Description and Background
The Province of New Brunswick will subject all NB Power operations to regulatory oversight and review, and require NB Power to present an Integrated Resource Plan every three years and a Financial Forecast annually to the New Brunswick Energy and Utilities Board (EUB), or as directed by the EUB.
To improve transparency and accountability, an integrated NB Power will be required to demonstrate its costs and revenues across the entire company when requesting rate changes, including rate increases of three percent or less, which are currently exempt from regulatory scrutiny. In addition, NB Power will be required to assess electrical system requirements through an Integrated Resource Plan (IRP). This process will utilize the principle of least cost procurement, economic and environmental evaluations, determine appropriate risk values for future electricity requirements and the best options to meet them. The results of this IRP process will be shared with NB Power’s customers and stakeholders by submitting the IRP to the New Brunswick Energy and Utilities Board (EUB) within one year of reintegration of the utility, and thereafter at three year intervals or more frequently if directed by the EUB. In addition to submitting the IRP, NB Power will also be required to file a 10 year strategic, financial and capital investment plan with the EUB during its first year as an integrated utility, and will provide annual financial forecasts to be used by the EUB in the rate-setting process.
Two additional items will also bring public and shareholder transparency. Beginning in 2011-12, NB Power is required to issue quarterly financial statements and the utility, as represented by the CEO and the Chairman of the Board, will be required to appear annually before the New Brunswick Legislature’s Crown Corporations Committee.
Key Objectives Served by this Action
Low and Stable Energy Prices – Requiring NB Power to appear before the EUB to defend its costs and projections across the entire organization, as opposed to only the Distribution and Transmission operations as currently required, will ensure the utility’s costs and operations are as efficient and effective as possible while adhering to government policy. In addition, a regularly updated IRP will assist NB Power and the EUB in identifying the most cost effective ways to meet our electricity requirements into the future.
Energy Security – An integrated resource plan will assist NB Power and the EUB to identify future demand trends and asset performance expectations, ensuring that we plan ahead so that there will always be enough electricity supply to meet our demand requirements. The IRP will also identify the optimal mix of domestic supply sources to ensure security of supply, as well as encourage energy efficiency and utility-based demand side management initiatives.
Reliability of the Electrical System – An integrated resource plan allows the utility to take a long view of our electric system to determine future electricity requirements and the best options to meet them. This will allow us to maintain a robust and reliable electric system for all New Brunswickers.
Environmental Responsibility – Requiring NB Power to consider and incorporate principles of environmental stewardship into its long-term planning process via the IRP will ensure that future operations and asset development continue to be carried out in an environmentally sustainable manner.
Effective Regulation – Increased scrutiny by the EUB will ensure NB Power continues to operate in the most efficient and effective manner possible.