1 The idea of exploiting New Brunswick’s geographical location and energy infrastructure to meet New England’s needs originated in the 1960s. Plans ranged from damming the upper Saint John River watershed in the 1960s, to nuclear exports in the 1970s, followed by coal exports in the 1980s, and visions of a Saint John energy hub in the twenty-first century. Most recently, NB Power, in May 2017, set up an independent subsidiary, NB Energy Solutions Corporation, to market wind, solar, and hydro power in export markets. It was hoped that, as a subsidiary corporation, it could access federal infrastructure funding and avoid direct regulation by the New Brunswick Energy and Utilities Board.¹ Canadian export initiatives in the resource sector have at various times involved extensive government subsidies and preferential regulatory treatment, beginning in the colonial period and extending throughout the twentieth century.²

2 In contrast with the staple exports of timber, wheat, minerals, and hydrocarbons, electricity exports had historically been restricted by federal regulations to short-term exports, primarily between Ontario utilities and utilities in neighbouring American states. In October 1963, the federal government changed its policy to allow long-term power exports in cases where exports would accelerate new investments in electrical generating capacity in Canada.³ Subsequently, in the 1960s and 1970s, several provincial utilities including the New Brunswick Electric Power Commission (NBEPC), the Quebec Hydro-Electric Commission (Hydro Quebec), Manitoba Hydro, and the British Columbia Hydro and Power Authority altered their investment strategies to generate power for the American market.⁴ NBEPC was relatively early in developing its export market, so much so that by 1977 it was second only to Ontario Hydro in the value of export revenues. Among Canadian public utilities, NBEPC was also the most dependent on exports to the United States, with export sales making up 33 per cent of total revenues.⁵ Not only was this the most aggressive attempt among Canadian utilities to integrate with American markets at that time, but it would drive NBEPC’s investments over the following twenty years. This article explores the historical origins of NBEPC’s export strategy, focusing on the strategic choices of NBEPC managers who created the strategy and the associated conflicts with other areas of public policy both at the provincial and federal levels.

3 My approach is influenced by the historical research of Thomas P. Hughes into the comparative history of electrical systems in the United States, England, and Germany. For Hughes, electricity networks could not be adequately explained solely within a framework of technological and economic determinism, but required an exploration of institutional and social contexts. Especially important for Hughes were the variations in what he called the sociotechnical systems that developed around electrical utilities that “had high momentum, force, and direction because of their institutionally structured nature, heavy capital investments, supportive legislation, and the commitment of know-how and experience.”⁶ Hughes used this framework to explore the variation among utilities in their capital intensity, efficiency, organizational form, extent of interconnections, and degree of public ownership. In addition to utilizing Hughes’s framework of sociotechnical systems, this research is sensitive to two important aspects of the development of electricity in Canada: the environmental context⁷ and the organized power of utility managers within primarily state-monopoly enterprises.⁸ The research findings in New Brunswick suggest that the principal actors in this transition were the NBEPC managers who had the social capacity to construct the new export strategy in a manner consistent with their assumptions about the technical benefits of interconnections and their desire for organizational growth. My approach necessarily relies on primary documentary evidence, which includes archival records of NBEPC, New Brunswick premiers Robichaud and Hatfield, and the federal Departments of Finance, Regional Economic Expansion, Environment, and Energy, Mines and Resources.

