Hydro-Quebec to buy New Brunswick Power for $5B
The Canadian Press
Published Thursday, October 29, 2009 10:06AM EDT
FREDERICTON - Quebec will buy a majority stake in New Brunswick's power utility in a deal worth just under $5 billion.
Quebec Premier Jean Charest was in Fredericton to make the announcement Thursday morning with his counterpart, Shawn Graham.
Hydro-Quebec would shell out just under $5 billion in cash -- an amount equal to NB Power's debt -- while a lower rate structure for electricity would see savings for New Brunswickers of approximately $5 billion.
The memorandum of understanding announced Thursday would serve as the basis for public debate before formal negotiations on a final sale.
The Quebec source said the debt is not part of the transaction, but the New Brunswick source said the debt would be addressed through the cash transfer.
Nuclear plant among the assets
According to the New Brunswick source, a deal would see Hydro-Quebec establish a New Brunswick-based company and assume ownership of NB Power offices, trucks, power lines and most power plants, including the Point Lepreau nuclear power plant.
The source said they hope to close a deal by the end of March and the province would not transfer the ownership of Lepreau until the ongoing $1.4-billion refurbishment is complete. That refit of the reactor was supposed to be completed last month, but is running 18 months behind schedule.
Sources say that under the provisions of the memorandum of understanding, NB Power would continue to exist as a utility with ownership of five fossil-fuel powered plants -- although only the ones at Dalhousie, Belledune and Coleson Cove are now in use.
The power from those plants would be sold back to the Quebec-run utility.
The New Brunswick source said the province's Energy and Utility Board would remain in place and regulate power rates into the future.
Risk for Graham
In addition to determining the future of a utility created by New Brunswick's legislature in 1920, the deal carries national-unity implications, political risks for Graham, and significant consequences on hydro exports.
The New Brunswick government has come under pressure in recent days to reveal details of discussions over the future of NB Power amid fears that the province could relinquish control of the Crown corporation.
Graham has said any deal would have to address a number of key demands, such as lowering power rates for New Brunswickers, eliminating the utility's debt, and promoting his government's vision of making New Brunswick a conduit for neighbouring provinces to export their energy to the northeastern United States.
He refused to release details Wednesday of the announcement, except to say they would announce a memorandum of understanding and there would be ample opportunity to debate it.