Transmission battle crosses borders

Rob Antle
Send to a friend

Send this article to a friend.

NL Hydro forwards filings criticizing Hydro-Quebec to U.S. regulator

Newfoundland and Labrador's Crown-owned hydro corporation has been sending U.S. regulators a series of "informational filings" criticizing Hydro-Quebec for allegedly seeking to thwart access for Lower Churchill power to U.S. markets.

Those documents are on file with the Federal Energy Regulatory Commission, or FERC.

They are available to the public on FERC's website.

To date, Newfoundland and Labrador Hydro (NLH) has not formally complained to FERC about the situation.

Power lines near Quebec City are shown in this 2006 file photo. Newfoundland and Labrador is criticizing Hydro-Quebec for allegedly blocking access for Lower Churchill power to U.S. markets. Photo by Jacques Boissinot/The Canadian Press

Newfoundland and Labrador's Crown-owned hydro corporation has been sending U.S. regulators a series of "informational filings" criticizing Hydro-Quebec for allegedly seeking to thwart access for Lower Churchill power to U.S. markets.

Those documents are on file with the Federal Energy Regulatory Commission, or FERC.

They are available to the public on FERC's website.

To date, Newfoundland and Labrador Hydro (NLH) has not formally complained to FERC about the situation.

Hydro-Quebec denies any wrongdoing.

And FERC regulators have so far expressed satisfaction that Hydro-Quebec and its affiliates are following the rules, and providing open access to competitors seeking to export power into the U.S.

While Newfoundland and Labrador officials have not filed complaints with FERC, they have a number of complaints pending with authorities in Quebec.

NLH has a series of actions pending before the Regie de l'energie - Quebec's equivalent of the Public Utilities Board.

Newfoundland and Labrador Hydro wants to wheel power from the Lower Churchill through Quebec for sale into other Canadian and American markets.

Nearly four years ago, NLH started that process with Hydro-Quebec TransEnergie (HQT) - the Quebec power giant's transmission arm.

But in early 2008, NLH began filing a series of complaints with the Regie, taking issue with how Hydro-Quebec TransEnergie was handling its requests.

NLH alleges that HQT has failed to calculate the available capacity on the transmission lines connecting its power grid to Labrador, did not issue a complete system impact study, and wrongly bumped an NLH request for service down the priority queue.

Hydro-Quebec disputes those allegations.

After a series of delays, the Regie is now scheduled to hear NLH's complaints next month.

Those hearings will be important in determining NLH's ability to transmit power across Quebec territory and Hydro-Quebec's lines, and the cost of doing so.

The reams of documents sent by NLH to FERC over the past two years shine some light on a topic that has seen its share of heat in recent months.

Premier Danny Williams has repeatedly lashed out at Hydro-Quebec.

"Hydro-Quebec haven't had enough by filling their guts and filling their stomachs with a billion dollars a year from the Upper Churchill," Williams said during an October speech in Gander.

"They now want to try and cut us off on the Lower Churchill. That's what they're up to."

It's a tangly issue, involving an alphabet soup of companies, agencies and technical terms.

But the bottom line is this: Nalcor Energy - the Crown-owned parent company of Newfoundland and Labrador Hydro - wants to sell Lower Churchill power to the U.S.

American rules require that companies selling power in the U.S. do not block competitors' access to transmission lines taking electricity into those markets.

Nalcor alleges that Hydro-Quebec is slowing down the approval process that would let Lower Churchill power flow south.

That process is mainly taking place in Quebec, at the Regie.

But FERC, in the U.S., also has an interest, given its rules over the free flow of power.

NLH notified FERC in July 2008 that it wanted to intervene in Hydro-Quebec's compliance filings with the U.S. regulator.

"The commission should be aware that there are concerns regarding the sufficiency of the HQ-TransEnergie (open-access transmission tariff) and its implementation in an open and non-discriminatory manner," the Washington, D.C.-based law firm Van Ness Feldman wrote in a July 17, 2008, letter to FERC on NLH's behalf.

"Open and non-discriminatory access to the HQ-TransEnergie system is critical for NLH's project."

Less than two weeks later - on July 28, 2008 - Hydro-Quebec's U.S. affiliate replied.

That company indicated to FERC that it is "functionally separated" from Hydro-Quebec's transmission arm.

"(The affiliate) thus is not in a position to comment on the substance of the NLH allegations regarding HQT other than noting that they appear to address good faith commercial disputes over capacity postings and queue priority, not unlike many similar interconnection request cases pending before this commission," the Washington law firm of Skadden, Arps, Slate, Meagher & Flom wrote on its behalf.

Hydro-Quebec's U.S. affiliate contended that the open-access arrangements in place continued to meet FERC rules.

In November 2008, FERC concluded that its regulatory requirements were satisfied.

The same day, Newfoundland and Labrador Hydro sent FERC 122 pages of documents "to keep the commission apprised of recent developments."

NLH updated the regulator on the status of its complaints to Quebec's Regie, and added some expert testimony by Dr. Robert A. Sinclair of Potomac Economics in Washington.

According to NLH, Sinclair concluded that HQT's administration of its open-access agreement is "lacking vigour" and "not consistent with a willing and eager seller of transmission services."

