Premiers Shawn Graham and Jean Charest today announced the conclusion of negotiations on an energy agreement between the provinces of New Brunswick and Québec. This concludes the discussions undertaken by the governments of Québec and New Brunswick in early 2009, which resulted in the signature of a memorandum of understanding (MOU) on October 29, 2009.
Under the agreement's framework, New Brunswickers are to benefit from advantageous electricity rates, a significant reduction in provincial debt and a secure, long-term source of electricity, while retaining responsibility for its energy strategy and implementation. Hydro-Québec will acquire Power Generation Assets as well as Firm Transmission Rights and will commit to a long-term power supply contract.
Summary of Agreement between the governments of Québec (QC) and New Brunswick (NB):
NB Power Assets acquired by Hydro-Québec:
The following Generation Assets:
- The seven (7) hydroelectric generating facilities (895 MW);
- The two (2) diesel peaking units on the main grid (499 MW);
- The Point Lepreau nuclear power plant (635 MW), once the refurbishment completed, expected on or about January 1, 2011.
- Firm Transmission Rights associated with the acquired Generation Assets, including 670 MW of transmission rights with New England.
Supply of electricity to NB Power by Hydro-Québec:
Hydro-Québec will act as a wholesaler for NB Power under a long term power contract, Hydro-Québec will provide NB Power 14 TWh of electricity per year. For the first five (5) years, that supply will be provided at a price of 7.35 cents per kWh, after which the price will be adjusted according to the New Brunswick Consumer Price Index (CPI).
New Brunswick to administer "Heritage Supply" of electricity in the following manner:
Two Energy Pools will be created: one of 4.5 TWh for Industrial Customers and one of 9.5 TWh for Residential, Commercial and Wholesale Customers;
Industrial Rates will be set immediately after the closing at a level that will result in rate reductions averaging 23% for Large Industrial Customers using more than 5,000 kW per month and averaging 15% for Large Industrial Customers using between 750 kW and 5,000 kW per month;
On the first (1st), second (2nd), third (3rd) and fourth (4th) anniversaries of the closing date, Industrial Rates will be adjusted in accordance with increases, if any, of Hydro-Québec's "L" and "M" rates;
Residential, Commercial and Wholesale Rates will be frozen for five (5) years at the levels currently in effect in New Brunswick;
All New Brunswick electricity needs beyond those included in these Heritage Supply Pools will be met through calls for tenders at market conditions approved by the New Brunswick Energy and Utilities Board.
NB Power Employees:
At the time of closing, Hydro-Québec will offer employment to the employees of the NB Power facilities purchased and will respect existing collective agreements.
Employees transferring to Hydro-Québec will continue to receive pensions provided by New Brunswick's public sector pension plan, and Hydro-Québec will reimburse New Brunswick for the cost of those benefits accrued following the closing.
Hydro-Québec will make two payments totalling $3.2 billion; the first ($1.8 billion) on or about March 31, 2010, and the second ($1.4 billion) at the time of closing of the Point Lepreau transaction, expected on or about January 1, 2011.
Assets not acquired by Hydro-Québec:
NB Power will retain the ownership of the Transmission and Distribution Assets and of NB Power's head office, or "Holdco".
NB Power will retain ownership of the following assets and operate them for the benefit of Hydro-Québec under the framework of Tolling Agreements*:
- Belledune generating facility (coal, 458 MW);
- Coleson Cove generating facility (oil, 978 MW);
Hydro-Québec has the option to request the shut down of these two facilities upon one (1) year's notice and by paying NB Power the equivalent of twelve (12) months of fixed costs of the facilities.
- Tolling Agreement: An agreement by which a party agrees to acquire the fuel for the operation of a generating facility owned by another party, thereby acquiring the exclusive rights to determine and purchase the related energy production. Such an agreement usually includes provisions to cover fixed operating costs.
NB Power will retain the following assets, which are deemed surplus facilities:
- Grand Lake generating facility (coal);
- Dalhousie generating facility (oil);
- Courtenay Bay generating facility (oil).
NB Power is also to retain the Grand Manan autonomous facility, located on the island of the same name.
Closing of the transaction
On or about March 31, 2010 and expected on or about January 1, 2011 for Point Lepreau.
Closing conditions for the Point Lepreau transaction:
- Completion of the refurbishment project currently under way;
- Restart of the facility following successful testing;
- Issuance of the necessary permits and authorizations prior to the restart and acquisition of the facility.
Touting the benefits of the agreement, Premier Graham declared: "Our partnership with Québec will secure lower energy costs for our province, leave NB Power as a New Brunswick-owned entity, and reaffirm our province's control over decisions affecting energy policy," "We are proud of a partnership that allows us to create jobs and a better economic future for New Brunswick, and to do our part in reducing greenhouse gases."
Expressing the benefits to the province of Québec, Premier Charest commented "In a world where access to clean renewable energy sources is an issue, where energy needs are strong and continue to grow, Québec and New Brunswick are leading the way. The changes we are announcing today, along with firm transmission rights to New England, allow us to achieve the goals set out in the agreement reached with New Brunswick," "Hydro-Québec will acquire quality assets allowing it to maximize its export capacity, while New Brunswickers will benefit from a reliable source of energy with important economic and environmental benefits,"