Bill 41 alters the Local Governance Act to replace the old “generation facility” concept with a defined “clean energy generation facility,” and to give local governments new, explicit powers to build, own, operate or hold securities in such projects. Municipalities may use generated electricity for themselves, sell it under the Electricity Act, or sell environmental attributes tied to generation; they may not, however, distribute electricity as a retail service to their residents.
The bill also permits municipalities to establish for‑profit corporations to run these projects, requires council resolutions before taking action, creates temporary and construction borrowing rules, and allows delegations to regional service commissions — with specific borrowing and guarantor mechanics. The legislation adds reporting requirements for municipal corporations and channels any profits back into the municipality’s general operating fund.
At a Glance
What It Does
The bill replaces the generic 'generation facility' term with 'clean energy generation facility' (as defined in the Electricity Act) and authorizes municipalities to construct, own, operate or hold securities in such facilities or corporations set up to do so. It allows sale of electricity and sale of environmental attributes but prohibits municipalities from distributing electricity directly to residents.
Who It Affects
Municipal governments in New Brunswick, regional service commissions, Indigenous band councils when entering agreements, municipal finance officers, and provincial regulators under the Electricity Act and related renewable regulations. Utilities and private developers that negotiate offtake or partnership agreements will also be directly affected.
Why It Matters
This creates a statutory path for municipalities to participate commercially in the clean electricity market — including through for‑profit corporate vehicles — while defining borrowing and delegation mechanics that allocate risk across municipal, regional and provincial actors. It also ties municipal activity to definitions and rules in the Electricity Act and renewable regulations, making inter‑act with provincial energy policy central to implementation.
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What This Bill Actually Does
The bill recasts municipal participation in electricity projects around the concept of 'clean energy generation facility' — a term pulled from the Electricity Act — and inserts that concept throughout the Local Governance Act. That change is more than semantic: by using the Electricity Act’s definition it links municipal powers to provincial standards about what counts as 'clean' and to the regulatory regime that governs generation and environmental attribute accounting.
Municipalities may directly construct, own or operate these facilities, acquire adjacent lands for projects, and enter into multi‑party agreements that share construction and operating costs, including with other municipalities, Indigenous band councils, the Crown or private parties. Critically, the bill bars municipalities from acting as retail distributors to their residents: they can use the electricity internally, sell it in compliance with the Electricity Act, or sell environmental attributes, but they cannot set up a municipal electricity service to supply residents.The statute also authorizes municipalities to form or hold equity in corporations that build or operate clean generation projects.
Those corporations can operate for profit; any profits received by the municipality must be paid into its general operating fund and used solely for municipal purposes. The bill exempts certain statutory constraints (sections 8 and 112–116) from applying to facilities organized under the corporate route, which changes which procedural rules govern those projects.On financing, the bill adds a temporary borrowing allowance for operations — permitting municipalities to borrow up to 50% of budgeted revenue for a year to cover current expenditures related to operating a clean energy generation facility — and preserves borrowing routes for construction, including delegation to regional service commissions.
Delegations must be done by by‑law, require the regional service commission’s consent, and trigger Municipal Capital Borrowing Act rules where the commission borrows and municipalities act as guarantors.Finally, the bill layers in municipal reporting and transparency: amendments to the regulations require municipalities to disclose corporate names, purposes and profits paid back to the municipality, and councils must pass a resolution before initiating construction or corporate measures. Those governance, reporting and borrowing mechanics will shape how quickly and at what scale municipalities enter the market.
The Five Things You Need to Know
The bill ties the municipal power to build energy projects to the Electricity Act by defining 'clean energy generation facility' using that Act’s definition, embedding provincial standards in municipal projects.
A municipality may use generated electricity for itself, sell it under the Electricity Act, or sell environmental attributes, but the bill expressly prohibits municipalities from distributing electricity or providing it as a retail service to their residents.
Municipalities may set up or hold securities in for‑profit corporations to run projects; profits from those corporations must be paid into the municipality’s general operating fund and used solely for municipal purposes.
The bill allows temporary annual borrowing for operations related to a clean energy generation facility up to 50% of that year’s budgeted revenue, and preserves other borrowing mechanisms for construction.
Municipalities may delegate powers for construction or operation to regional service commissions by by‑law, with the commission able to borrow (as borrower) under the Municipal Capital Borrowing Act while municipalities act as guarantors.
Section-by-Section Breakdown
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Adopts 'clean energy' language and adds 'environmental attributes'
The bill removes the old 'generation facility' term and inserts 'clean energy generation facility,' explicitly linking municipal project eligibility to the Electricity Act’s definition of clean sources. It also adds a statutory definition of 'environmental attributes' drawn from the province’s Electricity from Renewable Resources Regulation, so municipalities can contract and account for tradable attributes (e.g., Renewable Energy Certificates) under a recognized provincial standard. That cross‑reference forces municipal projects to fit within provincial definitions and market constructs rather than leaving interpretation to local bylaws.
Expanded acquisition and partnership authorities for municipalities
Section 112 is rewritten to let municipalities acquire adjacent land, enter multi‑party cost‑sharing or development agreements, and join with Indigenous band councils, the Crown or other entities to construct, own or operate clean energy projects. The provision requires a council resolution before proceeding, which creates a public decision point and record. Practically, the clause lowers transactional barriers for intermunicipal and Indigenous partnerships while embedding a local democratic check via the resolution requirement.
