The New Brunswick government has backed away from selling the majority of its provincial power utility to Hydro-Quebec, but the Quebec utility will have the right to use nearly all of the available export capacity to ship power to energy markets in the U.S.
“What was always key for us was the ability to access the transmission system to reach markets, to basically a bridge from our resources here in Quebec to markets along the eastern seaboard,” Thierry Vandal, president and chief executive officer of Hydro-Quebec said.
“Those transmission rights will be transferred over to Hydro-Quebec and that’s very positive.”
Under a new plan announced Wednesday, Hydro-Quebec will purchase New Brunswick’s hydro-electric facilities and a nuclear power plant for $3.2 billion — but the Atlantic province will retain control of its transmission and distribution systems.
The new deal gives 670 megawatts of transmission rights to Hydro-Quebec for the U.S., in addition to the 300 megawatts of transmission capacity it has on a line opened in 2007.
With 970 total megawatts of transmission, Hydro-Quebec almost has the same total capacity as that between New Brunswick and Maine, which is a little more than 1,000 megawatts.
N.B. Premier Shawn Graham said the deal doesn’t give Quebec special treatment, and open access to the U.S. market will be maintained.
“Those rules have to be followed,” he added. “So whether it was ownership of NB Power or Hydro-Quebec, the rules applied for open access to that U.S. market. And today, those rules will be followed, but they’ll be put in place by a New Brunswick system regulator and, at the same time, ownership of the lines belonging to New Brunswick.”
Graham announced the details of the revised deal on Wednesday, suggesting that the new deal was proof that his government listened to its critics.
The original plan had been to sell almost all of NB Power for $4.75 billion, a price that is equivalent to the provincial utility’s debt. But the deal included selling off the transmission and distribution systems — a point that angered local premiers, the public and members of the government itself.
In the new deal, the province will also keep NB Power, the provincial power utility, as a Crown corporation. It will employ about two-thirds of its current workforce under the terms of the deal, which is to be finalized by March 31.
Hydro-Quebec bought seven hydroelectric generating facilities, two diesel units and transmission rights associated with those units for $1.8 billion. The Quebec utility will buy the Point Lepreau nuclear generating station for $1.4 billion when its refurbishment is completed in 2011.
Homeowners will not see their power rates increase for the next five years and industrial customers will see their rates drop 23 per cent.
The deal will reduce debt, lower power costs and allow the province to retain the possibility of making itself into a so-called energy hub for the northeastern United States.
“So going forward now, we’ve got a marriage that is going to allow us to maximize the value of each other’s assets, but at the same time, we can maintain control and access of our transmission system here in the province of New Brunswick,” Graham told reporters gathered at a news conference in Fredericton.
New Brunswick Conservative Leader David Alward said the government must allow time for the deal to be studied.
“Don’t make a disastrous decision by forcing a signature on a line on an arbitrary date, let’s get it right,” he said. “He (Graham) proved the first time he couldn’t get it right. We’re going to prove that he still doesn’t have it right.”
Barbara Pike of the Atlantic Institute for Market Studies — a non-profit research group — said the deal is one more step towards making New Brunswick a better place to do business.
“The deal continues to make New Brunswick very competitive,” she said. “You’ve got tax reform and now you’ve got stable power rates that makes it very attractive. When companies are taking a look at where they’re going to move, they’re going to look at a place like this.”
With files from The Canadian Press and a report from CTV Atlantic