Update: Quebec and New Brunswick scrap energy deal

CanWest News Service
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After months of negotiation, Quebec and New Brunswick announced today they are scrapping a controversial energy deal that would have seen Hydro-Quebec get greater access to energy-hungry markets in the northeastern United States.
The proposal called for Hydro-Quebec to pay $3.2 billion for most of NB Power's power generation assets and 670 megawatts of transmission rights to New England.
Opposition to the agreement, which had to be finalized by the end of the month, has been consistently fierce in New Brunswick, prompting massive demonstrations and forcing one cabinet minister to resign.
The Quebec government said Wednesday the deal fell through because due diligence showed some assets would have required bigger investments than previously planned and Hydro-Quebec was not willing to take more risks.
"It was out of question to buy assets that didn't meet our expectations," Quebec Premier Jean Charest told reporters.
"For example, in the case of certain infrastructures we ended up with civil responsibilities that were not directly linked to energy and that's not the core business in which Hydro-Quebec is involved," he said.
Charest met with New Brunswick Premier Shawn Graham on Tuesday and said both came to the conclusion a win-win agreement could not be reached.
"We always thought that this was good for both sides at the outset, but we've come to a conclusion today that it is not what we expected," Charest added.
He recalled that it was New Brunswick that came knocking on Quebec's door seeking an energy deal.
Graham has said his government was looking for an alternative to prevent major energy rates hike in the province, which is struggling with a major deficit at NB Power.
Today, Graham acknowledged "a number of issues emerged" as the two sides worked to take the energy agreement and turn it into a full legal document.
"Hydro-Quebec asked for changes to the agreement that would have unacceptably taken away some of the value and increased some of the risks for New Brunswickers," he said in a statement.
"With Hydro-Quebec's proposed changes, I do not believe New Brunswick receives enough in direct benefits and reduced risks to provide a deal worth signing."
The New Brunswick government will now look at other alternatives to address the challenges facing NB Power and the electricity situation in the province, and in doing so, it will look for input from New Brunswickers, Graham said.
"People were not upset with us for taking on the electricity issue; they were angry with us because they wanted to be part of the solution and our process did not let them in.
"I can assure you that, after the debate of the past few months, I have heard loud and clear that New Brunswickers want to help us deal with our energy challenges. That is an important lesson, and it is why I am committed to working with the people of the New Brunswick as we work to move our province forward generally and on the energy issue."
Under the deal, residential and commercial rates would have been be locked at the current level for five years, while industrial users would have received savings of up to 23 per cent.
In mid-January, the deal was watered down so that Hydro-Quebec would not take over NB Power's transmission and distribution system, as originally planned in the initial memorandum of understanding, which unleashed a firestorm of protest in the Atlantic provinces.
The agreement would have seen Quebec acquiring most of NB Power's generating stations. Hydro-Quebec would have owned the Point Lepreau Nuclear Generating Station and the province's hydro dams and two diesel units.

Organizations: Hydro-Quebec, NB Power, Point Lepreau Nuclear Generating Station

Geographic location: New Brunswick, Quebec, United States New England

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Recent comments

  • Don
    July 02, 2010 - 13:33

    Just as I predicted a few weeks ago, the people of New Brunswick put a stop to this ill-conceived deal. While Dictator Danny dithered and fumed, Hydro-Quebec got the drop on him. Lucky for Danny, the people of New Brunswick saved their hydro-electrical utility and saved Danny Williams from being remembered as just another stupid Newfoundland Premier who got outsmarted by Quebec. Dictator Danny owes the people of New Brunswick for stopping Quebec from getting the better of us again. No thanks to Danny who did not see the Hydro-Quebec deal coming and could only rant, roar and whine after it was announced. Danny, please don't forget to give the people of New Brunswick a big discount on Lower Churchill electricity when the day comes that Newfoundland and Labrador can wheel its power through the Maritime Provinces to the USA market. By then, hopefully, Dictator Danny and his flunkies will be long gone from office.

  • David
    July 02, 2010 - 13:13

    When Hydro Quebec says it was for financial reasons, you can at least be certain that isn't the truth.

    I'm betting that due diligence revealed additional, material financial or environmental liabilities at NB Power.

    No doubt Danny is thinking of stepping into the breach with an ill-advised offer of his (our) own....

  • Offshore
    July 02, 2010 - 13:12

    Good to see the idiots in Quebec lose out , they will not admit it , but they did . Also i hope the lose out on the court action Danny and company have against them. Go Danny Go.

  • Karma
    July 02, 2010 - 13:11

    Danny will now enter the stage to thunderous ovations and proceed with a lucrative deal for NL to wheel power through NB while flipping HQ the bird and no one on the Rock will ever have to work again.

  • Don
    July 01, 2010 - 20:22

    Just as I predicted a few weeks ago, the people of New Brunswick put a stop to this ill-conceived deal. While Dictator Danny dithered and fumed, Hydro-Quebec got the drop on him. Lucky for Danny, the people of New Brunswick saved their hydro-electrical utility and saved Danny Williams from being remembered as just another stupid Newfoundland Premier who got outsmarted by Quebec. Dictator Danny owes the people of New Brunswick for stopping Quebec from getting the better of us again. No thanks to Danny who did not see the Hydro-Quebec deal coming and could only rant, roar and whine after it was announced. Danny, please don't forget to give the people of New Brunswick a big discount on Lower Churchill electricity when the day comes that Newfoundland and Labrador can wheel its power through the Maritime Provinces to the USA market. By then, hopefully, Dictator Danny and his flunkies will be long gone from office.

  • David
    July 01, 2010 - 19:51

    When Hydro Quebec says it was for financial reasons, you can at least be certain that isn't the truth.

    I'm betting that due diligence revealed additional, material financial or environmental liabilities at NB Power.

    No doubt Danny is thinking of stepping into the breach with an ill-advised offer of his (our) own....

  • Offshore
    July 01, 2010 - 19:50

    Good to see the idiots in Quebec lose out , they will not admit it , but they did . Also i hope the lose out on the court action Danny and company have against them. Go Danny Go.

  • Karma
    July 01, 2010 - 19:47

    Danny will now enter the stage to thunderous ovations and proceed with a lucrative deal for NL to wheel power through NB while flipping HQ the bird and no one on the Rock will ever have to work again.