4 In the case of New Brunswick, early plans for an integrated public power system⁹ were set back by the election of 1925 when the Liberal government was defeated along with plans for an interconnected provincial electricity system under public control. The new Conservative government halted the process and transferred the lucrative Grand Falls hydro site to International Paper as a public subsidy for their proposed pulp and paper mill in Dalhousie, New Brunswick.¹⁰ Subsequently, between 1920 and 1945, NBEPC developed incrementally as a small public commission serving communities that were of little interest to the for-profit private companies. However, by the late 1940s, political and business elites agreed that a much-expanded electrical supply system was a necessary condition for economic growth in the province, a system that the private sector was not interested in developing. Given the increasing American demand for a reliable supply of strategic resources for military purposes and the material needs of mass production in the United States, the New Brunswick government focused its growth strategy on accelerating the processing of forestry and mineral resources for export to the United States, a strategy that necessarily required new large-scale power supplies for the power- intensive industries.¹¹ Central to this process was the transformation of NBEPC from a politically controlled state agency to a quasi-autonomous public utility with its own planning capacity. Under the slogan “power for industry,” the provincial government mandated NBEPC to construct an integrated provincial electrical system building on the hydroelectric potential of the Saint John River watershed. In spite of significant public opposition,¹² the Saint John River was transformed in the 1950s and 1960s by a complex of hydroelectric generating units. The subsequent reductions in industrial electricity rates contributed to attracting foreign capital, especially significant in the processing of pulp and paper and base metals. Dams also generated thousands of short-term construction jobs, with the associated political benefits that both Conservative and Liberal governments endorsed. At the same time, it created an expanded state enterprise, the NBEPC, monopolizing not only the electrical system but also the planning capacity to pursue its increasingly self-defined organizational interests.

5 The organizational autonomy of NBEPC was based on its technological capacity to extract economies in the sector, economies that depended on growing sales to justify progressively more efficient and larger generating units. The ensuing relations among the government, public power, and private business reflected a set of symbiotic relations based on a continuation of rate reductions through economies of scale, economic growth in the resource-processing sector, public sector employment in construction, modernization of the electrical sector, and the organizational growth of NBEPC. However, by the late 1960s, the exceptional growth of the resource-processing industries of the 1950s slowed within New Brunswick, reducing the immediate gains from the power-for-industry model. NBEPC responded, as was the case with other electrical utilities in the 1960s,¹³ with an aggressive marketing strategy, increasing the marketing staff to forty-one employees, introducing sales quotas, increasing advertising, and providing incentive rates for power-intensive residential appliances such as water heaters and space heating. In the words of one memo sent to staff, “Selling power is the business of every employee.”¹⁴ However, this more intensive use of electricity within the province could not overcome the limits of the small size of the provincial market. NBEPC managers believed that they needed to expand their sales beyond New Brunswick if they were to escape what they viewed as the small-utility trap, and approach the same levels of system efficiencies as Ontario Hydro and Hydro Quebec. By the late 1960s, senior managerial meetings were preoccupied with what they increasingly referred to as their “export dream”¹⁵ as an alternative to the limits of the small New Brunswick market.

6 As part of the original planning for dams on the Saint John River, NBEPC staff worked closely with federal agencies in the United States in the planning for hydro dams on the international Saint John River watershed. Within New Brunswick, the Mactaquac dam was the last of three major hydro projects. It was completed in 1968 with three installed 100-megawatt turbines. Additional generation of up to 300 megawatts could be installed, but would generate primarily temporary peaking power during periods of exceptional high-water flows.¹⁶ Such additional generation was planned to be added incrementally to serve future growth in provincial demand unless export sales could justify earlier developments. For NBEPC managers, the export option was preferred and was viewed as an extension of the work they had done with the public power interests in the United Sates. Specifically, future development of hydro dams on the Saint John River in northern Maine would involve high-voltage interconnections to southern New England, which NBEPC could also use for exporting present and future surpluses of Mactaquac power.¹⁷ However, the Dickey-Lincoln project in northern Maine was never a certainty and became the focal point of an intense public/private power battle in New England. When the U.S. House of Representatives voted 233 to 169 on 25 July 1967 to defeat a motion to allocate $1,676,000 for the final engineering and design work for the Dickey-Lincoln project, NBEPC turned its focus to developing an export strategy to New England independent of the Maine hydro project.¹⁸ This required not only a substitute for the Dickey-Lincoln high-voltage transmission system to southern Maine but also a new set of corporate relations with the New England private power sector and a new source of power for export to supplement additions to the Mactaquac generating capacity.

