Hydro deal gives Quebec too much power, Williams warns

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Hydro-Québec's takeover of New Brunswick Power amounts to a virtual power monopoly in Eastern Canada and poses "a very dangerous situation" for the entire country, Newfoundland Premier Danny Williams warns.

The outspoken premier told The Globe and Mail Thursday that Hydro-Québec's "agenda" is to secure a stranglehold over access to electricity markets in the U.S.

In a tentative $10-billion deal announced Thursday Hydro-Québec will spend $4.7 billion for the assets of New Brunswick Power, which would become a subsidiary of Quebec's giant hydroelectric utility.

Hydro-Quebec will also take over New Brunswick Power's debt, estimated at close to $5-billion.

"This agreement ... will also provide Quebec with a strategic geographic position with regards to the markets of Atlantic Canada and New England," Quebec Premier Jean Charest told a news conference after signing the tentative deal Thursday with New Brunswick Premier Shawn Graham.

Mr. Graham said the deal would free New Brunswick of a financial albatross.

"The elimination of NB Power's massive debt will help us attain self-sufficiency and relieve our children and grandchildren of this burden," he said.

Hydro-Québec has already initiated similar discussions with Prince Edward Island and contends that eventually Nova Scotia will have no choice but to join the pack - raising fears that Quebec could suddenly hold control over a major portion of Eastern Canada's energy supply.

Nova Scotia Energy Minister Bill Estabrooks said he was concerned about the potential repercussions the deal would have on Atlantic Canadian efforts to co-operate in selling energy to the United States, as well as power rates.

"I don't know why New Brunswick would be going down this route - for obvious reasons of politics and finances, but that's not something for me to surmise," Mr. Estabrooks said.

Mr. Williams said New Brunswickers need to heed his province's experience with Quebec on the Upper Churchill hydro-electric project in Labrador.

Since the Upper Churchill came online, Mr. Williams claims Quebec has "taken $22-billion out; we've got $1-billion. What are they going to do to New Brunswickers?"

Mr. Williams is particularly irate that Quebec is considered a "have-not" province collecting billions in equalization payments for 2009-2010 while spending billions more for the takeover of New Brunswick Power, a deal he suggests can only hurt other provinces.

"It's wrong for one jurisdiction to have a virtual monopoly," he says "And yet we still throw huge dollars at the province and a company that has an agenda."

He predicts Quebec, through the provincial utility, will lower its own hydro rates while raising any others it gains control over. The result would mean any new industry would choose to set up in Quebec in order to benefit from lower power costs.

Thierry Vandal, president and chief executive officer of Hydro-Québec, brushed aside suggestions that Hydro-Québec will have an unfair advantage over rivals, such as Newfoundland and Labrador.

"Hydro-Québec is proposing to acquire [New Brunswick Power's]assets, but the network remains open. It's not because we're acquiring it that we're going to close [access to the network]" he said in an interview with the Globe yesterday.

Mr. Williams has reiterated his threat to take his case to the federal Competition Bureau if a deal between the two provinces goes ahead.

Newfoundland Hydro now has plans for a massive hydroelectric project on the Lower Churchill, which includes options for a transmission route bypassing Quebec.

Newfoundland Hydro has also had talks with Nova Scotia and New Brunswick over possible electricity export partnerships. It has, as well, applied for access through Quebec's network for exports. Newfoundland has complained in the past that Hydro-Québec doesn't respect requirements from the U.S. regulator that exporters to the American market provide rivals with "open access" through their systems.

Mr. Vandal said Hydro-Québec has always made it a point of pride to keep its system open. And that will be the case in New Brunswick as well, he added.

U.S. officials, including some New England governors, have been pressing Hydro-Québec to take over New Brunswick Power, according to a Quebec government source, a move that would make it easier to co-ordinate production and transmission of electricity to the northeastern United States.

New Brunswick industries needed more power and the cheapest and most reliable way of getting it was through Hydro-Québec. To meet their demands, Hydro-Québec offered to cut industrial rates, a key element in the memorandum of agreement signed yesterday to get influential business leaders on side.

Jean-Thomas Bernard, an energy-market economist at Université Laval, said that Hydro-Québec understands that as it tries to strike a deal with Prince Edward Island next, it must make sure it keeps the U.S. regulator happy by ensuring non-discriminatory access to other players such Newfoundland and Labrador, said Mr. Bernard.

"This will extend Quebec's influence in the Maritimes. Almost all of Prince Edward Island's electricity comes from New Brunswick and New Brunswick also sells some to Nova Scotia," Mr. Bernard said.

With a report from The Canadian Press