A week ago, the Provincial Government announced that it was replacing the Public Utilities Board (PUB) with a new Energy and Utilities Board.

In the process they will do away with all Board members including the Chairman who had been appointed for life.

This week, the PUB Chairman announced, after four weeks of hearings and months of deliberation that it (the Board) was recommending an average power rate increase of more than 9%.

NB Power had originally asked for an 11.6% increase. Notwithstanding the PUB recommendation or NB Power’s request, the Provincial Government had already trumped the PUB with the promise of an 8% cap on price increases. The 8% increase will be offset by removal of the 8% provincial sales tax.

Now here’s the catch.

The PUB recommends a 13% increase for residential customers and a 15.3% increase for large industrial users but increases for other user categories (small business, schools, hospitals and municipal utilities) will be less than 6%.

Based on the PUB recommendations, residents of Saint John will only see a 5.7% rate increase but receive an 8% bonus from removal of the sales tax. The net after tax cost of electricity for Saint Johners will actually be 1.6% lower than today while in Moncton the after tax cost will increase by nearly half a percent.

Cost of the price cap for NB Power will be an estimated $36 million. The cost to Government for the tax removal will be an estimated $112 million. The combined costs will be financed by increases in debt and down the road we will pay in the form of higher taxes or higher power rates.

Rates increased by 2.5% on April 1, 2004, another 3% on March 31, 2005 and another 3% on July 7, 2005. As mentioned above, the utility was looking for another 11.6% this year. That’s a compound increase of 21% in just two years.

Based on inflation, a reasonable year over year increase in expenses might be in the 2% to 3% range. To be fair, the cost of fuel and the cost of replacement power have risen significantly in the last couple of years as a result of oil price increases but not at the rate of 400%.

That’s what it would take to use up a 21% rate increase.

One can only assume that the need for a 21% rate increase comes from the Government’s misadventure with Orimulsion, the refurbishing of Coleson Cove, the planned refurbishment of the Point Lepreau nuclear plant and its quest for profitability.

Saint John Energy, the municipal utility that distributes electricity in the port city already offers its customers a retail rate that is reported to be 10% lower than NB Power’s retail rates in Moncton. With the latest round of price increases the spread between Moncton and Saint John will swell to 12 percent.

Increased fuel costs would be passed on to Saint John Energy so that doesn’t justify the price difference between Moncton and Saint John.


The difference is explained in part by the fact that Saint John Energy’s distribution costs are lower than NB Power’s because its customer base is more concentrated than NB Power’s but there must be other factors at play to create that magnitude of difference.

The cost difference between NB Power delivered electricity and Saint John Energy’s delivered electricity (in both cases generated by NB Power) must be hidden in the administrative inefficiencies created by the re-structuring of NB Power from a single entity into a holding company, four operating companies and an outside Electricity Finance corporation. The other possibility is that NB Power is selling electricity to Saint John Energy below cost.

Whatever the reason for the price difference, it seems to me the time has come for Greater Moncton to get into the electricity distribution business. We should be building our case for a municipally owned distribution utility that could lower the price of electricity consumed in our community.

Naysayers will argue that New Brunswick’s Electricity Act prevents the creation of a new electric utility but a government that can replace its “Public Utility Board” and retire its Chairman is surely able to change its Electricity Act.

Others will argue that removal of Greater Moncton’s customer base would cripple the operation of NB Power and burden the rest of its customers with higher costs to offset the loss of business.

That doesn’t wash because the restructuring of NB Power already separates electricity generation from distribution. NB Power would continue to generate electricity for Greater Moncton but it would sell to a single customer, the “Greater Moncton Energy Corporation”.

NB Power would save the cost of distribution in Greater Moncton and the cost of customer service and business administration. A lean, customer-focused “Greater Moncton Energy Corporation” would purchase electricity wholesale from NB Power and distribute at a retail price that would be competitive with Saint John Energy’s prices.

Logic would also suggest that a brand new distribution company could start without the baggage of an older company like Saint John Energy and thus be more efficient. Greater efficiency could lead to lower prices.

The only serious issue standing in the way of a “Greater Moncton Energy Corporation” would be financing.

Could the money be raised to establish the corporation and purchase NB Power’s distribution infrastructure?

In my view, the time has come to give it serious consideration. We have no control over the operation of NB Power.

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

“Atlantica” (an international trade corridor that would stretch from Buffalo, New York across the northeastern United States to Atlantic Canada) spinners were out in full force this week after conferencing in Saint John.

