Premier Lord promises to build a coal-fired, electricity generating plant if the federal government doesn’t cough up $500 million to help him refurbish the Point Lepreau nuclear generating plant.

Bruce Power submits a conditional offer to refurbish and operate Point Lepreau. Presumably, the condition is a $500 million cash injection or some form of investment guarantee that would equate to $500 million.

Last week in Paris, energy ministers and officials from 74 countries, including the United States were told by experts that only by building more nuclear generating stations will the world be able to meet its energy needs.

The Kyoto Protocol commits governments to reduce greenhouse gas emissions. Power plants fueled by coal and oil are major sources of carbon dioxide and other greenhouse gases that cause global warming.

In the last few weeks, Irving Oil negotiated a long term tax deal with the City of Saint John that will limit its property tax payments to $500,000 a year for the next twenty five years if they go ahead and build a liquid natural gas (LNG) gasification terminal in the city. Some people, including the Deputy Mayor have second thoughts. Nobody stops to smell the roses. No plant, no taxes. $500,000 a year plus the economic activity generated by a billion dollar investment is a lot better than nothing.

Earlier this week, residents of Perry, Maine, with a 65 vote majority decided not to permit Oklahoma-based Quoddy Bay LLC and the Passamaquoddy Indian band to build a $400 million LNG terminal near their town. Concerns for the environment, navigational hazards and lifestyle infringements were given as the reasons for rejection. Logic would suggest the Perry, Maine decision will improve the economics of Irving’s LNG terminal.

On March 22nd, Irving Oil announced that it has reached an agreement to purchase the last 75% interest in the Bayside Power co-generation plant, that it did not already own, from American giant Duke Energy, controlling partners in the Maritimes & Northeast Pipeline and parent of Westcoast Energy of Vancouver.

The Bayside generating plant is one of four NB Power generating plants at Courtenay Bay that has been converted from a 100 MW oil-fired electricity generating unit to a 260 MW natural gas-fired electricity generating unit.

A literal translation of the Irving announcement would suggest that NB Power has indirectly sold one of its electricity generating plants, to Irving without the scrutiny of a Public Utilities Board (PUB) Hearing. It also represents a major investment in electricity generation by Irving.

The Bayside plant, together with the co-generation plant at the Irving oil refinery and Irving plans to build a power plant that will use natural gas from its LNG terminal will make it a major player in the electricity industry.

It’s clear the Irvings have an energy development plan. It’s equally clear that the provincial government and NB Power do not. On March 1st, NB Power announced a 3% rate increase to take effect March 31st and a 4.5% fuel surcharge to cover the cost of its Orimulsion fuel replacement.

Combined with a cost of service realignment geared to eliminate cross subsidization from one customer class to another, residential customers will face a combined rate increase of nearly 10% if the PUB approves its application. Oh and by the way, that rate increase will attract the HST so the real increase will be more like 11%.

There is a side note to this rate increase. Apparently, NB Power’s application to the PUB will ask for retroactivity in respect to collection of its fuel surtax. Now I would have thought that a rate-increase application would specify a start date. For example, if the application asked for an increase effective April 1, 2005, it would be effective April 1, 2005 subject to approval by the regulator.

Collection would begin in April but if the regulator subsequently rejected or amended the application, customers would receive a cash rebate or credit, plus interest for any over-collection. That’s a lot easier than trying to collect for six to nine months of under-collection.

There’s another issue. A fuel-surcharge by nature is a variable charge based on the actual cost of fuel. Airlines use it from time to time to offset sudden increases beyond their control. NB Power would use it to offset the additional cost it will incur in replacing Orimulsion. A fuel surcharge should be transparent and not permanent. An unexpected and significant spike in oil costs would justify a fuel surcharge. A drop in oil prices should allow the utility to lower its electricity rates.

New Brunswick is energy deficient, yet hugely dependent on energy for its industrial base. Our climate and lifestyle demand energy but we don’t have the natural resources to generate significant amounts of that energy. Sure, we have wind and we have tides but so far neither has proven to be economically feasible for large scale power production.

NB Power has worked hard to ensure that New Brunswick is independent of a single source of fuel to generate its electricity. Coal, natural gas, oil, orimulsion, diesel fuel, uranium, water, even wood chips contribute to the generation of electricity in this province but we don’t appear to have a go-forward plan that will make our electricity more affordable.

The Utility has applied to the PUB to build a new transmission line between Lepreau and the U.S. border but it does nothing to engage the lowest cost producer of electricity in North America, Hydro Quebec.

Protection of our planet from green house gas emissions is more important than an idle threat to build a coal-fired generating plant in New Brunswick.

At the end of the day, some combination of nuclear power, gas-fired power and hydro power from Quebec may be the way of our future.