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In response to
"As a policy wonk myself, the public's appetite for the deal doesn't really weigh on me, but some questions on the deal...."
by
Name Withheld By Request
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answers:
Posted by
Beaker (aka Anniebecca)
Nov 20 '09, 11:45
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The debt is paid via rates New Brunswickers pay to NB Power to cover their capital assets and expenses. Currently NBP has invested heavily in a new power line to the US and in the nuclear refurbishment (say $3 billion all told there, the other 2 billion is for line upgrades, other power plants etc). The debt incurred now is paid off with future revenue generated from the new assets (essentially as old assets are amortized new assets are added using debt). The debt is at Govt rates so the cheapest form of financing available.
The big hoopla has been that the debt is crippling which is bullshit, the debt went up because of assets that were added and would generate power and revenue over the enxt 25 years.
So HQ takes over NBP's assets by paying off the debt and then will pay down their own debt used to buy NBP with rates charged to NBers.
2) the rates HQ will charge NB will be at market after the 5 year freeze in some cases and tied to inflation for the majority...remember when inflation was 20% or so for a couple years? NB is boned. NO safeguards or controls for increases in the MOU, if inflation is 10%, the rates will jump 10%. Also, other charges will be added by the Govt outside of what HQ will charge. All thermal plant cleanup costs will be responsiblity of NB (a couple hundred million to a billion there which would normally be paid via rates offset with new generation facilities).
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