Annual Report 2013-2014 2 NB Power Mission Proudly Serve Our Customers Vision Sustainable Electricity Values Safety, Quality, Innovation
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Annual Report 2013-2014 2 NB Power Mission Proudly Serve our Customers Vision Sustainable Electricity Values Safety, Quality, Innovation Table of Contents 4 How we power New Brunswick 5 6 7 8 Submission letter Message from Message from Corporate to Minister the Chair the CEO Governance 10 14 23 42 Year in Review Report on Management’s Financial Statements Performance Discussion and Analysis NB Power 3 How we power New Brunswick NB Power has developed one of the most Quebec diverse generation fleets in North America Regional Office Lamèque Nuclear to meet the very unique daily and seasonal Belledune Caraquet power needs of New Brunswickers. As Hydro Eel River Wind a “winter-peaking” province, we see big Thermal swings in energy usage between summer Edmundston Bathurst Ste.-Rose Cumbustion Turbine and winter. An average summer day might Sisson Nepisiguit Falls Terminal Millbank Interconnection see a peak system load of 1,500 MW be- Iroquois Saint-André Caribou 345 kV Lines ing required to meet the demand while a Newcastle 230 kV Lines very cold January day might see this usage Grand Falls 138 kV Lines peak at near 3,000 MW. This huge swing in Tobique Prince demand requires us to keep generation on Edward stand-by to ensure New Brunswickers have Beechwood Island Murray Corner the power they need when they want it. Millville Moncton Woodstock Keswick Salisbury We have a combined total generating ca- Fredericton Memramcook Maine Kent Hills pacity of 3,513 MW plus additional installed Marysville Nova Scotia Mactaquac capacity of 294 MW of wind and 437 MW Norton of other capacity provided by third parties through Power Purchase Agreements (PPA’s). Milltown Lancaster We also import electricity from Quebec or Oak Bay Coleson Cove New England when electricity markets are Pennfield Point Lepreau favorable. Most days, New Brunswickers receive their Grand Manan power from a combination of generation sources such as nuclear at Point Lepreau, Generating Capacity Thermal Power Purchase Agreement thermal at Belledune, hydro generated from Coleson Cove 972 MW (PPA) Wind 294 MW any or all of our 7 dams, wind from any or all Belledune 467 MW of the 3 wind farms, natural gas from PPA’s Total Thermal 1,439 MW Other Power Purchase with Bayside and Grandview, biomass from a Agreement (PPA) PPA with Twin Rivers and imports from New Generating Capacity Hydro Bay Side (Natural Gas) 285 MW England and/or Quebec. As days get colder, Mactaquac 668 MW Grand View (Natural Gas) 90 MW additional capacity is likely to be added to Beechwood 112 MW Twin Rivers (Biomass) 39 MW the system from our oil-fired plant at Grand Falls 66 MW St George (Hydro) 15 MW Coleson Cove. Tobique 20 MW Edmunston Hydro 7 MW Nepisiguit Falls 11 MW Other Renewable 1 MW NB Power is working to find new ways of Sisson 9 MW Total 437 MW putting renewable energy sources onto the Milltown 3 MW existing grid as Government has mandated a Total - Hydro 889 MW Number of Lines goal of having 40 per cent of our in-province Distribution Lines 20,815 km energy come from renewable sources by Generating Capacity Nuclear Transmission Lines 6,849 km 2020. Today renewable sources such as Point Lepreau 660 MW hydro, wind and biomass account for about Exporting and Importing 30 per cent of our energy. Generating Capacity Capacity Combustion Turbine Export Capicity 2,270 MW In the past year, NB Power continued to Millbank 397 MW Import Capicity 1,775 MW make progress with our partner Siemens Ste.-Rose 99 MW Canada on the building of an integrated Grand Manan 29 MW Number of Customers smart grid in New Brunswick. This innova- Total - Combustion Turbine 525 MW # of Direct Customers 351,238 tive strategy to overlay the communications # of Indirect Customers 46,264 grid on top of the electrical grid will help Total Generating Capacity Total Customers 397,502 Thermal 1,439 MW NB Power better optimize our assets, Hydro 889 MW integrate more renewable energy, offer our Nuclear 660 MW customers more choice, convenience and Cumbustion Turbine 525 MW control over their usage and help keep Total Generating Capacity 3,513 MW customer rates low and stable. 