is about lowering costs, creating efficiencies and making the right choices now to protect New Brunswickers today and for the next decade,” Energy Minister Craig Leonard said in an Oct. 19 statement. “These action items will help keep rates for all energy sources competitive and stable while meeting our responsibilities to the environment in a balanced and incremental manner.”

According to the blueprint, New Brunswick’s transmission grid, which loops around the province, allows NB Power to supply almost any point on the transmission system from either direction should an interruption occur. 

Reintegrating NB Power will provide low and stable energy prices, as well as the opportunity to subject all of NB Power’s operations to regulatory oversight and review, which will ensure that NB Power continues to operate in the most efficient and effective way possible.

The blueprint also said that the primary requirement for Canadian jurisdictions is to provide open, non-discriminatory transmission access that meets FERC reciprocity requirements, which can be done through either a vertically integrated model or an independent system operator.

Other significant items in the action plan include a review of the national gas distribution model to achieve lower rates; the establishment of an office of the public energy advocate; an increased commitment to renewable energy sources; and a new focus on energy efficiency and better managing energy demand, according to the Oct. 19 statement.

About Corina Rivera-Linares 3106 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.