FREDERICTON – The past week saw debate in the legislature confined to a single, explosive topic: NB Power, the province’s often-maligned electric utility. What started with revelations of hidden bonuses and pay hikes for the utility’s CEO and other executives, quickly escalated into claims that the governing Liberals are dangerously unaware of the utility’s business and its operations. One basic question emerged from the debate: Who, exactly, is in charge of NB Power? Is it CEO and president David Hay, who hauls down annual compensation in the $500,000 range? Or is it the Crown corporation’s board of directors, chaired by influential Liberal policy architect Francis McGuire? And what about Energy Minister Jack Keir? Is he the emperor of the NB Power kingdom, as most say, or just a lowly foot soldier as he claims? Trouble is, the answer changes depending on who you ask. The issue of who ultimately controls NB Power erupted after it was discovered the utility’s board approved hidden retroactive bonuses and pay raises for Hay and other executives. Those initial flames of controversy were then splashed with gasoline when Keir said he has no say over the day-to-day operations of NB Power, including decisions on salaries and bonuses. He also admitted to learning about the retroactive bonuses after reading his Saturday newspaper, despite having access to the minutes of the board’s meetings. Keir later defended himself by saying the governance structure at NB Power is “broken” and blaming the former Tory government for its destruction. But Conservative MLA Jeannot Volpé says Keir need only look in the mirror to see who has the final say and responsibility over NB Power. The former finance minister says the power structure is simple: Hay, with his business and management expertise, runs the daily operations, with help and oversight from the board. The board also ensures government directives are carried out. Keir, said Volpé, sits atop the food chain. The board, and thus the utility, answers to him. The Madawaska MLA said the former Conservative government in which he served sent many direct orders to the utility: They rejected a request by the CEO for a wage increase and cancelled the executive bonus program in 2006. On Friday, a day after calling for McGuire and Hay to appear before a legislature committee, the Tories listed examples they say prove the Liberals play dumb with managing NB Power: Sometimes the Grits order the utility around, while other times they pretend to be helpless. Volpé alleged the Liberals asked the utility to sign on to a multimillion dollar wind energy project without a request for proposals. Tory Paul Robichaud claimed the Grits have muscled the Crown corporation into using a particular reactor as it pursues a second unit at the Point Lepreau Nuclear Generating Station. And, while Premier Shawn Graham insisted the proposal process has been used properly, the Tories appeared to land at least one solid verbal punch: The government often boasts of its commitment to keep power rate increases limited to three per cent a year through 2010, they said. Is that not a direct order to the utility? Conservative Leader David Alward thinks so. “What we have is a premier and a minister of energy who are speaking out of both sides of their mouths. At times they are saying they are independent, and the next, they are saying they are directly involved in decisions taken by NB Power,” said Alward, who called for Keir’s resignation. Keir contends the limited rate increase was confirmed only through negotiation, as with many decisions. “It wasn’t us saying to them: ‘You must do this.’ It was us sitting down with them and saying: ‘Is this objective reasonable?'” Keir, the Fundy-River Valley MLA, argues NB Power is a utility with an identity crisis, thanks to the Conservatives. In October of 2004, the debt-ridden company ($3.2 billion and counting), was broken into five different companies to trigger the end of the state monopoly, in response to cries for outside competition. But the plan was never carried out to its end goal. Now, says Keir, it’s a $1.5-billion company divided into five silos. He says the utility must either be pushed closer to privation, or pulled closer to the hip of government. He pledged changes starting in the new year. Charles Cirtwill doesn’t hesitate when asked which direction the government should go. “Just sell it and get it over with,” said the executive vice-president of the Atlantic Institute for Market Studies, a Halifax-based think-tank. “The challenge you have is government trying to run a business, but you don’t have anyone in government with the credentials. That doesn’t mean they’re evil or that they’re trying to rip people off. It just means they don’t have experience operating private sector companies,” he said. David Coon, policy director for the New Brunswick Conservation Council, doesn’t buy the argument that the utility’s governance structure is shattered. He says the utility’s power formation remains unchanged: The board and CEO report to government, through the minister, as they have for years. But, contended Coon, two other recent changes have altered how decisions are made at the Crown corporation. The first is the politicized role of the board, thanks to the appointment of McGuire, who has also served as the craftsman of many Liberal policy ideas. The second involves the Energy Department’s move from Fredericton to Saint John under the Liberals. That shift, said Coon, means less oversight, direction and accountability at NB Power’s head office in the capital. “What’s going on with this bonus business is just a symptom of the fact that the Department of Energy has lost its compass,” Coon said. Late Friday, after a week of heated exchanges in the legislature, NB Power board member Ed Barrett announced that the utility had accepted government’s suggestion to scrap the executive bonus program this year, considering the current economic conditions. At the press conference, he was asked to whom the board is ultimately responsible. “You’re getting a little bit outside my pay grade here,” he responded, revealing the complexity of the issue. When pressed, he said the board answers to its chairman – McGuire – who ultimately answers to the government, who in turn represents the utility’s shareholders: the taxpayers. Barrett wouldn’t say the structure is flawed, but hinted that reform is necessary. “I don’t know that it’s broken,” he said, “but it wants for more clarity in a number of ways.”
