1.0 INTRODUCTION

Provincial energy policies have evolved over recent years to reflect the energy developments of the era. In the 1970s and 1980s, energy policy was guided by price and security of supply, which was influenced significantly by conflicts in the Middle East.

Energy efficiency and conservation, along with price and security of supply, were the foundation of the energy policy of the 1990s, with goals which were characterized by sustainable development, energy efficiency and secure energy sources that were reasonably priced.

During the mid-1980s, the natural gas industry began moving in the direction of deregulation. In the 1990s, the electricity sector emerged from a regulated industry toward one being driven, in many jurisdictions, by competitive market forces. These market forces are a global phenomenon, driven in North America primarily by the United States Federal Energy Regulatory Commission ("FERC"). There is little option but to become part of what is developing into a fully integrated, North American electricity supply and marketing grid. In order to participate and to continue to capture the benefits of a competitive market, New Brunswick must operate by rules and procedures compatible with those established by FERC.

Emerging energy markets offer challenges and opportunities for New Brunswick. This White Paper provides a framework for a provincial energy policy for 2000-2010. The energy policy provides direction in preparing for the future while maintaining sufficient flexibility to allow the Province to participate in the market at a time and to a degree which is considered most appropriate and beneficial. The policy formulated also recognizes the inextricable link between different forms of energy, the economy and the environment.

  1. Process

    2. In 1996, the Legislative Assembly appointed a Select Committee on Gasoline Pricing to undertake research and conduct public hearings on gasoline pricing in New Brunswick. The resulting document, Final Report of the Select Committee on Gasoline Pricing, included recommendations with respect to gasoline pricing.

    In 1998, the New Brunswick Legislative Assembly appointed a Select Committee on Energy to consider the future of the electric utility industry in New Brunswick and to examine the implications of natural gas for the province. A discussion document, Electricity in New Brunswick – Beyond 2000, was tabled by Government and a task force established with the undertaking to prepare a report on electric utility options. The resulting document, Electricity in New Brunswick and Options for its Future, included input from interested stakeholders and became the focus for public hearings which culminated in the Report of the Select Committee on Energy’s Electricity Restructuring in New Brunswick.

    Industry comments were solicited and public hearings were also held to prepare recommendations with respect to natural gas development in the province. Recommendations presented in the ensuing report, Natural Gas for New Brunswick, provided guidance for creation of the Gas Distribution Act, 1999 and for development of a request for proposals in the process of awarding a provincial natural gas distribution franchise.

    In 2000, the Province recommended development of a comprehensive energy policy, to be published in a White Paper. This White Paper was produced, in part, on the basis of input from the previous processes. Advice of the Select Committee and contributions from public hearings provided significant guidance in formulating the goals and objectives contained in the energy policy.

    An interdepartmental Energy Policy Working Group, led by the Department of Energy, prepared the White Paper, with the assistance of an energy market consultant. Similar work undertaken in other jurisdictions was extensively reviewed as part of the process.

    The White Paper was approved by Cabinet in December, 2000. Consideration of restructuring options for the Crown utility will occur in a second stage process, and will be consistent with the framework provided by objectives stated in the White Paper.
  2. Policy Goals

    3. Following are the five key goals that form the basis of the provincial energy policy.
    1. Ensure a secure, reliable and cost effective energy supply for residential, commercial and industrial customers.
      2. While energy security does not carry the same degree of urgency that it did during the 1970’s, reliability is even more critical. Supply diversity and flexibility reduce the dependence, and thus vulnerability, on price and supply that can result from over-reliance on any single energy source. The Province’s energy supply interests can be enhanced by means of continued improvements in efficiency of energy use. There is also some potential for the development of indigenous resources in the Province. Reliability has become more of a factor, particularly for electricity, with the continued development of information technology-based business.

      The addition of natural gas to the region's energy mix enhances competition among energy forms. Providing New Brunswick consumers with energy at the lowest possible cost can be accomplished by ensuring that the interests of all energy consumers and the energy industry as a whole are considered.
    2. Promote economic efficiency in energy systems and services.
      3. New Brunswick’s geographic location provides a strategic advantage to compete with utilities, refiners, and energy distribution companies in surrounding jurisdictions. However, changes to the marketplace require examination of the taxation, governance and perhaps even ownership regimes to achieve the maximum economic efficiency that will allow New Brunswick companies and utilities to compete effectively in both the domestic and export markets.  
    3. Promote economic development opportunities.
      4. New Brunswick has a relatively large, energy-intensive, resource-based manufacturing sector with a substantial proportion of industry and business operating expenses attributable to the cost of energy. The Province wishes to sustain these operations as well as attract new ventures that will enhance growth and employment opportunities. Access to a variety of energy sources with stable, long-term competitive rates is critical to the success of existing and new businesses as they compete in the global market place.
    4. Protect and enhance the environment.
      5. New national and international agreements on climate change, air quality objectives and acid rain commit Canada to emissions reductions. In addition, the Province has made a commitment to long-term environmental sustainability. These will have an increasing effect on energy costs and consumption, driving the markets toward cleaner, more efficient consumptive and supply technologies. In the near term, promotion of technical innovation in the areas of energy efficiency and alternative energy forms will have an important part to play in their acceptance and recognition as critical in reducing air emissions while increasing the reliability and security of our energy supply and the competitiveness of our industries. Other environmental concerns such as nuclear waste storage, remediation of hydrocarbon contaminated water supplies and soils, decommissioning of existing energy facilities, long term effects of hydro developments, and coal mining must also be addressed.
    5. Ensure an effective and transparent regulatory regime.
The current regime and economy has been developed over a relatively long time period, during which many social objectives were incorporated within regulations and policies. New Brunswickers have lived and made decisions to protect themselves and their livelihoods within the context of such a system. Unlike preceding models, competitive energy markets tend to be directed by light-handed, transparent, performance-based regulation. Recognizing that major changes will take place in the market place and that New Brunswick cannot adopt an isolationist stance, the energy policy seeks an appropriate form of regulation for the restructured market, providing as much opportunity as possible for adjustment and migration to a new regime that protects the interests of all New Brunswickers. At the same time, this migration must be done in a timely fashion such that the benefits of the new competitive systems do not pass by, strand or render any of our own energy infrastructure and industry obsolete or less competitive. Involving the appropriate regulatory agencies ensures transparency in the process.