Hydro Quebec, New Brunswick Power call off electric power asset sale

A multi-billion-dollar electric power generation asset and transmission deal between provincial utilities Hydro-Quebec and New Brunswick Power has been canceled.

Hydro-Quebec was supposed to pay C$3.2 billion (US$3.13 billion) for the bulk of NB Power’s power generation assets and 670 megawatts of transmission rights to New England.

Hydro-Quebec sought an amendment after its due diligence review found more risks involved in the buy than what the firm was willing to make, said New Brunswick Premier Shawn Graham.

The agreement, which would have given Hydro-Quebec better access to markets in the northeastern United States, was scaled back from a C$4.75 billion (US$4.49 billion) deal announced in October 2009.

Generating assets were to include seven hydroelectric generating facilities and two diesel peaking units located on the main grid, plus firm transmission rights associated with those assets. Hydro-Quebec also was to acquire the Point Lepreau nuclear facility for C$1.4 billion upon its successful refurbishment, on or about Jan. 1, 2011.

In other news, a pair of Vermont utilities recently signed a memorandum of understanding with Hydro-Quebec, setting the stage for a new power supply contract for Vermont customers.

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Hydro-Quebec, New Brunswick reach agreement on purchase of New Brunswick assets

Hydro-Quebec will pay C$3.2 billion (US$3 billion) to buy most of New Brunswick Power’s generating facilities, the utilities reported.

The agreement, which gives state-owned Hydro-Quebec better access to markets in the northeastern United States, has been scaled back from a C$4.75 billion (US$4.49 billion) deal announced in October 2009.

Montreal-based Hydro-Quebec will now buy the bulk of government-operated New Brunswick Power’s generating assets for C$1.8 billion (US$1.7 billion) and pay C$1.4 billion (US$1.3 billion) for a nuclear facility at Point Lepreau when refurbishment work is completed, Hydro-Quebec reported.

Power assets include seven hydroelectric generating stations, two diesel units and firm transmission rights from those assets, including 670 MW with New England.

The transaction is expected to close on or about March 31, 2010 for the assets acquired, with the exception of the Point Lepreau facility, which will be transferred upon the successful completion of its refurbishment and the issuance of the necessary operating permits.

“In a world where access to clean renewable energy sources is an issue, where energy needs are strong and continue to grow, Quebec and New Brunswick are leading the way, said Quebec Premier Jean Charest. “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-Quebec said it will act as an electricity wholesaler to New Brunswick Power, with a long-term contract that sets a rate of 7.35 Canadian cents per kilowatt for the first five years. After that, the price will change only according to New Brunswick’s consumer price index.

New Brunswick will keep ownership and operations of the transmission system, which runs into the state of Maine, along with distribution assets. The utility, which had a C$4.75 (US$4.49 billion) debt, also retains some coal and oil power facilities. 

“Our partnership with Quebec 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,” said New Brunswick Premier Shawn Graham. “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.”

Hydro-Quebec is also negotiating with the Atlantic provinces of Prince Edward Island and Nova Scotia on power supply deals.

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