Mines and Energy minister releases report on Newfoundland Power

Ed Byrne, Minister of Mines and Energy, released today a report by Deloitte and Touche which estimated the cost of taking ownership of Newfoundland Power. The report was commissioned by the previous government as an initial step in examining a possible merger of Newfoundland and Labrador Hydro and Newfoundland Power. Its scope was limited to available public information and brief discussions with government.

The preliminary review indicates, at the time this report was completed in August 2003,

the fair market value for the common equity of Newfoundland Power was within the range of $310 million to $380 million.

Minister Byrne indicated that it is not government�s intent at this time to pursue options for Hydro to assume ownership of Newfoundland Power.

"To our knowledge, Newfoundland Power is not being actively offered for sale. That suggests that either Newfoundland and Labrador Hydro would have to pay a high enough price to encourage the sale, or that government would have to get involved to force the sale," said Minister Byrne. "Neither is a direction we want to pursue at this time."

In releasing the report, Minister Byrne took the opportunity to reiterate the commitments his government made in relation to the electricity industry in Newfoundland and Labrador. Among these commitments are:

• Retaining Newfoundland and Labrador Hydro as a crown corporation with an expanding mandate;
• Implementing an energy plan that will ensure energy sources are used first to provide a reliable, affordable supply of power for domestic use and for province-wide development;
• Take advantage of business opportunities in export markets to sell energy that is excess to the province�s needs on terms that secure maximum benefits for the province;
• Secure maximum benefits for the province from the development of its hydroelectricity resources, including the potential of the Lower Churchill.

"I do believe there is room for improvement in the organization and regulation of the industry," said Minister Byrne. "This is not going to be achieved overnight. We will take the time required to complete an in-depth analysis of the information we have accumulated to date and to undertake further analysis as required. We want to make sure we do it right."

Minister Byrne said he wants to position the electricity industry to ensure it meets the needs of the people of Newfoundland and Labrador and that its role in the economic development of this province is maximized.

"Our role as a government is to ensure that people of this province continue to have access to a reliable, clean and affordable supply of electricity," said Minister Byrne. "Our objective is to find the right structure and find the right balance to maximize benefits for the people of Newfoundland and Labrador."

The Deloitte and Touche report is available at: //www.gov.nl.ca/mines&en/publications/energy/Deloitte&Touche.pdf

Media contact: Carmel Turpin, Communications, (709) 729-5282

2004 02 12                                       11:10 a.m.