New Brunswick Premier Shawn Graham makes a point about hs provincial counterparts during a news conference in Fredericton, N.B. on Friday Dec. 4, 2009.Charles-Antoine Gagnon
Embattled Premier Shawn Graham has re-assured New Brunswickers that the sale of the province's power generation to Hydro-Québec will not jeopardize their long-term energy needs.
At a news conference Wednesday morning, Mr. Graham said his province could no longer afford to rely on its aging fleet of hydro-electric, nuclear and fossil fuel plants, and needed access to Quebec's low-cost hydro power.
But he said the resulting $3.2-billion deal will no longer transfer ownership of New Brunswick Power's power transmission and distribution operations out of the province.
"We have retained complete ownership and control of our energy future," Mr. Graham said.
His Liberal government - which faces an election in eight months - has been racked by internal dissent, and pilloried by the public, by other Atlantic premiers and by opposition parties over the proposed agreement unveiled last fall that would have sold the entire provincially-owned utility to Hydro-Québec.
Under the final deal released Wednesday morning, the giant Quebec utility will get most of New Brunswick's generating stations and a long-term contract to supply the province with electricity in exchange for $3.2-billion, a five-year rate freeze for residential customers and a 23-per-cent rate reduction for industrial power users.
The original proposal carried a $4.8-billion price tag, and would have reduced power rates for industry by 30 per cent to bring it in line with rates charged to large industrial customers in Quebec.
Changes to the agreement will not hamper Quebec's ambition of becoming the main supplier of clean, renewable energy on the northeastern part of the continent, Premier Jean Charest claimed.
Hydro-Québec has the capacity to export 5,000 megawatts of electricity on existing transmission lines. The deal will substantially enhance Hydro-Québec's penetration into the New England market.
Mr. Charest noted that last year Hydro-Québec exported only 8 per cent of its total which generated 32 per cent of its total profits. The new hydro electric generating facilities will soon be completed on the Rupert River in the James Bay region and La Romaine River on the Lower North Shore region.
Hydro-Québec is positioning itself to meet the increasing energy demands expected in the coming years in the United States, Mr. Charest argued.
"We want to export energy, we want to develop more capacity to export to all our neighbours in Canada and towards the south into the United States. And this [deal]is a step in that direction in developing what I anticipate will be an eastern regional approach for the continent, not only for Canada but for the Eastern American seaboard," Mr. Charest said during a news conference in Quebec City on Wednesday.
By purchasing a key portion of New Brunswick Power's generation capability, Hydro-Québec obtains guaranteed access to 670 megawatt of transmission rights to the highly profitable New England market.
Hydro-Québec chief executive Thierry Vandal said that if more transportation capacity is needed to satisfy other suppliers then a new line will have to be built.
"What was always key to us was the ability to access the transmission system to reach markets and to basically bridge from our resources here in Quebec to markets along the Eastern seaboard," Mr. Vandal said. "That was the case back in October and it is still the case today. Those transmission rights will be transferred over to Hydro-Québec and that is very positive."
However, New Brunswick officials stressed the province will maintain "open access" to its transmission system - in which all power producers can compete - as required by U.S. regulators, and that Hydro-Québec will get no "special status."
Critics have complained the Liberal government was putting the welfare of New Brunswickers in the hands of a Quebec-owned utility, which has a mandate to enhance the economic well-being of Quebeckers. In particular, concerns have been raised about the potential for steep rate increases once the five-year freeze expires.
Under the original deal, the government had insisted that Hydro-Québec would always need regulatory approval for rate increases and that there were specified limitations to future rate hikes. Now, Mr. Graham noted, New Brunswick Power will be the utility that has to get rate increases approved.
The premier touted the new agreement for significantly reducing the province's current debt burden, and eliminating the need to spend as much as $10-billion to replace and refurbish existing power plants.
"To do nothing involves greater risk to the people of New Brunswick," he said. "The status quo is simply not sustainable."
Mr. Graham faced open opposition to the original deal from his Liberal colleagues, but insisted his caucus is now united in support of the new, scaled-back version.
He also won an endorsement from one of the deal's harshest critics, Danny Williams, premier of Newfoundland and Labrador. Mr. Williams had labelled the initial effort a "capitulation" because it gave Quebec control of New Brunswick's highly-prized transmission corridor to lucrative U.S. markets.
His supportive comments regarding leaked details of the new deal on Tuesday captured large headlines in local New Brunswick newspapers.
Nova Scotia Premier Darrell Dexter had also criticized the original deal for handing too much market power to Hydro-Québec, but said Wednesday morning that New Brunswick appears to have addressed those concerns.
"I'm pleased to see the efforts made to accommodate the concerns raised by myself and Premier Williams," Mr. Dexter said in a telephone interview.
The New Brunswick government said the deal with Quebec was critical to reducing power rates and improving the competitiveness of the province, which has been battered by the recession.
Peter Gordon, president of forestry company Fraser Inc., said the power deal will provide $6-million in savings for his New Brunswick operations. The company is currently before the courts under bankruptcy protection, and has been slashing jobs at its Edmundston pulp mill.