In its latest strategic report, NB Power says the Atlantic Loop may not be the most efficient way to decarbonize electricity generation in the province.
The utility’s Integrated Resource Plan says the steep capital cost of the project along with the accompanying power purchase agreement with Hydro Quebec could mean that avenue to decarbonization could cost $270 to $310 million more per year than other solutions.
“The Atlantic Loop could aid in New Brunswick’s path to net-zero, but it faces significant cost barriers,” the report says.
“The current view is that the least cost alternative for New Brunswick is to build carbon-free resources in the province.”
The Atlantic Loop is the name given to a series of upgrades to transmission lines that would allow for more power to flow from Quebec into the Maritimes, pitched as a way to help the region transition from coal power and decarbonize the grid.
The concerns raised over the project in NB Power’s latest IRP mirror those expressed by the provincial governments of New Brunswick and Nova Scotia.
“We have complete agreement on greening the grid, we have complete agreement that there’s a role for government in taking steps to protect the planet,” Nova Scotia Premier Tim Houston said following federal-provincial meetings last month. “But on the Loop, it’s a massive project, fraught with risk.”
“The only next step is one where I’m shown a business case where the rates impact on Nova Scotians is not to the degree that it is from what I understand now.”
New Brunswick Energy Minister Mike Holland was not made available for an interview but expressed similar concerns in a statement.
“The government of New Brunswick has been clear that we must take into consideration the effects that the Atlantic Loop could have on rate payers if implemented. The preliminary figures do not include the costs of the electricity purchases from Quebec and all scenarios being contemplated, including the Atlantic Loop, require new generation to be built in both New Brunswick and Nova Scotia to ensure energy security,” Holland said.
“It is unlikely that the Atlantic Loop can be constructed and fully operational by 2030, meaning additional investments may be needed to meet the 2030 coal regulations. These are all additional costs to the proposed project.”
Federal Infrastructure Minister Dominic LeBlanc urged the provinces to return to the negotiating table, arguing that the project is the best way to ensure the least impact of the 2030 coal moratorium.
“The government of Canada has made a substantial offer of financial support to the two provinces for this project, which is based on an in-depth analysis carried out jointly by federal, provincial and utility experts over the past two years,” he said in a statement.
“This is the only real plan to close coal-fired power plants in Atlantic Canada by 2030, as required by federal and provincial legislation, while maintaining affordable electricity rates over the long term.”
The project comes with a capital cost of about $6 billion. Ottawa has put forward a series of loans and tax credits to entice the provinces and their respective utilities, but the uncertainty of what funding would look like also impacted NB Power’s analysis.
“There is considerable uncertainty on the impacts of federal support or preferred financing from the Canadian Infrastructure Bank,” the report says.
New Brunswick Green Party Leader David Coon says that NB Power’s analysis should be taken with a grain of salt considering that fact, but notes that the federal government does need to step up to make the project happen.
“They don’t really know how much the federal government is going to put into it. I mean’ it’s essentially interprovincial infrastructure like the Trans-Canada highway so the federal government definitely has an important role to support that as part of their net-zero efforts,” he said.
Other critics say the utility failed to take into account the potential economic benefits of the project, which would also enable the province to export power to neighbouring jurisdictions in New England.
“NB Power is not fully connecting all the dots. They consider the Atlantic Loop only as a way to import electricity from Quebec but it’s also an opportunity for NB Power to export and generate a lot of revenue,” said Moe Qureshi, the manager of climate solutions at the N.B. Conservation Council.
“If you look at NB Power’s most recent annual report it spoke about how Point Lepreau increased the debt quite significantly last year, but they were able to generate quite a lot of profit by increasing exports.”
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