Maine is about to get a big new energy neighbor.
Last week, Hydro Quebec signed an agreement to purchase New Bruns-wick Power, the provincial utility with two major transmission links with Maine. That transaction, which still must be approved in both provinces, could affect Maine’s energy outlook.
The New Brunswick government says it was forced into the sale by its growing debt, which could not be covered by its electric rates. Hydro Quebec will pay off the debt and get the company.
If the deal goes through, Hydro Quebec will gain a powerful position in both the Canadian Maritimes and in the northeastern U.S. markets. It will control all Canadian access points into New England.
And it is not stopping with NB Power. The Quebec utility is reportedly in talks to acquire the power company on Prince Edward Island and may bid for Nova Scotia Power.
Just how powerful it will be is evidenced by the outcry coming from Danny Williams, the premier of Newfoundland and Labrador, and Darrell Dexter, the premier of Nova Scotia.
Williams is almost apoplectic at the thought of having to ship his province’s power through Hydro Quebec to reach the U.S. market. His province still smarts from a decades-old Labrador transmission deal under which Hydro Quebec left only crumbs for Newfoundland-Labrador.
Nova Scotia’s Dexter, while less outwardly angry, is clearly frustrated. He claims that Gov. John Baldacci has promised to block his province’s only alternative, an underwater transmission line to Maine. Baldacci’s office recalls no such statement.
New England energy prices are set at the level of the most expensive supply needed to meet total consumer demand. A single, major supplier may be able to manipulate the market. Hydro Quebec could get such market power from its New Brunswick purchase.
That is the reality of the deregulated generation market. The belief that Hydro Quebec will sell cheap power to Maine is outmoded. If Canadian provinces have lower rates than Maine, they may result from their governments’ subsidies not offered to Americans.
The outcome of the Hydro Quebec march across the Maritimes could be determined in Washington. The Federal Energy Regulatory Commission is likely to be asked to look at Hydro Quebec’s market power. If the regulator finds that is has too much market clout, it can deny it the right to set its own market price.
One solution that might give some comfort to the locked-in Canadian provinces and New England customers would be to give Newfoundland-Labrador and Nova Scotia the right to dedicated transmission corridors at decent rates. That could solve their problems while reducing Hydro Quebec’s transmission monopoly.
On a smaller scale but no less important to the people affected is the potential impact of the new deal on the electric customers of northern and portions of eastern Maine. They are connected only to the New Brunswick transmission grid through which power must pass to and from the rest of New England.
Hydro Quebec expects to roll the New Brunswick transmission system and its independent manager into its own transmission subsidiary. That could have major consequences for the Northern Maine Independent System Administrator (NMISA), the manager of power flows in the isolated portion of the state.
Will NMISA be able to function as it has in the past as a successful, low-cost administrator benefitting from a good relationship with it fellow manager in New Brunswick?
There’s no clear answer from the Quebec-New Brunswick agreement, and certainly nobody has thought to talk with Maine about protecting the NMISA.
For wind power to develop in northern Maine, it must be connected to a major grid.
Perhaps Hydro Quebec could provide the solution that has thus far been impossible with the New England grid or New Brunswick.
Hydro Quebec is likely to be interested in new transmission links with New England, and these lines would pass through Maine.
Instead of burdening customers with the cost of major new lines, such as the Central Maine Power proposal now before the Public Utilities Commission, Maine should start talking now with Quebec.
For years, Maine has been discussing joint energy plans with New Brunswick, but they seem to have been passed by events. The Hydro Quebec purchase of NB Power is not a purely Canadian deal. It creates an agenda for Maine negotiations with Quebec on transmission, wind power and protecting northern Maine.
Hydro Quebec says that New Brunswick will become an “energy hub.” That puts Maine in a strategic position, and it should move to take advantage of it.
Gordon L. Weil, a weekly columnist for this newspaper, is an author, publisher, consultant and former international organization, U.S. and Maine government official.