After ousting CEO Keith Cronkhite, NB Power’s chairman of the board says a “special skill set” is needed to tackle the utility’s gargantuan debt.
The utility announced Monday that the board had removed Cronkhite after just two years and that it will now embark on a “significant transformation of the organization.”
“This utility company has the potential to be a significant contributor to the coffers, to the provincial treasury and should not be a critic,” Board Chairman Charles Firlotte said in an interview.
“It was about the steep climb and the skill set required to do it.”
Over the past decade, NB Power has been consistently unable to meet debt or earnings reduction targets. In fiscal 2020-2021, Cronkhites’ first as CEO, the crown corporation lost $4 million and added $9 million to its net debt.
The budgeted targets for the year had been a profit of $41 million with a decrease of $17 million in net debt. Results from the last fiscal year are expected this month, but $40 million had already been added to debt at the end of the third quarter.
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NB Power’s net debt stands at more than $4.9 billion, or about 94 percent of its equity, according to former Auditor General Kim Adair. The Higgs government’s debt reduction targets would see utility reduced to 80 percent by 2027, but little to no progress has been made so far.
The board has hired Price Waterhouse Canada, which will “lead a strategic review that will include identifying immediate ways to optimize the current cost structure and meet debt obligations, as well as identifying alternative solutions to meet energy needs.” of New Brunswickers at a competitive and reliable cost. and environmentally sustainable.
But Firlotte says the utility’s top priority should be figuring out how to reduce debt.
“We are going to tackle our own house and get it in order first,” he said.
“We will leave no stone unturned as we do that.”
Some opposition lawmakers say the government has been claiming the groundwork was being laid to transform NB Power and question why the board is now saying more reviews of the organization are needed.
Liberal energy critic Rene Legacy pointed to amendments to the Electricity Act that will allow NB Power to explore other business ventures through a new holding company to generate revenue, as well as new efficiency targets to be implemented next year.
“This government has been in power for four years and for the last two a minister told me that all the basics were being put in place for NB Power to evolve,” he said.
“I don’t hear that they fired their CEO because they wouldn’t execute that plan, now they say they need a whole new plan.”
The next CEO will also have to deal with federal clean electricity regulations that will ban the burning of coal and oil for power by 2030 and 2035, respectively. Those sources accounted for about 20 percent of the province’s power generation in 2019-2020 and will need to be replaced.
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While NB Power’s debt load remains significant, green power critic Kevin Arseneau says the utility needs to prioritize creating additional green power and avoid falling victim to some of the costly mistakes made in the past. .
“It’s not just debt that’s the bottom line here, there’s also the climate crisis that needs to be addressed,” he said.
“If that’s not the focus and there’s no plan for that, then any other plan is bogus.”
The Higgs government has promoted small modular nuclear reactors (SMRs) as a potential way to meet future energy needs and stimulate economic development. But Arseneau is skeptical that investing in nuclear technology is an effective way to address NB Power’s debt.
Louise Comeau, director of climate change and clean energy at the New Brunswick Conservation Council, says about half of the utility’s current debt comes from the construction and renovation of the Point Lepreau nuclear power plant. But she adds that there are still opportunities for economic development in green energy projects.
“I hope that the table and the process integrate both the climate change agenda and the debt issue so that we solve them at the same time and come out with a renewed institution, a renewed opportunity in the province that is bigger than thinking about small modules. reactors,” he said.
Comeau welcomes the utility’s review, but wants outside experts to be welcome to the review to provide input on how the utility can adapt to the changing energy landscape.
Asked what kind of utility the board wants to see, Firlotte said they ultimately want NB Power to be a consistent source of public revenue and continue to play a significant role in the economic life of the province.
“We want a customer-focused, efficient and business-savvy company that is a significant contributor to the provincial treasury,” he said.
“That’s the goal here.”
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