Bill Marshall is a past president of the New Brunswick System Operator, a past director of strategic planning with NB Power and has consulted widely in the power sector throughout eastern Canada for the past 11 years through his company, WKM Energy Consultants Inc.
Saint John Energy’s proposed Burchill Wind Energy Project in the Spruce Lake area near Coleson Cove is a project that should excite all New Brunswickers. The up-to-42-megawatt wind generation project is a progressive initiative that will benefit all New Brunswickers by contributing to lower power bills in the long run.
As an engineer with more than 40 years of experience in the power sector, the numbers surrounding the Burchill wind project are compelling and indicate long-term economic value, as wind energy today is the cheapest form of new generation.
I conducted an analysis looking at the wind project in the same manner that NB Power uses to assess its programs. I built a spreadsheet model using the same avoided cost data and calculation method that NB Power applied to evaluate its energy efficiency program Energy Smart NB. The same data and calculations it shared with the New Brunswick Energy and Utilities Board (EUB) to approve current rates were used.
I did a benefit-cost analysis of the long-term rate impacts of the Burchill project and Energy Smart NB, which has been approved by the EUB and is currently in operation. Simply put, I wanted to compare how each would affect electricity rates. Would they cause rates to go up or down?
I ran three industry-standard tests, looking at the benefits of each to NB Power, to the participating customer and, more importantly, to the impact on rates for all customers. My extended analysis compared each project over a period of 25 years.
I wanted to find out the resulting benefit-cost (B/C) ratio from the Rate Impact Test. If it is higher than one, then this is the desired outcome as the benefits outweigh the costs, offering rate relief. If it’s below one, well, they don’t and the outcome will apply rate pressure.
Here’s how it breaks down: NB Power’s Energy Smart Program came out with a long-term B/C ratio of 1.07, which is a beneficial result. In the short-term, though, it was only 0.60, meaning its costs actually outweigh its benefits. The reality is, NB Power’s Energy Smart Program causes rate pressure in the short-term. Its real value for New Brunswick is long-term.
So is Burchill’s. At about 0.85 in the short-term and with a long-term B/C ratio up to 1.36, its rate impact is actually better than the Energy Smart Program both in the short- and long-term. Plus, it’s consistent with provincial energy policy, in that it contributes to the provincial renewable energy requirement and reduces carbon costs.
The counter-argument is that the Burchill Wind Energy Project will cost NB Power – and customers – in the short-term because it will decrease demand for the provincial utility’s supply of electricity. That is true. But NB Power is already working to reduce demand through its Energy Smart Program, which provides incentives to businesses and individuals to increase their energy efficiency and, therefore, decrease consumption. It’s the right thing to do.
With our province’s ageing energy infrastructure, we need to be thinking long-term. Burchill delivers long-term benefits because of emissions reductions and avoided costs for fossil fuels, operations and maintenance. The federal carbon tax is making greenhouse-gas-emitting fossil fuel energy increasingly expensive. Plus, Burchill will produce carbon-free energy that will help NB Power meet its renewable energy obligations of at least 40 percent of provincial supply by 2020.
In conclusion, the Burchill Wind Energy Project will further position Saint John Energy as a progressive utility with a clear eye on the future. This is a solid project with significant long-term benefits for all New Brunswickers.
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact editor Mark Leger: [email protected]