According to one of them “we are about to become a major doorway for trade between Asia and the North American heartland”.

He claims that west coast ports are “choked with goods from China, India and the Asian Tigers” and the Panama Canal is no longer capable of handling the newest in super-ship cargos. They could be diverted through the Suez Canal to the deep water ports of Atlantic Canada for distribution to the northeastern and mid-western United States.

Others see the Atlantica concept as an opportunity to integrate the Atlantic Canadian economy with the U.S. northeast and ultimately to integrate all of Canada with the United States “inside one big continental economic and security zone”.

Opponents of the Atlantica concept claim that a more open border would lead to a loss of Canadian sovereignty, lower wages for our workers and the disappearance of treasured social programs. They also argue that a boost in energy production would increase greenhouse gas emissions and increase “our children’s radioactive waste legacy”.

On this matter, the New York Times reported last week that American satellites have tracked vast clouds of sulphur dioxide pollution and desert dust from China as it passed over the U.S. According to the Times, every ten days or so, a new coal-fired power plant opens in China and begins to spit out sulphur dioxide.

It’s estimated that sulphur dioxide causes up to 400,000 premature deaths in China each year. It also causes acidic rain harmful to plants and animals. According to U.S. scientists, Chinese pollution already accounts for 10 to 15% of allowable federal particle levels over the west coast states.

The promoters of Atlantica lean on the premise that future economic development will be based on the continued globalization of trade and the realization of economies of scale where bigger is considered better in terms of production and distribution. International trade currently represents about a third of global production and continues to grow.

In the last thirty years, it’s estimated that global shipping volumes have tripled. In concert with shipping volumes, air-polluting road transport has grown exponentially.

The question is will the world be able to live with continued growth in global production, global trading and the costs of global transportation. It’s unlikely given that global energy consumption is expected to increase by 65% by the year 2025 (most notably in China and India) and the price of oil could triple as reserves are depleted.

The combination of major increases in the cost of energy (as a component of transport) and concerns about global warming (linked to CO² emissions) could force the world to take a new look at the flow of merchandise in the next decade or two.

• What if a survivalist world demanded a reduction in greenhouse gas emissions that reduced the availability of affordable transportation?

• What if the combination of higher energy prices and more expensive transportation forced the world to switch from globalized production to a mix of intellectual globalization and localized micro production, where proximity to markets becomes more important than the production economies of scale and size?

• What if the future favoured a circumstance where product research and development was done in one country and mini-production units were set up in consumer countries to serve local markets?

Michelin Tire is already doing this in test form.

The Globe & Mail comes together in Toronto but is printed in Halifax, Montreal, Winnipeg, Calgary and Vancouver. McCain Foods has operated for years with growing operations and processing plants in more than fifty countries around the world.

New Brunswick lost its way economically nearly a hundred years ago when a combination of cheap transportation and large scale production economies (in Ontario and Quebec) undercut the prices of local manufactures and forced them out of business.

Wouldn’t it be neat if the cycle reversed itself and small scale production should become the poster boy for global production?

It may be that rising transportation costs and tighter border security could actually work in our economic favour. Wouldn’t it be better if New Brunswick and/or the Atlantic Provinces could become a world leader in short run production by developing technologies that would make mini-production units more competitive than low wage, centralized global production units in China and India?

Our friends at Atlantica would have us believe that great wealth awaits us if we can remove the borders between Atlantic Canada and New England, prepare the Halifax harbour for an Asian trade missile and build a new four lane highway to Bangor. All this, as their story goes, will permit the export of more energy, attract more tourists and trumpet our supposed transportation advantages.

Nothing prevents us from exporting more energy today except environmental considerations and distribution bottlenecks. Tourism growth might come with a four lane highway but tourism will continue to be vulnerable to the vagaries of weather, border security and rising gasoline prices.

The notion that land-based transportation holds the key to our future in a world beginning to suffocate from greenhouse gas emissions and rising energy prices seems a little far-fetched to me.

Instead of begging for an increase in equalization payments from the feds, maybe our provincial governments should be rounding up funds for a multi-billion dollar investment fund that would flow exclusively to Atlantic-based businesses with the potential to develop and grow by combining their intellectual property with mini-production technologies that would give them competitive advantages over larger scale global producers.

Success might lead to the wealth we need to remove ourselves from the dependence inherent in equalization payments.

