N.B. Power’s Electricity Export Policy Puts Irving Paper Mill Closure at Risk as Energy Costs Set to Rise by $10 Million

J.D. Irving Ltd. has warned that rising electricity costs resulting from New Brunswick Power’s decision to sell surplus electricity to external markets could lead to the closure of its Irving Paper mill in Saint John, with the company expecting an annual increase of at least $10 million in electricity expenses.

The warning follows an April ruling by the New Brunswick Energy and Utilities Board (EUB), which authorized N.B. Power to sell surplus electricity previously offered to local industrial customers at discounted rates to buyers outside the province, including in the United States, at higher market prices.

Irving, N.B. Power’s largest industrial customer, has described the impact of the change as substantial. According to company Executive Vice-President Mark Mosher, approximately three-quarters of the electricity consumed by Irving’s two Saint John paper mills last year came from the utility’s lower-priced surplus supply.

In a letter to the EUB, Mosher warned that the revised electricity arrangements, combined with higher energy rates resulting from ongoing operational issues at the Point Lepreau generating station, could force the closure of Irving Paper Limited’s east Saint John mill.

Government Defends Electricity Sales Policy

The New Brunswick government has defended N.B. Power’s decision, arguing that selling surplus electricity at market rates outside the province generates additional revenue for the utility and benefits its customers.

Energy Minister René Legacy told the provincial legislature that the government has no plans to direct the Crown corporation to offer the same electricity to local industries at discounted prices.

N.B. Power operates a generation and transmission system that frequently produces more electricity than required to meet demand within New Brunswick. The utility has been using external market sales to improve its financial position, with the April EUB ruling expected to generate millions of dollars in additional earnings.

EUB Review Expected

Previously, N.B. Power offered discounted interruptible electricity to nine large industrial customers in New Brunswick, including several pulp and paper mills. The supply supplemented the companies' regular firm electricity contracts.

Following Irving's concerns, EUB Chairperson Christopher Stewart has committed to holding a hearing as quickly as possible. However, he indicated that a comprehensive review of the company's concerns would take weeks or months rather than days.

The outcome could have significant implications for Irving's Saint John paper operations and other energy-intensive industrial customers affected by changes to the availability and pricing of surplus electricity.