New Brunswick’s Energy Challenge

A presentation byKurt Peacock2007/08 Crabtree Scholar in NB Public PolicyUNBSJ

• The price per litre of gasoline in the Fall of 2008 is roughly 40 cents more than 2 year ago

•Contrary to what some industry individuals insist, gas regulation appears to be working

•The escalating price is a result of global factors, although consumers can expect some relief this winter

•NB Power purchases its fuel 18 months ahead of time, so painful power rate increases are likely coming

The price at the pumps is simply one indication that New Brunswick

is facing an energy challenge...

The Energy Challenge is especially pressing on low-income households,

whose incomes are not keeping pace with expenses

NB Minimum Wage in Constant 2008 $

$5.13

$5.69

$6.48

$7.29

$9.01$8.70 $8.66

$7.90

$6.94$6.70

$6.99 $6.86$6.59

$7.02 $6.95 $6.87 $6.77 $6.84$7.24

$7.75

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

1965 1967 1970 1972 1975 1978 1980 1982 1985 1987 1990 1992 1995 1997 2000 2002 2005 2006 2007 2008

This report was developed throughpartnerships with:

In Saint John’s very high poverty neighbourhoods, the majority of

dwellings are rented. These neighbourhoods are more dependent on

government institutions like the Rentalsman, and they are more

vulnerable to issues like energy poverty.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

CMA City G.B.-Westfield

Rothesay Quispamsis Very HighPoverty DAs

Fredericton Moncton NB Canada

Percentage ofdwellings thatare rented

In the inner city of Saint John, residential growth has become stagnant, especially in the most vulnerable neighbourhoods.

In the affluent suburbs, housing construction is on pace with national

trends.Age of Housing Stock

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

CMA City Grand Bay-Westfield

Rothesay Quispamsis Very HighPoverty DAs

NB Canada

Built Before 1946 (%) Built 1946-1960 (%) Built 1981-1990 (%) Built 1991-2001 (%)

The Energy Challenge is seen in the number of NB households whose power is disconnected

A question of justice: NB Power charges its consumers a much higher monthly service charge than its provincial counterparts

This represents an effective toll on the right to use electricity

A question of justice: under its current rate design, NB Power charges a higher rate per kWh to its smallest customers than to its largest

The declining block rate represents an income redistribution from poor NB residents to large consumers of energy

Because of Higher Energy Prices, small consumers deserve greater government oversight on Energy

• Despite having the largest refinery in Canada, NB residents have historically paid more than the Canadian average at the pump

• Regulatory institutions like the Energy and Utilities Board (which regulates both electricity and gasoline)are meant to serve the best interests of NB residents, but are often ignored by government, general public

Fuel Price Canada Calgary Halifax Montreal Ottawa Saint John Gap (in cents)(less taxes) between SJ and Cda

Jan-91 41.3 45.2 45.7 44.2 42.0 44.9 3.6Jan-96 25.9 25.0 27.6 27.0 24.6 28.1 2.2Jan-01 37.4 42.3 39.9 34.7 36.0 39.2 1.8Jan-06 61.5 58.8 60.5 57.4 62.7 61.5 0.0Jan-08 75.5 78.7 76.4 76.0 75.3 75.4 -0.1Jun-08 104.3 105.2 101.2 103.9 101.4 101.3 -3.0

If we can have a consumer advocate for car insurance, why not energy?

•The current provincial government pledged a more activist role in energy, but so far has been principally concerned with promoting an ‘energy hub’•New Brunswick residents need a consumer watchdog on the energy file, to ensure that the decisions being made by NB Power and at the EUB are in the best interests of small consumers

What should be done? Some Ideas…

• More co-operation between Efficiency NB and low-income communities should be encouraged. The corporation currently has almost $10 million in its annual budget, yet little progress has been made in addressing energy poverty

• Residents need to demand that our power rate design is not discriminatory toward small consumers (i.e. no declining block rate, lower monthly service charges)

• Pressure should be put on NB Power to lower its interest penalty from credit card levels

• Stronger oversight on the energy file should be encouraged, including the establishment of a consumer advocate

• All new non-profit housing built or funded by NB gov’t should meet the highest efficiency standards

• The idea of a provincial ‘energy hub’ should recognize that the energy consumer comes first