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

An esteemed group of business folks, academics and politicians are meeting in conference this weekend to discuss the creation of an international trade corridor that would stretch from Buffalo, New York across the northeastern United States to Atlantic Canada.

Code name for the corridor is “Atlantica”.

Atlantica is premised on the age old notion that prior to Confederation, Maritime trade patterns were north-south and the region was an economic powerhouse, trading with the United States, the Caribbean, Europe and northern Africa. As the story goes, all this changed in 1867 with Confederation and the subsequent shift in trade from north-south to east-west.

Those who would turn back the clock forget that wood was the primary staple of Maritime trade for much of the 19th century. European demand for timber brought investment and immigration to eastern Canada; it fostered economic development; and it transformed the regional environment far more radically than the earlier exploitation of fur and fish. The lumber trade encouraged the building of towns and villages, the opening of roads and exploration.

Maritimers produced wooden masts for the Royal Navy, wooden shingles, barrel staves, wooden boxes and spool wood for textile factories. Wood was also the basis for a thriving shipbuilding industry led by New England emigrations to Saint John in the 1760s.

Indeed, Saint John became the largest shipbuilding center in the Maritimes. Major centers also developed in St. Martin's, the Miramichi and Nova Scotia’s Yarmouth and Pictou Counties. Shipbuilding was also a part of the landscape in Moncton and Shediac.

Promoters of the Atlantica Conference appear to blame Confederation (1867) for the region’s economic fortunes. In so doing they confuse Sir John A. MacDonald’s “National Policy” (1878) with Confederation. The National policy was a response to the U.S. rejection of “reciprocity”.

The National Policy was a three point plan to establish a protective tariff around Canada, build the Canadian Pacific Railway (CPR) and stimulate expansion into western Canada. Some Maritime entrepreneurs flourished in this protected environment while many companies in Ontario and Quebec stumbled in the face of enormous competition from American branch plants.

I would argue that it was completion of the CPR that did most of the damage in the Maritimes.

In the years following introduction of the National Policy, the Maritimes experienced a boom as foreign imports became prohibitively expensive and our larger regional manufacturers produced goods for both the regional market and new Canadian markets opened for cotton textiles, refined sugar, iron and steel.

With completion of the Canadian Pacific Railway to Saint John, the days of the wood and water economy gave way to a new rail-based economy of coal and iron. Central Canadian manufacturers demanded coal to fuel their plants. The railways needed more rails and rail cars.

Coal mines in Cape Breton mines provided a base for expansion of the iron and steel industry in Sydney. Iron works, strategically located near coal mines in the Pictou region, produced pig-iron and supplied the railways with forgings, spikes, and car-axles. In 1894, the newly amalgamated Nova Scotia Steel Company acquired the iron ore deposit at Wabana, Newfoundland and built furnaces at North Sydney to supply rolling stock, car shops and related industries at New Glasgow.

The rate of Maritime industrial expansion in the 1880s exceeded that of Central Canada by fifteen percent, and its manufacturing output relative to total production increased from 37 percent in the 1880s to 48 percent in 1890. By the end of the decade Saint John had almost doubled its industrial output, ranked third in Canada in the production of machinery and first in the production of nails and brass.

So why do these Atlantica folks want to re-write history?

It’s because they forget that while some sectors of the Maritime economy flourished with the National Policy, the development of secondary manufacturing enterprises occurred haphazardly and without organization thus depriving the region of advantages that could be found in strategic location, purchasing power and economies of scale and production.

In the 1880s, the Maritime Provinces also suffered from the highest rate of out-migration in Canada and a population growth rate that was only 1.1% as compared to 13.5% in the previous decade.

When the CPR was completed, Maritime industries initially viewed the railway as a means of accessing markets in Ontario and Quebec but by the 1890s it was a floodgate through which inexpensive goods produced by much larger central Canadian manufacturers drowned out small domestic producers in the Maritimes. The casualties were high. Those who are promoting Atlantica today believe that new transportation infrastructure would return the Maritimes to the more prosperous times of the 19th century. You can’t go back in time. Nothing is as it was.

Conference delegates who dwell on the past will ignore the fact that nothing today prevents Atlantic Canada from trading north-south except the U.S. preoccupation with border security, the continuing shortage of production (scale) economies in Atlantic Canada and the non-tariff barriers that are put in the way of some Canadian exports.

