Assembly of New Brunswick
Énergie NB Power
Focused Business Plans - Facilities Management
NB Power has positioned itself to continue providing customers reliable electricity at competitive rates. To remain competitive, existing facilities must be efficiently managed and future facilities must be planned to provide long-term economic and environmentally responsible usage.
Integrated Resource Plan
The completion of NB Power's latest IRP in December 1995 indicates a strategic course of action which differs somewhat from the 1990 IRP. The IRP also contains a sensitivity analysis for such variables as load growth, oil prices, environmental externalities, economic parameters and the availability of natural gas. The overall impact of these variables does not have a significant effect on strategies as identified in the IRP. Based on all these factors the recommended strategic action contained in the IRP is as follows:
With the possibility of a deregulated and competitive electric utility industry in the future, the need for integrated resource planning may be diminished. In a deregulated environment the timing of new generation supply resources will be determined by the market place. In addition, demand-side management measures will no longer be driven by vertically integrated utilities to replace or defer new facilities. Instead programs will become cost reduction measures or differentiated services marketed to customers by distribution companies or by independent energy services companies.
Co-generation and Non-utility Generation (NUG)
NB Power's current resource plans include two wood-fired NUGs. One 38 MW NUG contract is planned for service in January 1997 and another 25 MW NUG contract for January 1998.
To pursue mutually beneficial means of providing future energy requirements, ensure competitive rates for its customers and assist New Brunswick industry to be more competitive, NB Power chairs an ad hoc Forestry Committee with representatives from the pulp and paper industry.
In addition, NB Power will review its overall non-utility generation policy during 1996. Areas to be considered include rate structures, alternative energy sources, interconnection requirements and stand-alone generation projects. At this stage, the non-utility generation policy will likely be similar to NB Power's co-generation policy detailed in the NB Power - Facilities Management section.
Demand-Side Management (DSM)
With the completion of NB Power's latest IRP, future conservation and DSM efforts are critical in achieving a least cost plan to meet future load requirements. Future energy conservation initiatives are expected to feature the following:
The "Heat Plus" program, an energy-efficiency retrofit initiative for the residential sector, will continue over the next five years. Individual home owners will be eligible for loans up to $3,500 at attractive interest rates to carry out energy-efficiency measures. A total of almost $6,000,000 is expected to be advanced under this program over a five-year period.
External Market Opportunities
NB Power's long-term strategies must incorporate existing commitments for the sale of electricity to external markets as well as potential sale opportunities. NB Power's committed external sales are detailed in Table 11.
External markets today, New England included, are considerably more competitive than only a few years ago. With lower than expected load growth, U.S. utilities are generally reporting surplus generation until the turn of the century. Limited generation additions are planned for New England. Of the planned additions, many are in the form of Non-Utility Generators (NUGs). These are relatively low cost combined cycle units fuelled with natural gas primarily acquired from Western Canada. As a result, NB Power's traditional markets in the U.S. are turning toward lower priced short term contracts to meet existing and future loads. This type of market makes it difficult to establish long-term agreements.
In addition to pricing issues, the nature of external transactions has undergone significant changes in recent years. The Energy Policy Act of 1992 (EPA) is changing the electric utility industry in the U.S. and has implications for Canadian utilities. As well, the EPA, designed to promote competition, legislated open access on electric utilities' transmission systems. This new environment is leading to 'wholesale wheeling' of energy which results in supplying electricity across jurisdictional boundaries to service customers. 'Retail wheeling' is also being considered in some states.
These revolutionary changes to the U.S. electric utility industry will have an increasing impact on Canadian utilities. NB Power received, in early 1996, a blanket export permit from the National Energy Board. This permit will allow the Corporation to respond to opportunities available in U.S. markets on relatively short notice.
NB Power is closely monitoring the transmission access issue in the U.S. to determine the impact on present operations and potential opportunities. In the Canadian context, recent inter-provincial trade negotiations did not reach a consensus on steps that would lead to transmission system access in this country. Provincial trade negotiators are currently revisiting this issue with the assistance and full participation of all provincial electric utilities including NB Power. Any decisions that evolve from these negotiations may have a significant impact on the Canadian electric utility industry. Through initiatives discussed in this Business Plan, NB Power is striving to be in a competitive position in order to take advantage of opportunities offered by a deregulated environment.
Long-term Development Plan
NB Power's current long-term development plan indicates that new capacity will not be required until 2005 or later. This requirement is based on the 1995 Load Forecast, existing and committed resources, and committed external sales. The 1995 Load Forecast projects slower load growth than the 1993 Load Forecast used during preparation of the IRP. As a result, NB Power's current development plan differs from that presented in the IRP.