7 As demonstrated in the work of Hughes, particular electrical systems interconnect with other systems in distinctive ways, reflecting the technical and social context. NBEPC was no exception. In 1967, NBEPC managers began the process of sorting out the logic of how they would benefit from the emerging opportunities in neighbouring markets. While the Dickey-Lincoln option was being foreclosed, new opportunities for interconnections were opening for NBEPC as a result of Hydro Quebec’s exclusive contract for the 5,400-megawatt Churchill Falls dam in Labrador, providing surplus power that could be available to NBEPC.¹⁹ In the summer of 1967, NBEPC management hired some of the leading Canadian and American utility consultants to identify the potential of large-scale interconnections with the Hydro Quebec and New England systems and the particular ways NBEPC could benefit both in the short and longer term.

8 The role of oversight, coordination, and articulation of the strategy was given to G.W. Clayton, Vice-President, Acres Research and Planning Limited. He was supported by Joseph P. Swidler, who had formerly been the Chief Attorney of the Tennessee Valley Authority and Chairman of the United Sates Federal Power Commission. He provided advice on the American political context and the challenges of navigating through the private/public power political conflicts in New England. Shawinigan Engineering was hired to construct supply/demand balances for the New England utilities in order to identify possible markets. In a progress report of 16 July 1967, G.W. Clayton reported to NBEPC’s general manager with detailed notes of meetings with NBEPC senior executives, staff of the U.S. Department of the Interior, and Swidler. The notes provide insight into the key actors’ perceptions of the opportunities and challenges of large-scale interconnections. NBEPC managers were focused on the opportunities for building new generation to serve the export market with capacity and energy sales, as well as the possibility of acquiring Hydro Quebec power for re-export to New England.²⁰ There is no evidence in the 1967 correspondence that NBEPC had any interest in purchasing Hydro Quebec power for the long term to meet New Brunswick demand, even though there are several references to Hydro Quebec offering at that time up to 1,200 megawatts to Vermont and New York utilities for twenty-five years.²¹ Of special interest for future negotiations were references to the implications for NBEPC of the animosity between private and public utilities in New England. In spite of NBEPC’s almost exclusive past relations with the public power interests, their Washington advice from both Swidler and the Department of the Interior officials was to develop new relationships with the private utilities if they were to develop the necessary transmission interconnections.

9 The final report of Clayton, “New Brunswick Electric Power Commission Interconnections Study,”²² provided NBEPC managers with a framework for investments in interconnections that was tailored to NBEPC’s context. The standard potential advantages from interconnections were summarized, ranging from very short-term exchanges to take advantage of the varying load and generation characteristics to potential long-term participation agreements designed to capture potential economies of scale.²³ The thesis of the report was that interconnections and participation agreements in larger units could assist NBEPC in overcoming limits imposed by the small size of its utility. However, there was no discussion of the typical way for a small utility to do this through participation in another utility’s project as part owner. For NBEPC management, generation for provincial needs would have to be in-province and under their control. They proposed that larger, more efficient generating units could be built by NBEPC either by using electricity imports to defer small-scale units until larger units were justified in the province, or building larger units to serve both domestic and export markets over the long run.²⁴ Swidler, for his part, expressed some reservations about the risks to NBEPC if their exports could not compete with the several nuclear projects being built in New England in the late 1960s. In spite of these concerns, NBEPC managers moved forward, inspired by the vision of becoming a cost-effective generator serving much larger systems—what they came to refer to as their “export philosophy.”²⁵

