Late Thursday afternoon, I attended a Christmas reception in a downtown Moncton office.

As I was leaving the reception, a business colleague was arriving. We shook hands, wished each other a Merry Christmas and then he asked me if I had written the editorial in Thursday’s Times & Transcript. I had not. Indeed, I had not even read it so naturally, I was intrigued.

I have since read the editorial “NB Power rates are too high”. There’s some twisted logic in that editorial and it deserves discussion.

Earlier this year (April/May), NB Power argued before the Public Utilities Board that it needed an 11.4% rate increase to meet its profit objectives in fiscal year 2006/07. The Conservative government of the day usurped the authority of the Board and promised voters that rate increases would be capped at 8%. They also promised to rebate the 8% Provincial Sales Tax on home heating fuels to offset the 8% increase in NB Power’s rates.

The public utility warned in response that the smaller increase would cause it to lose some $40 million plus another $30 million resulting from a time delay in the approval process.

NB Power reported in July 2006 that it had generated a $96 million dollar profit in fiscal year 2005/06 (ended March 31, 2006). The newspaper editorial suggested that NB Power’s fiscal 2005/06 profit should nullify the need for rate increases in fiscal 2006/07 but ignored the fact that NP Power was mandated by the previous government to produce profits consistent with private sector expectations.

A $96 million profit on revenues of $1.585 billion (6% before taxes) is not an acceptable profit ratio in the private sector. I’m not defending NB Power’s 2006 rate application but the notion that a prior year profit should mitigate the need for future revenues is a joke.

The second flaw in the editorial’s logic is the suggestion that because NB Power made a small profit in fiscal 2005/06, the new Provincial Government (elected in September 2006) should honour the former Conservative Government’s promise of an 8% tax rebate when to do so would push the Province towards a deficit. The tax rebate was a government initiative, not an NB Power promise.

In its final point of logic, the Times & Transcript argues that NB Power’s rates are excessive and inflationary, that consumers should not be forced to pay “market rates” for electricity because NB Power is a monopoly and that government should ease the burden of NB Power rates.

It’s true; NB Power is a virtual monopoly. It is not true that NB Power’s rates are insensitive to market competition. NB Power’s rates are 15% lower than Nova Scotia Power’s rates (also a monopoly) and nearly 20% lower than the average kilowatt hour rate in New England.

As to the notion that government should ease the burden of power rates, that would seem to contradict previous positions taken by this newspaper insofar as it has advocated the separation of government and utility and judged the operational performance of NB Power against private sector standards. NB Power is a public utility owned by the government. Ownership does not obligate subsidy.

All of which brings us to the point of this column. What is or should NB Power’s role be in our economy and in our daily lives. Clearly, the cost of energy is a factor in business location and retention. NB Power is a public utility charged with delivering electricity to its customers at affordable prices.

The Lord Government mandated NB Power to deliver profits to the Provincial Government. It re-structured its operations in anticipation of a competitive marketplace. It squandered millions of dollars on the Coleson Cove Orimulsion fiasco. It’s planning to test-burn new coke-based fuels as potential substitutes for Orimulsion.

The Times & Transcript says “NB Power rates are too high”.

The newspaper is right if the utility’s rate structure is financing economic development initiatives and/or if it is contributing revenue to the Provincial Treasury. It is wrong if the utility is operating as a cost-recovery, not-for-profit public utility. It is wrong if NB Power’s lower than market rates are encouraging the use of energy-producing fuels that contribute to greenhouse gas emissions and global warming.

It’s time we woke up to the economic, political and social implications of climate change to realize that it presents serious threats to humanity. As temperature and rainfall records tumble and droughts and floods strike many countries, politicians and business leaders are beginning to recognize the implications of climate change.

• 
  The Arctic tundra is melting faster than previously thought.
• Satellite images indicate that major rivers in Africa are carrying significantly less water than before.
• The Gulf Stream, which warms the north Atlantic, is losing its force. Arctic sea ice is predicted to disappear, along with polar bears, by 2040,
• and almost all the world's glaciers appear to be in retreat.
• World Cup skiing in Europe has been cancelled due to lack of snow.
• Here on December 23rd we have no ice in the Bay and no snow on the ground.

Something is wrong.

The new government’s audit review revealed that the cupboard is bare, no big surprise but a reality check, nonetheless. Tax rebates for home-heating costs (as promised by the Lord Government) are off the table. The new government will replace the rebate with a $100 payment to lower income families.

Some will argue that Scrooge is the ghost of Christmas this year. I would argue that anything that helps to reduce the consumption of electricity and anything that directly or indirectly leads to lower emissions of greenhouse gases, even an increase in the price of electricity is a Christmas bonus.

With all due respect to those who might disagree, I wish you a very Merry Christmas and a healthy New Year.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com