4 NB Power July 2014 To: Honourable Craig Leonard Minister of Energy and Mines Province of New Brunswick Fredericton, NB E3B 5H1 Sir: I am pleased to submit the Annual Report of New Brunswick Power Corporation for the fiscal year ended March 31, 2014 in compliance with Section 42 of the Electricity Act. Ed Barrett, Chairman, Board of Directors NB Power 5 Message from the Chairman On behalf of everyone at NB Power, I’d like to thank New Brunswickers for their continued confidence as we work to achieve our vision of being one of North America’s top performing utilities. The last year has been tremendously successful as we continue to follow a deliberate path laid out by our stra- tegic plan and the Province of New Brunswick’s Energy Blueprint. These plans are aligned to ensure reliability of Ed Barrett, service, careful financial management and strategic in- Chairman, vestment in areas that will improve service to customers NB Power and enable the company to lead New Brunswick into the Board of Directors energy future. The new Electricity Act was proclaimed in October 2013, Also this year, we were able to reduce our net debt by re-uniting the former NB Power Group of Companies $44 million. This was possible due to a significant in- under a single corporate NB Power structure subject to crease in free cash flow resulting from a reduction in the regulatory oversight by the Energy and Utilities Board current year’s capital spending requirements and a year (EUB). This new approach allows us to be more efficient over year reduction in the need for replacement energy in our spending and more open and accountable in our costs since the Point Lepreau Generating Station’s return decision-making, ultimately helping us to focus more on to service and its exceptional performance during the serving our customers better. coldest winter in 30 years. This reduction allowed us to make progress on our strategy of eliminating $1 billion In addition, the last year saw us implement a new and of debt by 2021. independent process of choosing new members for the NB Power Board of Directors. This competitive process Our commitment to customers was clear during the allows us to hire an independent search firm to recruit December 2013 ice storm, when NB Power employees board members based on their skill set and experience, worked long hours away from their families during the helping us to create a world-class group of professionals holiday season to restore power to tens of thousands of that can steer us toward the future. New Brunswickers in extreme weather conditions. Our crews, along with hundreds of employees who worked Our vision is beginning to show results, and we are very in support roles behind the scenes, put the needs of our pleased to report that NB Power posted positive financial customers first in ensuring power was restored as safely results for the fourth consecutive year with net earnings and quickly as possible. of $55 million for the year end as of March 31, 2014. We are proud of these financial and operational results in the first full year of amortizing the costs of the Point Lep- reau refurbishment. We remain committed to building on the trust that New Brunswickers and our Shareholder, the Government of New Brunswick, have shown us in the last year by continuing to seek efficiencies and costs savings where possible, without compromising the high standards of reliability, safety and customer service that we’ve all come to expect from NB Power. 6 NB Power Message from the CEO Thanks to the efforts of our staff, NB Power posted posi- tive financial results for the fourth consecutive year with audited net earnings of $55 million for the year ending March 31, 2014. These results saw revenues boosted by increased export energy sales and consistent performance at Point Lep- reau Generating Station during the last three quarters of the year. This was the first full year of operation since the refurbishment of Point Lepreau and I am very proud that the station operated at or near 100 per cent net capacity Gaëtan Thomas, factor for 19 consecutive weeks during the winter heat- President and CEO, ing season (November to April). This was a crucial period NB Power for the utility when energy market prices in New England were often at record highs and Lepreau performed ex- ceptionally well. This kind of dependability and perfor- mance during the coldest winter in 30 years were the key reasons we refurbished Point Lepreau and what we Also in the last year, we continued to work more effi- expect from Point Lepreau for the next 25 to 30 years. ciently, streamlining operations and improving produc- tivity within the company in the following ways: We know that New Brunswickers expect their energy utility to be among the best in the world at what we do. • eliminating unnecessary operational and administra- We are rising to that challenge as we work to improve tive expenses, performance at our generating stations; as we integrate • continuing to adopt Lean and Six Sigma process im- more renewable energy into our grid; as we help cus- provement methodologies, tomers gain more control over their energy usage and as we improve how we communicate all aspects of our • constantly identifying and pursuing cost-savings, business. • implementing change while maintaining excellent safety and labour relations across our company.