Sinclair also contended that Hydro-Quebec reserved export capacity on a new interconnection to Ontario without first offering it to the marketplace.

Fourth complaint

NLH also said it had filed a fourth complaint with the Regie in relation to its request for transmission service.

"NLH remains concerned that HQ-TransEnergie's actions reflect a proactive effort to inhibit NLH's access to the grid," the company's Washington lawyers noted in their letter to FERC.

Hydro-Quebec rejected those concerns.

As for Sinclair's testimony, HQ-TransEnergie said in a June 30, 2009, letter to the Regie that it "will naturally offer a different interpretation that will be supported by substantial evidence at the hearing of the complaints."

Regie hearings on Hydro-Quebec's open-access agreement were postponed this summer, at Hydro-Quebec's request.

The company said NLH's complaints should be heard first.

The Regie agreed to the request.

In an Aug. 19, 2009, letter to FERC, lawyers for Hydro-Quebec's U.S. affiliate said the delays at the Regie did not change the circumstances that had previously satisfied U.S. regulators.

A month later, NLH again sent FERC an informational filing claiming that Hydro-Quebec's report on the delays was "incomplete."

Lawyers for the Newfoundland and Labrador company criticized Hydro-Quebec for a "last-minute" request to postpone Regie hearings into open-access regulatory matters until after the Regie had heard NLH's complaints.

"It is NLH's continued belief that HQT's extension request was unnecessary and untimely," the FERC filing noted.

The scheduled hearing on Newfoundland and Labrador Hydro's complaints was subsequently bumped from October to January, after a Regie commissioner was sidelined due to medical problems.

And that's where the situation stands right now.

Hydro-Quebec TransEnergie insists it is following FERC rules, and has treated Nalcor's requests for transmission the way it treats all such requests.

That means offering "open and non-discriminatory access to their transmission facilities in a transparent manner," Hydro-Quebec spokeswoman Ariane Connor said in an e-mailed statement.

"All power marketers who use these facilities, whether Nalcor or others, are equally submitted to the conditions of the (open-access transmission tariff)."

Connor said Nalcor is an existing customer of Hydro-Quebec TransEnergie, and the transmission reservation process is "fully transparent."

Hydro-Quebec president Thierry Vandal dismissed Newfoundland and Labrador's concerns in an interview this week with the Montreal Gazette.

"Anyone who wants to move power through Quebec's grid can do so if they pay the standard tariff," Vandal told the newspaper.

On the other side of the power divide, Newfoundland and Labrador officials are becoming increasingly exasperated by what they consider stalling tactics by the Quebec power giant.

Spreading the message

The premier recently took that message to New York, telling a business audience that Quebec is blocking the flow of low-price, green power from the Lower Churchill.

"My fear is that monopoly-like practices could mean that New York does not enjoy the cheap, competitively priced power that it should," Williams said in his speech.

"And this is something that should concern every person in this room, every resident in this state and every business that operates here."

Williams criticized the regulatory process in Quebec as "cumbersome, to put it politely" - something he says has slowed development of the Lower Churchill.

"The state of New York has a direct interest here," the premier said.

"Market dominance by Hydro-Quebec north of the border is bad for consumers. It is that simple. You should all be paying very close attention to Quebec's open-access system and ensure that it is operating in a transparent and fair manner."

Next month, the Regie - Quebec's regulator - is scheduled to hear submissions from the two sides.

rantle@thetelegram.com

Organizations: Hydro-Quebec, Newfoundland and Labrador Hydro, Federal Energy Regulatory Commission Regie de l'energie HQ-TransEnergie Public Utilities Board Van Ness Feldman Arps, Slate, Meagher & Flom Potomac Economics Montreal Gazette

Geographic location: U.S., Quebec, Newfoundland and Labrador Washington Gander New York Ontario

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • chris
    July 02, 2010 - 13:32

    Well if they can run a line across between N.S. and newfoundland , why don't they just then go down the end of N.S. and complete the line across Bay of Fundy directly into U.S.

    Plan the lines also for 2035 when we can cut power going through quebec and redirect it down through the island and over to N.S. with the rest of power from lower Churchill.

    Freeze out quebec.

  • Brian
    July 02, 2010 - 13:21

    Ah, the legacy of short term thinking left to us by that great man, Joey... Mm hm.

  • ALBERT
    July 02, 2010 - 13:15

    Danny in 2035 NL Should Be Ready With There Own Power Line TO The US , Pull The Switch Through Quebec Turn The N ew Switch Trough NB Say Good Bye To Que ALBERT

  • chris
    July 01, 2010 - 20:21

    Well if they can run a line across between N.S. and newfoundland , why don't they just then go down the end of N.S. and complete the line across Bay of Fundy directly into U.S.

    Plan the lines also for 2035 when we can cut power going through quebec and redirect it down through the island and over to N.S. with the rest of power from lower Churchill.

    Freeze out quebec.

  • Brian
    July 01, 2010 - 20:05

    Ah, the legacy of short term thinking left to us by that great man, Joey... Mm hm.

  • ALBERT
    July 01, 2010 - 19:54

    Danny in 2035 NL Should Be Ready With There Own Power Line TO The US , Pull The Switch Through Quebec Turn The N ew Switch Trough NB Say Good Bye To Que ALBERT