Those who oppose Atlantica fear that open trade borders would lead to the economic integration of Canada and the United States and ultimately the loss of Canadian sovereignty. They need not worry.

The reality is that with few exceptions (notably energy), Atlantic Canada is no better prepared for an open border trade corridor than it was in 1878.

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

Prime Minister Harper has floated the notion of Senate reform and fixed date elections.

His long time objective has always been to change the Senate from an appointed body to an elected body. His interim proposal is to limit the term of a senator to eight years.

In partnership with fixed senate terms he would establish fixed election dates for members of Parliament (every four years on the third Monday of October beginning in 2009). U.S. elections occur every four years on November 4th. This newspaper endorses Mr. Harper’s proposals as do others. However, before joining the stampede, one should consider the potential consequences of Mr. Harper’s “reforms”.

A change in the term of Senate appointments would require a constitutional amendment or a contractual agreement with the Prime Minister. The problem with a contractual agreement is that the contracting prime minister might not be in office when the eight year term expired and the senators contracted might choose to ignore a contract with a prime minister or a political party no longer in office.

The last time the term of office was changed was in 1965 when age 75 was adopted as the mandatory retirement age for senators. Constitutional change now requires the agreement of the Senate, the House of Commons and the legislative assemblies of at least two-thirds of the provinces with the aggregate population of at least fifty per cent of Canada. That means that constitutional change would not be possible without the agreement of one or the other of Ontario or Quebec.

Fixed election dates seem harmless enough. Some would argue they would prevent a government from timing an election to its advantage. Others suggest that fixed election dates would permit better planning. Fixed dates could also prevent a government from asking the people for approval (vote) to go to war or to make some immediate and fundamental changes to the tax system.

Fixed date elections could also lengthen the time frame for elections as in the United States where a combination of primaries to elect candidates and election campaigns carry on for nearly a year.

There are some contradictions in the fixed date proposal. A government could lose the confidence of the House of Commons and trigger an off-date election in the middle of February. The date of the next election would then be set four years hence in the month of February, not October.

Minority governments would have no assurance of a four year fixed term and the only real change would be that governments could no longer stretch their mandates to five years as Richard Hatfield and others have done in the past.

One also has to wonder whether a majority government with a fixed four year term would be as accountable as a government that could be forced to go an election on a matter of great importance to the electorate.

Look at circumstances in the United States. The U.S. President has lied to his people for the last four years about Iraq and his justification for invasion. His government is riddled with corruption. 70% of American voters disapprove of his performance but the only way they can remove him from office before 2008 is by impeachment and that would be a messy process.

I have no problem with the idea that governments should be required to meet the electorate at least every four years instead of five but I think the notion of fixed terms in a parliamentary system is a fool’s paradise.

People have been calling for Senate reform in Canada for more than a century. In the past thirty or forty years there have been more than 30 proposals for reform. When Stephen Harper was a member of the Reform Party, predecessor to the Alliance Party and today’s Conservative Party he was part of an Alberta voice demanding a Triple-E Senate (equal representation from every province, elected representatives and effective powers). There was never mention of shorter terms for appointed senators.

Alberta continues to lobby for an elected senate. Ontario wants no part of an elected senate, indeed Premier McGinty and others have called for abolition of the Senate.

Significant reform of the Senate, while desirable is highly unlikely given the Constitutional amending formula and the divergence of opinion in respect to what if any reforms should be implemented. The issue is not term of office but power and influence. If every province had 10 elected senators, New Brunswick’s influence on national affairs would be equal to Ontario’s. The problem is that Ontario would likely reject the idea because in relative terms, they would lose power.

Mr. Harper told a national newspaper recently that he expects that senatorial candidates will be on the ballot in the next federal election. He says he’ll change the method for Constitutional amendment even without consulting the provinces.

The existing formula protects us from such end-runs. In my view the only way he could by-pass the Constitutional process would be to hold a national referendum where a majority of two thirds or more would compel the provinces, the Senate and the House of Commons to reform the Senate consistent with a formula that would be put forward as part of the referendum question.

Predictability and fixed entities sit in contrast with federal-provincial bickering over “equalization” and fiscal imbalances.

David Ganong reminded us recently that equalization is not about sharing the wealth; it’s about ensuring that every Canadian has access to comparable levels of public service. He’s right. Every federal provincial squabble over money diminishes us as a country.

Maybe an elected Senate with equal representation from each province could generate the national consensus that provinces cannot.

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 heronplace1@rogers.com