Permits for‑profit municipal corporations to hold and operate projects
The new section 116.1 authorizes municipalities to establish or hold securities in corporations that construct or operate clean generation facilities and explicitly allows those corporations to operate for profit. It clarifies permissible uses — internal consumption, sale under the Electricity Act, and sale of environmental attributes — and channels any profits back into the municipality’s general operating fund for municipal uses only. The section also states that several municipal provisions (sections 8 and 112–116) do not apply to projects organized under this corporate route, creating a parallel governance track for corporate vehicles.
Operational budgeting flexibility and a 50% temporary borrowing cap
The bill amends budgeting rules to require municipalities operating a clean energy facility to produce a balanced operation budget, either annually or on a four‑year basis at their discretion. It replaces the old borrowing rule with a new temporary borrowing allowance that lets municipalities borrow up to 50% of budgeted revenue in any year for current expenditures related to facility operation. That creates short‑term liquidity leeway but also a clear ceiling that local finance officers must monitor as part of municipal cash‑flow and risk planning.
Delegation mechanics and borrowing allocation to commissions
The bill allows municipalities to delegate powers for construction or operation to regional service commissions via by‑law, but only with the commission’s consent under the Regional Service Delivery Act. When a commission borrows for construction under a delegation, the Municipal Capital Borrowing Act applies to the commission as borrower, while each participating municipality remains a guarantor. That structure centralizes project delivery but explicitly preserves municipal contingent liability, which affects municipal credit and risk exposure.
No municipal retail distribution; council resolution and profit rules
Multiple provisions together make two firm points: municipalities cannot set up retail electricity distribution to supply their residents, and they must pass a council resolution before initiating measures to construct or participate in projects. Corporations may operate for profit, but any profits received by the municipality are to be paid into the general operating fund and reserved for municipal purposes. Those combined limits shape both the commercial model available to municipalities and the internal governance and accountability path for proceeds.
New transparency duties about municipal corporations and profits
The bill amends regulations to require municipalities to disclose information about corporations created under the new rules — name, purpose and profits paid to the municipality — in municipal reporting. It also expands the municipal authority inventory language to capture municipal holdings in such corporations. These changes create minimum transparency expectations that will be relevant for auditors, municipal oversight committees and provincial monitors.
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Explore this topic in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Municipal governments — gain a statutory route to develop clean generation projects, additional revenue streams from asset sales or environmental attribute monetization, and broader partnership options with other municipalities and Indigenous councils.
- Regional service commissions — receive an explicit role as delivery vehicles for larger projects, with the ability to borrow directly and aggregate project activity across municipalities, potentially capturing economies of scale in planning and procurement.
- Indigenous band councils — become express partners in cost‑sharing and joint ownership arrangements, which creates opportunities for co‑development and revenue sharing tied to projects on or adjacent to their lands.
Who Bears the Cost
- Municipal taxpayers — face potential exposure if projects underperform or if municipalities act as guarantors on borrowing; profits are not ring‑fenced and may be used for general municipal spending, which could redistribute risk and returns across residents.
- Participating municipalities — will shoulder administrative, procurement and project‑development costs, and remain guarantors where regional service commissions borrow, potentially affecting credit capacity and debt ratios.
- Regional service commissions and municipal finance officers — bear new administrative and compliance burdens (borrower responsibilities, reporting obligations, by‑law delegations) and will manage the day‑to‑day fiscal risks of construction and operation.
Key Issues
The Core Tension
The bill balances two legitimate objectives that pull in different directions: enabling local governments to act on clean energy and capture economic value from generation projects, while constraining them from becoming retail electricity providers and protecting provincial market and fiscal stability. That trade‑off forces a policy choice between maximizing municipal autonomy to deliver local energy solutions and containing municipal fiscal and market risk within provincial regulatory boundaries.
Several implementation ambiguities and trade‑offs stand out. First, the bill ties 'clean' to the Electricity Act but leaves crucial operational detail to that Act and its regulations: what technology qualifies, how environmental attributes are quantified, and how offtake arrangements subject to provincial market rules will be treated in practice.
Municipalities will need to navigate provincial licensing, market access and attribute registry rules before revenue expectations are firm.
Second, the statute simultaneously enables municipalities to operate for profit and forbids retail distribution to residents. That narrows the commercial model to wholesale sales, internal use, and attribute markets; it prevents municipalities from becoming retail utilities supplying local customers, which could limit local decarbonization strategies that rely on direct municipal retailing.
Relatedly, requiring profits to flow into the general operating fund removes the option to ring‑fence earnings for the project — simplifying accounting but exposing municipal budgets to cross‑subsidization decisions.
Third, the financial mechanics create contingent liabilities: the regional service commission borrowing model centralizes project finance but leaves municipalities as guarantors under the Municipal Capital Borrowing Act. The 50% temporary borrowing allowance for operations gives short‑term flexibility but could mask recurring operational shortfalls if used repeatedly.
Finally, the exemption of sections 8 and 112–116 for corporate‑organized projects erects a parallel governance regime whose oversight contours — e.g., procurement, conflict of interest, and transparency beyond the relatively narrow reporting amendments — are not fully specified in the bill.
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