Office of the Premier

New Brunswick, Quebec conclude negotiations following energy agreement (10/01/20)

NB 73

Jan. 20, 2010

FREDERICTON AND QUEBEC CITY (CNB) - Premiers Shawn Graham and Jean Charest announced today the conclusion of negotiations on an energy agreement between the provinces of New Brunswick and Quebec. This concludes the discussions undertaken by the governments of New Brunswick and Quebec in early 2009, which resulted in the signature of a memorandum of understanding (MOU) on Oct. 29, 2009.

With this agreement, the two governments achieve their goals, while addressing the concerns expressed by New Brunswickers since the MOU was signed. Under the agreement's framework, New Brunswick will benefit from advantageous electricity rates, a significant reduction in provincial debt and a secure, long-term source of electricity, all the while retaining responsibility for its energy strategy and implementation. For its part, Hydro-Québec will acquire quality generation assets as well as firm transmission rights, and will commit to a profitable long-term power supply contract.

The transaction

As part of a global transaction worth $3.2 billion, Hydro-Québec will acquire most of NB Power's generation assets for $1.8 billion. This will include the seven hydroelectric generating facilities, the two diesel peaking units located on the main grid and firm transmission rights associated with the acquired generation assets, including 670 MW of transmission rights with New England. Hydro-Québec will also acquire the Point Lepreau nuclear facility for $1.4 billion upon its successful refurbishment, on or about Jan. 1, 2011.

The transmission and distribution arms of NB Power and the deferral account associated with the Point Lepreau refurbishment will be retained by New Brunswick. About two-thirds of the utility's employees will continue to work for NB Power, and employees of Holdco will continue to offer services to the operating companies of NB Power.

Hydro-Québec will act as an electricity wholesaler to NB Power. Under a long-term power contract, Hydro-Québec will provide NB Power with an annual supply of 14 TWh of electricity. For the first five years, that supply will be provided at 7.35 per kWh. As previously announced, after that period, the price will change only according to New Brunswick's consumer price index (CPI).

New Brunswick will manage this heritage electricity by creating two pools: one of 4.5 TWh for industrial customers and one of 9.5 TWh for residential, commercial and wholesale customers. The rates at which the electricity in each of these two pools will be sold is described in a summary of the agreement, available online.

NB Power will maintain the ownership and operation of the province's transmission and distribution assets as well as of the Grand Manan facility.

As well, the thermal generating facilities at Coleson Cove and Belledune will continue to be owned by NB Power and will supply electricity to Hydro-Québec under tolling agreements.

The transaction is expected to close on or about March 31, 2010 for the assets acquired, with the exception of the Point Lepreau facility, which will be transferred upon the successful completion of its refurbishment and the issuance of the necessary operating permits, expected to be on or about Jan. 1, 2011.

"Our partnership with Quebec will secure lower energy costs for our province, leave NB Power as a New Brunswick-owned entity, and reaffirm our province's control over decisions affecting energy policy," said Premier Shawn Graham. "We are proud of a partnership that allows us to create jobs and a better economic future for New Brunswick, and to do our part in reducing greenhouse gases."

"In a world where access to clean renewable energy sources is an issue, where energy needs are strong and continue to grow, Quebec and New Brunswick are leading the way," said Charest. "The changes we are announcing today, along with firm transmission rights to New England, allow us to achieve the goals set out in the agreement reached with New Brunswick. Hydro-Québec will acquire quality assets allowing it to maximize its export capacity, while New Brunswickers will benefit from a reliable source of energy with important economic and environmental benefits."

10/01/20

MEDIA CONTACTS: Marie-Andrée Bolduc, communications, Office of the Premier, 506-453-2144; Hugo D'Amours, press secretary, Office of the Premier of Quebec, 418-643-5321;

Marc-Brian Chamberland, head of public affairs and media, Hydro-Québec, 514-289-6222.

10/01/20