'Screw-ups' forced sale of NB Power to Quebec

The Windsor Star, Fri Oct 30 2009, Page: C1 / FRONT
Byline: John Morrissy, Source: The Financial Post

NB Power is a "crippled utility" that has been "shooting itself in the
foot for years and now needs to be rescued," says Tom Adams,
an energy analyst who has been covering the provincial utility's
affairs since 1995.

"NB Power has come to the end of its rope," Adams said in an
interview. "They have spent themselves into the ground."

Adams cites a long-running series of "huge business screw-ups"
that have plagued the provincial utility and contributed to the
provincial government agreeing Thursday to a $4.75-billion deal
under which Hydro-Quebec will take over NB Power's distribution,
transmission and generation assets and its $4.75 billion in debt.

Adams -- who has testified on NB Power before the Crown
Corporation Committee of the provincial legislature and the
province's Energy and Utilities Board, as well as writing numerous
analyses for newspapers and the Atlantic Institute for Market
Studies -- said while "some of the utility's assets are sound . . .
many other aspects of NB Power's systems are a mess."

Some, such as the company's obsolete Grand Lake generating
station, are highly polluting, while others, such as the Point Lepreau
nuclear generating station, are highly inefficient, with operating
costs per unit substantially higher than the Darlington station in
Ontario, which itself performs in the lower quartile of reactors in
North America, Adams wrote in a blog posting Wednesday for the
energy consultancy he now runs.

The result is that "those assets are going to need renewal in the very
near term ... There are going to be major expenses to get some of
these things into service," Adams said.

To some extent, Adams said, NB Power was restricted by the political
culture in New Brunswick and can't he held entirely to blame for the
utility's tattered state of affairs.

Nevertheless, he added, there is "a train of identifiable and individual
decisions" made by the utility's managers that led to the current state
of affairs.

One was the refurbishment of the Point Lepreau generating station,
whose budget has ballooned from an original estimate of $865 million
to $1.8 billion and whose timeline has doubled from 18 months to 36
months.

Costs were driven up, in part, when low-pressure turbines were being
overhauled by a company out of the U.K.

"These are massive pieces of delicate rotating equipment that were
shipped across the Atlantic. They were sitting in the harbour in Saint
John ready to deliver to the Lepreau site. They were sitting on barges
and they were shifting them around. And oh my gosh, darn it -- the
barge flipped over, and don't they have their turbines sitting on the
bottom of the bay."