Irving Paper reduces operations in Saint John due to uncompetitive electricity rates

Irving Paper, Limited has announced the permanent closure of 50% of its operations in Saint John, New Brunswick, in Canada, due to the impact of uncompetitive industrial electricity rates in the province. The decision, which takes effect immediately, results in the layoff of 140 employees and raises concerns about the viability of the industrial sector in the face of rising energy costs.

According to the company, electricity rates in New Brunswick are significantly higher than in other jurisdictions, such as Quebec, where heavy industry benefits from lower energy costs. The vice-president of Irving Pulp & Paper, Mark Mosher, pointed out that escalating prices jeopardize competitiveness on the international market. “Our employees are not just colleagues, they’re family. That’s why the decision to permanently downsize is a difficult one, but necessary to ensure the company’s long-term sustainability in the face of skyrocketing electricity rates”, he said.

J.D. Irving, parent company of Irving Paper, had been warning about the impacts of high tariffs and advocating changes to N.B. Power’s tariff structure. However, without a viable solution, the company opted to reduce its operations. Currently, the average tariff for large industries in the province is $93.43 per megawatt-hour, higher than the Canadian average of $72.68 and significantly higher than the $52.26 registered in Quebec.

The company is still negotiating with the New Brunswick government to find alternatives that will allow it to maintain the remaining 50% of the operation, especially in the face of the additional 10% increase in the electricity tariff, scheduled for April 1, 2025. N.B. Power stated that it will continue to work with Irving Paper to “explore options”, but stressed that its rates reflect the costs of supplying energy to residential and industrial customers.

Irving Paper is a leading manufacturer of graphic paper for magazines, catalogs, newspapers and advertising brochures. Until then, it employed 310 people directly and supported more than 300 suppliers in the province, handling $144 million in purchases spread across 40 communities by 2023. Around 95% of its annual production of 400,000 tons of paper is exported to 65 countries.

The partial closure of the mill rekindles the debate about the competitiveness of electricity rates in New Brunswick and the impact on the industrial sector. While experts point out that other provinces guarantee lower costs for large consumers, political leaders in the region argue that the rates are still more advantageous than those in some areas of the United States.

The city of Saint John and the provincial government have yet to comment on the company’s decision.