The projected capacity need can be met in three ways: by reducing load growth, changing load patterns, or adding new capacity through purchases or construction of new generating units. In formulating a long-term development plan, NB Power incorporates both supply and demand resources for meeting the customers' electricity requirements. The objective is a mix of DSM programs and generation projects which will provide an opportunity for the lowest possible power rates while maintaining an acceptable reliability of service.
NB Power's present resource commitments are listed in Table 12.
Figure 16 illustrates NB Power's existing and committed generation resources by fuel type. Figure 17 indicates how in-province load requirements will be met over the timeframe of this Business Plan.
Figure 18 compares NB Power's future load requirements to existing and committed resources. The figure indicates that during the next decade, NB Power will require additional resources in order to meet projected loads. NB Power is in a position whereby commitments toward future new generation projects do not have to be made until the later years of this Business Plan. This allows the Corporation to explore various supply- and demand-side options available to meet future loads. Changes in technology and economic factors during the next few years could significantly affect decisions on future additions.
Facility planning must also recognize the relationship between the cost of capital additions and ongoing fuel costs, as illustrated in Figure 19. The figure illustrates that base load units with high capital costs, such as nuclear generators, have very low fuel costs. Conversely, peaking units such as combustion turbines, which have relatively lower capital costs, require costly light fuel oil to generate electricity.
Future capacity requirements can most economically be met with peaking capacity options followed at some point with base load options. Currently being considered as options to meet projected deficiencies are:
Peaking Capacity Options:
Base Load Capacity Options:
Fuel prices, DSM reductions, environmental regulations and the long-term performance of existing units at Point Lepreau, Coleson Cove and Courtenay Bay are the most significant factors which will influence the amount and timing of base-load capacity requirements.
Regulatory changes announced in December 1993 require that the PUB review any direct capital expenditures related to additional generating capacity. Time to accomplish this review is built into the long-term development plan.
Historically NB Power has had a competitive disadvantage compared to other Canadian and U.S. utilities who have access to the relatively low priced fuel natural gas. The pipeline which transports Western Canadian natural gas ends at Quebec City. Previous estimates on extending the pipeline into New Brunswick have indicated that energy produced from natural gas is uneconomic.
Since the release of last year's Business Plan, significant activity has occurred relative to natural gas in New Brunswick. Three separate natural gas proposals are in the development stages. They include:
All projects are in their feasibility study stages and developments are preliminary in nature. However, there is a possibility that this fuel source could be economic for NB Power as a source of generation. This generation could be the conversion of existing oil fired units or the construction of a natural gas fired combined cycle (NGCC) unit at a time when additional capacity is required. NB Power will continue to monitor developments on the potential of natural gas.
In addition to the internal review of future planning options, NB Power will continue to pursue mutually beneficial initiatives with counterpart utilities in the Maritime region. The three main Maritime utilities; NB Power, Nova Scotia Power and Maritime Electric, have agreed to co-operate on the following initiatives:
NB Power's transmission system is planned, designed and operated in accordance with single contingency criteria. These criteria ensure that in the event of a single fault (e.g. transformer failure, etc.), the system will remain stable and capable of supplying 100% of the load normally supplied by the equipment forced out of service. Single contingency planning recognizes the cost/reliability trade-offs inherent in planning the system.
Transmission planning is based on peak demands on the NB Power system. NB Power's current Load Forecast indicates that peak demand will increase from 2,907 MW in 1996 to 3,363 MW in 2008/09. Where new service is required, NB Power plans to build 138 kV facilities rather than 69 kV when this is economically feasible. Projects required to meet forecast load growth are indicated in Table 13.
For the past several years, NB Power has been installing fault locating relays on 69 and 138 kV transmission lines. Through NB Power's SCADA system, these relays enable system operators to accurately locate faults, assist maintenance and repair crews with faster restoration times and decrease maintenance costs on older electromechanical relays. The program is scheduled to continue into 1997/98.
NB Power will continue to upgrade existing distribution facilities and will construct new facilities in response to load growth. Distribution loads are monitored and analyzed on an annual basis to identify areas requiring service improvement or expansion. Historically, approximately 75% of capital expenditures on the distribution system have been a direct result of customer demand. The remaining 25% is used to upgrade and rebuild existing facilities.
The Corporation will continue to co-ordinate distribution construction projects with NBTel. Co-operative efforts with NBTel allow the two utilities to share facilities (namely poles) and some administrative activities required to provide service.