Bertrand Marotte, Globe and Mail, Mar. 24, 2010
Death of New Brunswick Power deal hurts plans to expand exports to U.S.
and Eastern Canada
Hydro-Québec’s ambition to become a dominant force in eastern North American energy markets has been dealt a serious blow with the cancellation of its proposed acquisition of the bulk of New BrunswickPower Corp.’s generating assets.
The publicly owned utility, Canada’s largest electricity provider, is betting big on selling its surplus power into energy-hungry markets south of the border.
The New Brunswick deal was set to be a cornerstone in Hydro-Québec’s strategy to build an even stronger presence in Eastern Canada, where it would have more clout in swinging profitable deals for exports to the Northeast United States.
Expect it to ramp up efforts to win new markets in New England and New York now that it has lost the valuable New Brunswick transmission corridor, says one industry player.
“Could they be more aggressive and look for more ways to increase their presence? Sure they could,” said Angela O’Connor, president of the Boston-based New England Power Generators Association. “They have already been very aggressive.”
Claude Garcia, a corporate director of the Montreal Economic Institute and critic of the utility, says Hydro-Québec will no doubt press ahead in attempts to strike power agreements with all of the Atlantic provinces, including New Brunswick, despite losing the advantageous position it would have had owning the NB Power assets.
New Brunswick is already a big buyer of electricity from Hydro-Québec, and there are more potential power purchase contracts with it and other eastern provinces to look forward to, he said.
The utility had been counting on the $3.2-billion New Brunswick Power transaction to give it preferential access to existing NB Power lines to the U.S., and also a convenient bridge to electricity supply deals with Prince Edward Island and Nova Scotia.
Now, it is no longer guaranteed the access, which would have allowed it to determine the best times, during more profitable peak-demand periods, to ship electricity south of the border. It also loses its advantageous position as a major producer of electricity in Eastern Canada.
“This will change things for Hydro-Québec,” said Darcy Johnson, an electricity market analyst at the National Energy Board, Canada’s federal energy regulator. “They undoubtedly will not get as much transmission rights. They won’t be able to get as much through during peak times as they would have.”
William Marshall, president of Fredericton, N.B.-based WKM Energy Consultants Inc. and a former director of strategic planning for NB Power, said the loss of the deal will cut into Hydro-Québec’s U.S. expansion plans.
“To the extent that this New Brunswick deal provided them with a guaranteed supply and transmission through to New England, it was an opportunity to expand their New England presence.”
In 2008, the electricity giant exported 11 per cent of its power, most of it to the U.S.
Hydro-Québec officials declined to comment on any possible changes to their export strategy in light of the failure of the NB Power agreement.
Quebec Premier Jean Charest said in a news release that the acquisition of the NB Power generating assets was not necessary to ensure the utility’s future growth.
