Hydro-Quebec to acquire NB Power assets
30 October 2009
An earlier version of this story incorrectly stated that the handover of Point Lepreau would mean NB Power's exit from nuclear generation. In fact the company will continue to operate it on behalf of its new owner and so will retain significant interest in the nuclear industry.
The premiers of the Canadian provinces of Quebec and News Brunswick have signed a memorandum of understanding (MoU) under which Hydro-Quebec will acquire most of the assets of NB Power, including the refurbished Point Lepreau nuclear power plant.
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| Changing hands - Point Lepreau (Image: NB Power) |
The signing of the MoU follows initial discussions in June between New Brunswick premier Shawn Graham and Quebec premier Jean Charest to explore further cooperation on energy issues. Hydro-Quebec is now set to acquire most of the assets of NB Power for an amount equivalent to NB Power's debt, some C$4.75 billion ($4.4 billion), thereby completely eliminating the deficit.
The Point Lepreau nuclear power plant (after the completion of its refurbishment), the hydro facilities, the peaking power plants and the transmission and distribution assets of NB Power are part of the proposed transaction. Hydro-Quebec would not assume any liabilities with respect to the Point Lepreau refurbishment project, which prepares the reactor for about another 30 years of service.
When complete, the exchange will mark NB Power's exit from nuclear ownership, Point Lepreau being its only reactor, but the company will continue to operate the facility. Hydro-Quebec meanwhile would double its nuclear generating capacity to 1260 MWe as its acquisition joins Gentilly 2. The two Candu-6 units are considered twins and Hydro-Quebec has already decided to refurbish Gentilly 2 as an alternative to closing it in about 2011.
As a pre-condition to the negotiations, New Brunswick has established a revised rate structure, which is estimated by the provincial government to have a value to ratepayers of some C$5 billion ($4.7 billion). The proposed transaction would have no impact on Hydro-Quebec's electricity rates in Quebec.
A coal-fired power plant at Belledune and an oil-fired plant at Coleson Cove will continue to be owned and operated by the province of New Brunswick, and would supply electricity to Hydro-Quebec under the terms of tolling agreements. Under the terms of the MoU, Hydro-Quebec could direct New Brunswick to shut down these plants with one year's prior notice.
According to a timetable set in the MoU, the majority of NB Power's assets will be transferred to Hydro-Quebec around the end of March 2010. Assuming the successful completion of the refurbishment of Point Lepreau and the restart of the plant, Point Lepreau would be taken on by Hydro-Quebec around the end of January 2011. Once the transaction is completed, NB Power would continue to operate as a separate entity, and to use the existing name and corporate identity.
In addition, New Brunswick will be committed to establishing a legal and regulatory framework for electricity that reflects the framework currently in effect in Quebec. Under the timetable, these legislative changes should be introduced during the first quarter of 2010.
The transaction also commits Hydro-Quebec to supplying up to 14 terawatt hours (TWh) per year of electricity to New Brunswick customers at rates established by the New Brunswick government.
In a joint statement, the provincial governments said, "New Brunswick would benefit from lower rates, a vastly reduced provincial debt exposure as well as a secure and reliable source of energy and its development as an energy hub. At the same time, Hydro-Quebec would acquire quality assets, an additional base of more than 370,000 customers and would benefit from New Brunswick's strategic geographic position in the Northeast region of North America."