News Releases

November 04, 2009

NB Power-Hydro-Québec deal will have no impact on province’s credit rating, say credit agencies

FREDERICTON – Opposition Finance critic Bruce Fitch warns New Brunswickers to be cautious of claims the government is making as they try to promote the sale of NB Power to Hydro-Québec.

“The government is claiming New Brunswick’s credit rating will improve when the NB Power debt is erased from the provincial debt equation, but this isn’t true and now three rating services have confirmed this. The Graham government is doing whatever they can to paint a pretty picture of this deal but they are misleading New Brunswickers by providing inaccurate facts,” said Fitch.

Moody's Investors Service has confirmed that the proposed sale of NB Power assets, that would axe the public utilities debt, will have no impact on the province’s rating and borrowing capability. Last week, Dominion Bond Rating Service (DBRS) and Standard & Poors stated that the deal would not improve New Brunswick’s rating and yesterday their evaluations were confirmed by Moody’s.

“The Premier is saying that NB Power’s crippling debt is one of his prime motivators for moving forward with this deal. But the government is not being honest with New Brunswickers. If the motivating factor was debt reduction, there are other ways to reduce the debt of NB Power. NB Power’s debt and the provincial debt are viewed separately so erasing NB Power’s debt would not reduce the province’s net debt. Nor does this buy-out free up any cash flow since NB Power was paying to service its own debt,” explained Fitch.

In August, Moody’s downgraded the province’s credit rating, citing concerns with the Lepreau refurbishment, which has now been confirmed to be 16 months behind schedule. This is the first time in 12 years that any province’s rating had been downgraded.

Under the proposed agreement, New Brunswick will still be on the hook for these cost overruns since Hydro-Québec will not take over the nuclear power plant until after the refurbishment is complete and the generator is back on-line.

Opposition Leader David Alward says the Graham government should be ashamed of their shameless promotion of this deal.

“The government has accused us of fear-mongering but our aim to get accurate facts out to the people of New Brunswick. The government is cooking the details surrounding the deal to make it appear to be a good thing for New Brunswickers. What’s worse, they’re using the taxpayer’s money to try to convince them that it’s a good decision.”