Uncertain future for shadowy NB Power offshoot

It has no website, no legislation to authorize its creation and no dedicated employees. It has not released any annual reports to the public and has not appeared before any committee of the legislature.

But the New Brunswick Energy Solutions Corp. is, or was, a key part of the decision to hand $10 million in taxpayer money to two nuclear-energy startups in Saint John.

It was also designed explicitly to let NB Power explore new energy ventures outside the scrutiny of the Energy and Utilities Board.

"NB Power has some challenges with what they can and cannot do in front of the EUB," said Donald Arseneault, who was a Liberal cabinet minister when the corporation was created.

"So this is a way to shelter them to an extent, to have a little bit more flexibility to look at opportunities."

In February, NB Power board chair Ed Barrett told MLAs the corporation was "an avenue [for the utility] to do joint ventures" and a way to be "nimble" and make decisions quickly.

Flying under radar

The corporation has largely operated under the radar since it was announced by the Liberal government in May 2017.

But with Progressive Conservative Premier Blaine Higgs recently signing a deal with two other premiers to work together on small modular reactors, the funding mechanism for the two New Brunswick startups is getting more attention.

Last month, MLAs on the legislature's Crown corporations committee passed a motion requesting the corporation appear "as soon as possible" to answer questions.

Green Party Leader David Coon calls the corporation "an end run" around the EUB. NB Power officials told him at a Nov. 1 committee hearing they have yet to receive a mandate letter from Higgs for the corporation.

"What is its mandate? We don't know," Coon said. "There's no enabling legislation. Its mandate will be a mandate letter from the premier and we need to see it."

NB Power describes New Brunswick Energy Solutions, or NBESC, as a Crown corporation in its most recent annual report, though the corporation's board chair, David Campbell, says it's not a Crown corporation.

Crossing streams

The provincial government holds two-thirds of the shares and NB Power the other third. The CEO is Keith Cronkhite, an NB Power vice-president, and other utility employees do work for the corporation.

Its board is made up mostly of government and utility officials.

It includes Barrett, NB Power CEO Gaëtan Thomas, the clerk of the executive council Jean-Marc Dupuis and two departmental deputy ministers, Tom MacFarlane and Cheryl Hansen.

The other members are Campbell and retired University of New Brunswick business professor Barbara Trenholm.

While working for the Brian Gallant government's Jobs Board, Campbell wrote an economic growth strategy report that recommended the energy sector be a focus of the province's job-creation efforts.

"I thought we had some areas of opportunity under energy," Campbell said in an interview.

He became chair of the NBESC to help put that proposal into effect. But he said the Higgs government has effectively frozen the corporation's activities since taking power in November 2018.

"When the government changed, they said, 'Put everything on hold, we'll decide what we want to do,' and to my knowledge, they still haven't decided what they want to do," he said.

Not beholden to EUB

Under provincial law, any major NB Power spending decisions that may affect the rates paid by customers must be reviewed by the Energy and Utilities Board.

"If there was anything that was going to impact the New Brunswick ratepayer, it had to be under the purview of the regulator," Campbell said.

"What we were looking at was projects that didn't impact the ratepayer, so at least in theory, philosophically, shouldn't be in front of the regulator."

Another rationale was that while NB Power projects aren't eligible for federal government funding, ventures under the NBESC could be.

In recent years, NB Power has looked at business deals including an expansion of the Grand Falls hydro dam to sell electricity into the U.S. and new wind farms that would feed Emera's Atlantic Link transmission cable to New England.

Those projects did not go ahead, but Campbell said the corporation would have been the vehicle for any such deals.

So far, the corporation's only transaction was $10 million in research funding for the small modular reactors, or SMRs. The Liberals gave the corporation that amount in June 2018, and the corporation in turn invested the money in ARC Nuclear and Moltex Energy.

Campbell, who continues to chair the board as an unpaid volunteer, said the corporation produced an annual report that was submitted to Auditor General Kim MacPherson

MacPherson said the audit is still underway, and Campbell said he wasn't sure whether he could release the annual report to CBC News.

But he said other than proprietary commercial information, the corporation should be transparent.

"It should be wide open and public, and then if we get asked how that money is being spent, we should be able to account for that, for all that," he said. "It's public money so it should be very accountable."

There is also an "affiliate code of conduct" in place so that any time NB Power employees devote to the corporation is billed back to the NBESC so it doesn't affect ratepayers. That arrangement is subject to EUB review, Campbell said.

"To a certain extent, there are some accountability measures," Arseneault said.

Future uncertain

The corporation has been largely inactive in the last year pending the Higgs government's decision on its future.

In a recent interview with Future Power Technology magazine, Moltex's Canadian CEO Rory O'Sullivan said the company would be looking for $50 million to $70 million in government and private funding in the next three years.

On a CBC political panel last month, Energy Minister Mike Holland floated the idea of overhauling the corporation to address concerns that it doesn't have to answer to the EUB for its funding decisions.

"There will be no initiative that goes forward related to anything under the department that I have under the government of Premier Higgs that's going to circumvent anything," he said.

"I have no problem ensuring there are checks and balances." He offered to work with Coon if Coon wants to introduce legislation during the current session of the legislature.

"If there is no safeguard or there is an end run that could be done around that, let's change the makeup of that to make sure there's no ability to do an end run," Holland said.

Coon said there's been no movement on that since then.

Holland said in a statement Thursday that the corporation is "not actively pursuing new projects" and that the government is "looking at options" for its future.

Campbell said despite being the corporation being put on hold by the PCs, "we still have an actual organization," and the board had a meeting scheduled in the coming week, its first in more than a year.