17 While the initial 1971–75 New England contract was based primarily on re-exporting Hydro Quebec power, the longer-term objective of the export strategy was to build large-scale capacity in New Brunswick to serve the export market. From the perspective of NBEPC executives, the long-term choice was nuclear power.⁴⁵ Discussions had been taking place between NBEPC and officials of Atomic Energy of Canada Limited and the federal Department of Energy, Mines and Resources since 1966 about the potential for nuclear power in New Brunswick.⁴⁶ However, NBEPC’s analysis in 1970 concluded that nuclear units were not competitive with thermal units in New Brunswick at that time.⁴⁷ Large-scale thermal generation was NBEPC’s first choice, especially if it could be justified in association with participation agreements with New England utilities. New England utilities were experiencing further delays in construction of their nuclear units by 1971 due to a combination of construction and regulatory problems. Especially relevant was the success of environmental opposition to nuclear reactors in New England through regulatory intervention. The severity of problems varied among the utilities depending on their nuclear involvement and the economics of the available alternatives. The situation was especially serious for New England Electric System and Central Maine Power with their relatively large investments in the nuclear plants under construction.⁴⁸ In response to the New England shortages, NBEPC proposed in July 1971 to supply up to 1,050 megawatts of primarily thermal power to New England utilities and to build the associated additional transmission from New Brunswick to the Maine border.⁴⁹ The negotiations proceeded quickly with a Letter of Intent by 18 August and the final contract signed by November 1971 for 400 megawatts of firm power for ten years from 1976 to 1986 with MEPCO acting as the agent for the New England buyers.⁵⁰

18 The final export contract was for American utility participation in the proposed 900-megawatt Coleson Cove oil-thermal generating plant on the Bay of Fundy near Saint John in southern New Brunswick. The MEPCO participation was in the form of a “take-or-pay” contract for 400 megawatts of capacity and energy, composed of 133 megawatts from each of three 300 megawatt units at the Coleson Cove site. The contract was based on a pro-rating of full costs with the addition of a site charge. Over the ten-year life of the participation agreement, NBEPC expected between $260 and $300 million in export revenues with net earnings from the deal of over $80 million.⁵¹ At the same time, NBEPC was able to reduce its financial risk of failure of any one unit at Coleson Cove, as the New England utilities covered their share of costs, regardless of operating performance. The Coleson Cove project would almost double the generating capacity of NBEPC from the 1970 level of 1,032 megawatts to 1,932 megawatts. The New England exports from Coleson Cove would be 2,803 gigawatt hours each year for a utility with in-province sales of only 3,561 gigawatt hours in 1970.⁵² In spite of the magnitude of the exports, the negotiations with New England were left entirely to NBEPC managers. As with the previous New England exports, NBEPC was expected to continue to provide reduced power rates in New Brunswick and in-province construction jobs, which New Brunswick politicians had grown to expect in exchange for leaving electrical energy policy development and administration to NBEPC managers.⁵³

19 The speed of the negotiations reflected the shortages of power in New England and problems with nuclear delays and increasing costs. The competitiveness of the NBEPC exports depended on the ability to underprice the New England alternatives. Based on the minutes of meetings between NBEPC and the New England utilities, the New England utilities were most interested in the ability of NBEPC to burn oil of 2.0–2.5 per cent sulphur content as opposed to their environmental requirements to use 1 per cent sulphur-content fuel.⁵⁴ This meant that estimated fuel costs in New Brunswick were $3.00 per barrel compared to $4.00 per barrel for the cleaner fuel required in New England.⁵⁵ In addition, New England utilities requested and received a detailed account of the lower taxes that NBEPC would be subject to as a public corporation, savings that would be passed on to New England utilities, given the terms of the participation agreement.⁵⁶ These two factors—the ability of NBEPC to burn dirtier fuel than allowed in New England and the preferential tax treatment on NBEPC generation—provided NBEPC with its competitive advantage. In spite of this, NBEPC managers presented their “Export Power Programme for New Brunswick” to the premier and NBEPC Board of Commissioners in late 1971, claiming it was based on exploiting the economies of scale of larger generating units with no reference to the real factors creating the competitive advantage.⁵⁷

