New Brunswick’s Auditor General, Paul Martin, has raised significant concerns about the decision-making process of N.B. Power regarding its proposed Tantramar gas and diesel power plant. In a recent report, presented to members of the legislature, Martin highlighted critical lapses in N.B. Power’s evaluation of alternatives before committing to a deal with ProEnergy.
Key Findings of the Auditor General’s Report
The report sheds light on a 25-year agreement that N.B. Power has entered into to develop a 500-megawatt gas and diesel power plant located north of Sackville. Martin characterized the decision-making process as fundamentally flawed, stating, “There’s just gaping holes in this whole assessment and decision model.”
Concerns Over Risk and Cost
- N.B. Power did not assess other energy options effectively.
- The agreement with ProEnergy exposes N.B. Power to considerable financial risks.
- If ProEnergy fails to secure an Indigenous partnership by mid-2026, it could withdraw from the project.
- The estimated cost of the deal over 25 years could reach $2.8 billion.
In addition, Martin expressed astonishment that a performance assurance payment originally set at $46 million US was later reduced to $10 million US under a revised contract in December.
Regulatory Oversight and Process Compliance
The audit criticized N.B. Power for signing the deal with ProEnergy without prior approval from the Energy and Utilities Board (EUB). While the board has since approved the project, the report indicates that N.B. Power could have faced liabilities of up to $55 million US for early construction costs had the approval not been secured.
Moreover, the auditor general emphasized that N.B. Power will bear the responsibilities related to emissions and compliance with environmental regulations. Martin remarked on the imprudent nature of this arrangement, saying, “It feels like we’re signing up for someone to take care of this for us, but we’re paying dearly for it.”
Analysis and Internal Management Problems
Martin’s report indicates that N.B. Power’s analysis was often conducted after significant decisions had already been made. Key evaluations, especially concerning ownership versus partnership models for the plant, lacked thorough investigation. Initial comparisons showed that a partnership could incur additional costs of $425 million to $700 million, yet management opted for this more expensive route.
Importance of Governance and Oversight
The study underscores a lack of corporate governance at N.B. Power. Martin suggested that the board’s oversight was insufficient, potentially allowing issues to persist longer than necessary. He noted that a high-pressure environment led to rushed decisions, with little regard for established governance frameworks.
Industry Perspectives
N.B. Power’s CEO, Lori Clark, defended the company’s actions, asserting that high-stress conditions can result in varying interpretations of decisions. She also claimed that neighboring utilities are envious of N.B. Power’s foresight in managing this project, emphasizing the utility’s efforts in exploring different technologies and strategies to meet capacity demands.
The ongoing scrutiny of the Tantramar gas plant project calls for careful consideration of energy strategies in New Brunswick, as stakeholders weigh the financial and environmental implications of the decisions made by N.B. Power.
