FREDERICTON - New Brunswick should increase its reliance on natural gas as people and businesses gradually make the transition to a renewable energy supply, a government-appointed commission recommended Tuesday.
The New Brunswick Energy Commission, appointed last October by Premier David Alward, tabled 50 recommendations aimed at developing a long-term plan to ensure residents and businesses have access to a secure and cheap supply of electricity.
Alward called for a 10-year plan after the collapse of the province's proposed $3.2-billion sale of its Crown-owned electric utility, NB Power, to Hydro-Quebec in March 2010.
The ill-fated deal, proposed by Quebec's Jean Charest and then-premier Shawn Graham of New Brunswick, would have eliminated NB Power's debt and frozen rates for residential customers for five years. But the plan drew an immediate backlash from New Brunswickers, concerned they were losing control of the utility to another province.
Alward, elected to lead a majority Conservative government last September, said the failure of the proposed deal meant the province had to chart a new course to meet its energy needs.
On Tuesday, the two-member commission pointed out that natural gas is already used in 49 per cent of households in Canada, but only 4.3 per cent in New Brunswick, even though the province has a liquefied natural gas terminal in Saint John and a pipeline that carries natural gas from Nova Scotia's Sable Offshore Energy Project.
"Having access to natural gas as the 'transition' fuel from our current fossil fuel-based energy structure to one based on renewable sources is an advantage for our province," says the report, co-authored by former natural resources minister Jeanot Volpe.
"The use of heating oil, electricity produced with coal or oil and transportation fuels could be greatly reduced by increasing the use of natural gas. This lower-cost fuel, which has the least environmental impact of existing fossil fuels, needs to be given greater opportunity to fulfil the energy needs of the province."
Energy Minister Craig Leonard said the government will take some time to examine the report, but added the province will move forward with many of the recommendations.
"Some (recommendations) are more complex than others and will take additional time to examine to understand clearly all of the costs and ramifications," Leonard said in a statement.
Petroleum products, such as coal and oil, account for 54 per cent of the province's primary energy demand, while natural gas accounts for only 17 per cent, followed by wood at 14 per cent and coal at 10 per cent.
However, commission co-chairman Bill Thompson -- a former deputy minister of energy -- said the current price of natural gas is too high in New Brunswick because of regulations imposed in 1998 that tie its price to heating oil and electricity prices.
Last year, the province's Energy and Utilities Board gave 20 per cent "targeted savings" to residential customers who converted from electrical or oil heating to natural gas.
"Benefits for residents and companies switching to natural gas are not viewed as being as attractive as they could be," says the report.
"Oil prices have been increasing in recent years, while natural gas prices have been falling ... This reduction in natural gas prices has benefited natural gas consumers in other jurisdictions, but New Brunswick consumers have not seen the same benefits due to the link to the price of oil under our distribution fee structure."
The province's gas distribution system is based on a 20-year franchise agreement awarded to Enbridge Gas New Brunswick in 1999.
Earlier Tuesday, Enbridge announced that it wants the provincial regulator to halt a proposed rate increase for its largest customers until the province decides if it is going to change the way the company charges its customers.
The commission also said the government should look into connecting the Maritimes and Northeast Pipeline with the TransCanada Pipeline in Quebec "to create a more secure national system" and establish a natural gas fuel system for the province's fleet of government vehicles.
Raphael Shay, energy co-ordinator for the Conservation Council of New Brunswick, says the report's authors are making a mistake by recommending increased use of natural gas because it has a history of volatile price swings.
In 2001, another provincial energy commission reported that natural gas prices were much more volatile than oil in the late 1990s, Shay said.
"Natural gas as a transition fuel was a good idea 40 years ago," Shay said.
"New Brunswick doesn't have a very developed distribution infrastructure.... Meanwhile, Sable Island is drying up and shale gas has a huge ecological footprint."
Shay said the province should have taken a bold step and embraced energy efficiency and renewable energy, rather than shift to another fossil fuel.
The report says development of shale gas reserves could be a good idea, so long as there are appropriate safeguards in place.
"If appropriate rules for the sustainable and responsible development of the resource can be implemented, this could contribute significantly to local production."