20 The environmental consequences of the exports were significant. The 400 megawatts of exports would generate 192,000 tons of sulphur oxides, 42,400 tons of nitrogen oxides, and 3,230 tons of particulate over the ten years of the exports. As well, the Coleson Cove site was not using any of the best-available technologies to reduce emissions, relying instead on very high stacks to dilute the pollution.⁵⁸ NBEPC managers were aware of the potential problems, having been advised by their consultant that the environmental impacts of the exports would likely be one of the areas of concern for the National Energy Board.⁵⁹ The National Energy Board, while documenting some of the environmental implications of the exports, was satisfied by NBEPC’s commitment to meet provincial and federal environmental regulations.⁶⁰ The then-current federal regulations were relatively weak, but as the new federal Department of the Environment enhanced its regulatory powers and environmental assessments, NBEPC managers became concerned. In contrast with the planning for the Mactaquac dam in the early 1960s, where NBEPC employees were integrated with inter-departmental planning agencies that were designed to socially manage potential conflict,⁶¹ the newly created federal environmental agencies and the environmental review process were developed independently of NBEPC. By late 1972, NBEPC internal files were replete with references to the negative impact of the environmental reviews, to the point where the general manager reported to the senior executive meeting that environmental hearings “constituted a threat not only to the Commission and Cabinet but to industry within the Province.”⁶² In response, NBEPC management developed a corporate environmental program focused on public relations (stressing the need for more electricity) and the promotion of efficient regulations.⁶³ They were successful in avoiding restrictions on burning high-sulphur fuel, convincing the government that a high stack was sufficient for dilution of emissions. The sensitivity of NBEPC managers to environmental regulations was understandable, given the dependence of the exports on the relatively weak environmental regulations applied to NBEPC’s thermal generation.

21 More difficult to manage were the interests of the national government in promoting regional cooperation among the Maritime utilities, a position at odds with NBEPC’s focus away from its neighbouring provinces and toward the American market. During the early 1960s, the federal government had attempted to work with the provinces to establish a national electrical grid. From the federal perspective, a national grid could have provided the potential for exploiting the standard short-term benefits of interconnections, in addition to accelerating the development of more capital-intensive generation (specifically hydro in Quebec and nuclear power across Canada), which was assumed to offer economies of scale to reduce power costs. The federal government viewed the national grid as especially advantageous for the Maritime provinces with their small, isolated systems. A federal-provincial working group was established to explore the advantages of a national grid, but the federal initiative was constrained by the competing interests of provincial governments, which had jurisdiction over provincial electricity policy.⁶⁴ The Quebec government was opposed to a Canadian national grid that could restrict its use of provincial hydro resources to attract industry. Additionally, they were unwilling to “accept some kind of control by outside sources over the transfer of its energy to neighbouring provinces,”⁶⁵ reflecting the concern with possible enhanced functions of the National Energy Board as a regulator of inter-provincial trade in electricity. The focus of NBEPC, even at this early stage, was again on the American market, which offered the advantages of proximity and larger markets, in contrast with the Canadian grid with much longer distances among the utilities.⁶⁶ Thus, by the mid-1960s, the federal initiatives for a national grid were rejected by the provinces.

22 The federal government had been actively involved in subsidizing NBEPC’s initiatives in the 1950s and 1960s through the Atlantic Provinces Power Development Act (APPDA), which provided coal subsidies and financing for transmission expansion. The federal government, on a case-by-case basis, also provided special financial assistance for large generating projects such as the Mactaquac and Beechwood hydroelectric dams.⁶⁷ By early 1970, the federal government had decided to wind up the APPDA, shift authority for regional electricity policy to the newly created Department of Regional Economic Expansion (DREE), and provide subsidies that would benefit the Maritime region as opposed to individual provincial utilities.⁶⁸ DREE was willing to provide financial assistance to large Maritime projects provided the benefits were shared among the Maritime utilities. However, NBEPC was moving in the opposite direction with its export strategy, and asked the federal government for subsidies for its interconnections with Hydro Quebec and New England as an alternative to all future federal assistance. Opposition to NBEPC’s proposal was swift and not restricted to DREE. Officials in the federal Department of Finance argued that there was no economic justification for any subsidization of electricity, and that it had not been established that lower electricity prices stimulated economic development.⁶⁹ Nova Scotia utilities did not support NBEPC’s intentions to monopolize the Hydro Quebec interconnection and were skeptical of any Maritime benefits, which NBEPC cited in its Ottawa application.⁷⁰ Subsequently, NBEPC received a subsidy of only $4 million on its application for $24 million for its Quebec and New England interconnections, with the subsidy primarily to compensate for the discontinuation of the APPDA programs.⁷¹ NBEPC, then, was committed to its export strategy to the point of giving up federal assistance for joint Maritime projects.

