Quebec Hydro Reserves vs Wind, Tidal Power

From the CBC

N.B. wins in Hydro-Québec deal: economist
Last Updated: Friday, December 11, 2009 | 9:05 AM AT
CBC News
New Brunswick residents and businesses will likely emerge as winners in the proposed NB Power takeover deal, according to a Quebec economist.

Jean-Thomas Bernard, an economist at Laval University, has studied Hydro-Québec for years and he said the deal is good for the Quebec power corporation right now because it needs new customers to deal with all its excess power.

Bernard said Hydro-Québec may lose out in the long run and many of the utility's other customers would appreciate a similar deal that NB Power clients will be getting under the proposed arrangement.

"We are in a surplus situation now and having this additional market is most probably good at this time," Bernard said.

However, Bernard said in the long-term Hydro-Québec may regret this deal because the corporation may wind up selling its power to New Brunswick at a much cheaper rate than to its other customers in the United States or in Ontario.

"You must recall that you are paying 50 per cent more [for electricity] than in Quebec. And, Ontario is paying 70 per cent more than in Quebec," the economist said.

Under the proposed takeover agreement, Hydro-Québec would pay $4.8 billion to purchase the majority of NB Power's assets, that move would immediately erase the New Brunswick utility's debt.

Hydro-Québec would then freeze New Brunswick's residential power rates for five years and immediately cut large industrial power rates to the same level as in Quebec. After five years, Hydro-Québec can only raise rates to match inflation or cover new transmission or generation expenses that would have to be approved by the New Brunswick Energy and Utilities Board.

The provincial government estimates those rate savings are worth an additional $5 billion.

Cheap power
Bernard said New Brunswick is gaining access to one of the cheapest sources of power in North America, which is important considering the province has no natural advantages it can exploit for cheap power.

The Quebec economist dismissed wind and tidal power options as being unreliable and expensive compared to Quebec's hydro reserves.

The New Brunswick government has been hit by considerable opposition to the power pact since the memorandum of understanding was unveiled in late October. The New Brunswick Liberals slipped to second place behind the Progressive Conservatives in the last two public opinion polls.

The potential sale has also generated a lot of anxiety among the premiers of Nova Scotia and Newfoundland and Labrador.

Darrell Dexter and Danny Williams have demanded that New Brunswick Premier Shawn Graham guarantee to them in writing that their provinces would still have equal access to New Brunswick's transmission grid so they can send their power to other markets.

Under the agreement, New Brunswick's independent system operator — the agency that monitors the province's transmission system and oversees auctions for the use of any new transmission capacity — would be rolled into NB Power and controlled by Hydro-Québec.

Graham has said in his own letter to his Nova Scotia and Newfoundland counterparts that the deal will not hurt their access to the province's transmission system.

Bernard said he doubts Hydro-Québec can block Newfoundland and Nova Scotia from using the grid. Bernard said Hydro-Québec cannot afford to antagonize its U.S. clients by throwing up barriers in Canada.

"We export a fair amount of electricity to the U.S. market and I'm sure Hydro-Québec doesn't want to jeopardize that through an awkward move through New Brunswick," he said.