FREDERICTON – Two of the key issues involved in the debate of the proposed sale of NB Power to Hydro-Québec are the effect on energy rates and New Brunswick’s sovereignty over its own energy policy.

Central to both is the section of the memorandum of understanding (MOU) that deals with energy regulation, which currently falls under the jurisdiction of the New Brunswick Energy and Utilities Board (EUB). The document says that body “will be altered to conform to the framework currently in effect in Québec,” known in that province as the Régie de l’énergie.

The Progressive Conservatives say that clause will take away the independence of the EUB and give Quebec decision-making authority.

“The province of Quebec’s regulation will become now our regulation,” Opposition house leader Paul Robichaud said yesterday. “What we will have to do is adopt the Quebec model to (be) the New Brunswick model.”

Since the deal was announced on Oct. 29, the government has said that it would not surrender any control over energy sovereignty nor the ability to control rate increases, an assertion Premier Shawn Graham repeated yesterday.

“The fact is, New Brunswick will keep control over its energy policies,” he said during his budget speech.

“The fact is, rate increases will be regulated here in New Brunswick by the New Brunswick EUB, just as they always have been.”

The government said several times this week that the agreement to sell NB Power to Hydro-Québec is just a framework and not a final contract. In response, the Opposition questioned them on how some points in the deal could change or be refined between now and the March 31 closing date.

But in regards to regulation, the effect of harmonizing the regulatory bodies is clear, Robichaud said.

“It is very clear that New Brunswick will lose its sovereignty,” he said. “You have now a province who will have to adopt the policy of another province to follow the new regulation that will take place.”

But in addition to maintaining control over the EUB, Energy Minister Jack Keir suggested that conforming to the Quebec model could strengthen electricity regulation in this province.

“I do not know if the members opposite have reviewed the Régie de l’énergie in Quebec,” he said during Wednesday’s question period.

“I do not know if they understand the stringent regulations under which Hydro-Québec operates within Quebec. Before they critique and suggest that it is a bad thing to have some of our Energy and Utilities Board legislation mirror Quebec’s, they better take a look at what Quebec does.”

In Quebec, all proposed rate increases must gain approval from the regulatory board, no matter how large or small they are. Currently, the New Brunswick EUB only hears requests for increases of three per cent or higher, meaning NB Power can automatically impose a rate hike of up to a 2.9 per cent each year, without first seeking an independent review.

Robichaud said that may be the case now, but New Brunswick would also lose control over any future decisions.

“I’m not telling you the policy they have in place in Quebec is not a good one,” he said. “That also means that the government of Quebec could decide to change their policy in the years to come and the province of New Brunswick will also have to follow. We never know what the government of Quebec can decide.”

Robichaud said this concern was also expressed in a recent review of the deal from the Atlantic Institute for Market Studies, a Halifax-based think tank.

“(The MOU) leaves open the question of regulatory alignment should Quebec’s current regulation change over time,” that document stated.

“The MOU system will permanently reduce its ability to strike a reasonable balance between utility and customer interests.”

Keir said yesterday that future decisions in Quebec would not require the New Brunswick EUB to follow suit.

“The answer is no,” he said in an e-mail. “The EUB, and Department of Energy, will continue to provide independent and autonomous direction as it related to regulation of transmission and distribution in New Brunswick. This does not change under the MOU.”