23 Discussions with DREE over the form of assistance to the electrical sector in the Maritimes culminated in late 1970 over DREE’s insistence that the Maritime utilities create a power pool with shared planning and co-ownership of regional generating units. From DREE’s perspective, the provincial utilities were constrained primarily by their small markets, which could not independently justify the more economic larger units. In spite of this, the utilities were unwilling to establish a functioning power pool that could organize joint planning of new generation.⁷² NBEPC was adamantly opposed to a fully integrated pool and wanted to continue with the voluntary pooling arrangements with some enhanced transmission capacity and short-term power exchanges. At a meeting between NBEPC and the Nova Scotia utilities in December 1970, the NBEPC representative was clear in stating that the utility had dealings with New England and Hydro Quebec that it was not willing to share or diminish with a Maritime pool approach.⁷³ From NBEPC’s perspective, it had invested in interconnections with Hydro Quebec and New England that created what it was later to name its “earned strategic position”— that is, its unique ability among Maritime utilities to purchase relatively low-priced power from Hydro Quebec and to export into the relatively high-priced market in New England. NBEPC had created the interconnections to allow it to build new generation to export to New England. It was not something to be shared, as it was to be the cornerstone for its new corporate growth strategy.

24 The new federal electricity export policy of the early 1960s provided an opportunity for NBEPC managers to overcome the limits of its small utility by integrating planning with the continental market. Its response was strategic, developing an approach that integrated future investments with the export market, altering the timing of investments, and more than tripling the size of power plants. This research has identified several necessary conditions for the implementation of the export strategy, including Hydro Quebec surpluses created by the Churchill Falls contract, problems with the construction of nuclear reactors in New England, the technocratic capacity of NBEPC managers and their consultants, and specific environmental and social subsidies that NBEPC could exploit. The research has also documented the particular manner in which interconnections were developed and the social power of NBEPC managers to construct the export strategy.

25 As demonstrated in the comparative international research of Thomas P. Hughes, the history of electrical networks cannot be adequately explained by technological imperatives, and, as this research shows, New Brunswick was no exception. The historical origins of NBEPC’s exports and associated interconnections were conditioned by the particular social relations, institutional structures, and levels of expertise within NBEPC. Going beyond the work of Hughes, this research has benefited from internal corporate and government records that were unavailable in Hughes’s cases. Utilizing documentary evidence, the research was able to identify not only the contextual challenges faced by utility managers but also their conflicts with other organizations and the ways they attempted to exercise their social power in response to those challenges. Especially empowering for NBEPC managers was their ability as a provincial public sector monopoly to act under the authority of the provincial government while investing public time and resources to develop a particular export strategy that prioritized corporate growth. The consequences included the lost opportunity of long-term hydro imports from Quebec and the tax and environmental subsidies applied to the Coleson Cove exports.

26 Fifty years after NBEPC managers constructed their vision of an export dream, the utility is a very small player in export markets dominated by utilities in Quebec, Ontario, Manitoba, and British Columbia. However, at various moments the export dream has resurfaced in New Brunswick with visions of large-scale exports of nuclear or coal-fired electricity to serve the New England markets. While such visions tended to attract a great deal of attention from one political party or another, they resulted in very little aside from diverting attention from the challenges of meeting provincial energy needs in a relatively small regional market. The latest version of the export dream involves producing renewable wind and hydro power for the export market from an NB Power subsidiary, NB Energy Solutions Corporation, which would be shielded from regulatory oversight. Given the historical experience of the late 1960s, it is difficult to see the need for bringing back the potential adverse consequences of a closed public sector decision-making process, especially in the case of the province’s limited renewable energy resources.