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May 20, 2009
Quebec looks to woo U.S. energy industry into increasing hydro imports
MONTREAL, QC – The Quebec government's ambitious plans to seduce the U.S. energy industry into upping imports of the province's hydroelectricity have as much chance of being rebuffed as embraced, critics and industry insiders said.
Claude Bechard, the province's minister of natural resources, is in New England this week to take part in a major energy conference attended by some 375 key players from the region's energy sector. It's the first time in the conference's 16-year history that a provincial minister has been invited to attend.
"[I'm] really there to explain that this energy is green and to say we're not there to compete [with their utility companies]," Bechard told The Canadian Press on Monday after landing in Connecticut. He's also planning visits to Albany, N.Y. and Washington, D.C. over the next few months.
Quebec has good reason to try to intensify its trade relationship with the United States. The province is one of the world's largest producers of hydroelectric power and is planning to increase its production capacity by nearly 16 per cent within five years. It's also made developing its energy potential a priority.
Hydro-Quebec, the province's publicly owned utility giant, reported a net profit of $3.1-billion last year as the company generated higher net exports to the United States and other parts of Canada. It says its exports to the U.S. produced nearly one-third of the company's operating profits last year.
But Chris Sherman, general counsel for the New England Power Generators Association, the largest trade association representing competitive electric generating companies in the region, says the industry won't necessarily welcome Quebec's pitch with open arms.
"The reception is somewhat mixed," Sherman said. "A lot of people – policy makers and legislators – are looking at it largely favourably. But there are other groups, stakeholder groups, consumers, energy industry stakeholders that are a little bit more apprehensive."
Quebec has been exporting hydroelectricity to its southern neighbour for decades, but Bechard says the current environment is especially inviting. Combined with President Barack Obama's green energy push and Quebec's increased production capacity, he thinks the timing right.
"There's a greater openness to Canadian energy," he said.
The Federal Energy Regulatory Commission is currently looking into a 1,200 megawatt project with New Hampshire that includes an energy sales contract with Hydro-Quebec for a minimum of 20 years, starting in 2014.
The decision by U.S. authorities is expected soon and Bechard says it's exactly the type of long-term collaboration his government is seeking.
The province will certainly have energy to spare. Hydro-Quebec has been steadily increasing its production capacity in recent years with a number of new power plants.
The latest initiative is the Romaine River hydroelectric project that was launched just last week. It's a $6.5 billion behemoth, touted by Premier Jean Charest as the biggest construction initiative in Canada. It includes four dams to be built on the Romaine River on Quebec's Lower North Shore by 2020 and is expected to increase Quebec's installed capacity by 1,550 megawatts. That is enough to power 450,000 residences for a year. But Sherman says New England's energy needs are not growing as fast as forecast.
"We have a reprieve right now where we don't really have to make any hasty decisions," he said.
What Quebec hydroelectricity does offer the region, according to Sherman, is "the path of least resistance."
"Our policies call for pretty aggressive increases in renewable energy and yet we have not had the ability to [reach] that domestically or even regionally," he said. "So there is a demand for it."
Bechard is also facing detractors from U.S. and Canadian environmental groups.
The Sierra Club of Canada says the provincial government should stress cutting energy use in Quebec over building megaprojects.
"The strategy should not be towards giving Hydro-Quebec more money to build more dams," said executive director Stephen Hazell. "It should be a broad-based program to encourage energy efficiency in businesses and homes across the province. That should free up energy for export."
But Bechard is ignoring the critics and pushing forward the government's energy export policy.
"While others talk, we're building," he said.
