Quebec, N.B. set to reveal NB Power sale

New Brunswick Premier Shawn Graham and Quebec Premier Jean Charest are set to announce the takeover of NB Power by Hydro-Qubec, CBC News and Radio Canadahave learned.

Charest will announce onThursdaythatHydro-Qubec will buy a majority share of NB Power for almost $5 billion, which will erase its debt, Radio Canada has learned. In exchange,Hydro-Qubec will freeze residential New Brunswick rates which are actually 60 per cent higher than in Quebec for five years.

New Brunswick corporate rates will alsobe lowered 20 per cent to current Quebec levels.

Hydro-Qubec,which already provides more than a third of the energy consumed by New Brunswick, has decided not to buy all of NB Power. It didn't want the old and costly oil-fired and coal plants of Belledune. Only the nuclear facility in Point Lepreau is part of the agreement. Quebec will take possession once it's entirely renovated.

The announcement of a memorandum of understandingwill take place Thursdayin Fredericton at Government House, the official residence of the lieutenant-governor.

Earlier, the New Brunswick government issued a notice on its website saying that Graham and Charest, with David Hay, the president and chief executive officer of NB Power, and Thierry Vandal, the chief executive officer of Hydro-Qubec, will make an "energy-related" announcement.

Graham has not confirmed he's in talks to sell NB Power to Hydro-Qubec, but he has said Quebec and New Brunswick have been in talks since July on ways to co-operate in the energy sector.

The New Brunswick premier saidTuesday that any deal must result in lower power rates, reduce NB Power's $4.8-billion debt, promote the so-called energy hub and help small- and medium-sized businesses create jobs.

Quebec Natural Resources Minister Nathalie Normandeau saidWednesday the takeover was hypothetical and that interprovincial talks were about energy distribution, transportation andefficiency.

But she said any agreement would be a "win-win" for Quebec and New Brunswick.

On Monday, New Brunswick Progressive Conservative Leader David Alward issued his party's minimum standards for any NB Power sale, including ademand that any rate decrease for large industrial customersbe passed along to residential clients.

New Democratic Party Leader Roger Duguay released a statement Wednesday saying the party is firmly against dealing NB Power to Hydro-Qubec.

"We are tired of secret deals cooked up by Shawn Graham and his friends. We need to keep the power in New Brunswick, and New Brunswick in charge of NB Power," Duguay said.

"Shawn Graham promised he would keep NB Power public; none of us knew that when he said 'in public hands' he was talking about the public of Quebec."

Newfoundland experience

Newfoundland and Labrador Premier Danny Williams also weighed in on the issue Wednesday, writing a public letter to Graham thathe CCed to Nova Scotia Premier Darrell Dexter and P.E.I. Premier Robert Ghiz.

"I caution you, based on our experience with Hydro-Qubec, that a short-term opportunity can turn into a long-term loss of significant magnitude as they will most definitely find ways to recoup their investment and more from New Brunswickers who no longer control their energy destiny," Williams wrote.

He also said he is disappointed that his province was unaware of the "depth" of New Brunswick's negotiations with Hydro-Qubec.

"Some time ago our energy corporation, Nalcor Energy, commenced good faith discussions with New Brunswick Power on potential components related to the development of the Lower Churchill.

"Obviously, there would be significant implications to those negotiations if you do indeed proceed with a sale of NB Power," he said.

Williams said he is also disappointed that Graham has decided not to participate in next month's Council of Atlantic Premiers meeting in Churchill Falls, when the primary objective was to discuss energy co-operation among the Atlantic provinces.

Williams sees link to Irving

Earlier this week, Williams linked the Irving group of companies to the potential deal to sell NB Power to Hydro-Qubec.

"We're hearing now that this could be possibly be driven by the Irvings in New Brunswick because there are commercial interests because commercial rates could be driven down," Williams said on Monday.

"My comments, made solely in response to media questions, were simply meant to explain this province's negative experience in its relations with Hydro-Qubec and to urge New Brunswickers to seriously consider the long-term ramifications of selling this energy asset," he wrote Graham.

Williams describes Labrador's contract with Hydro-Qubec on the Upper Churchill hydroelectric development as "lop-sided and patently inequitable."

Although the market has changed dramatically since the contract was signed, Hydro-Qubec has "prevented a fair distribution of benefits," he said.

In 2008, for example, the net value to Hydro-Qubec for the Labrador project was $1.7 billion, but only $63 million has flowed to Newfoundland and Labrador, Williams said.

"It is somewhat ironic when you consider that in an indirect way the profits from a Newfoundland and Labrador project will help finance Hydro-Qubec's purchase of any New Brunswick assets," he said.

Complaints filed

In addition, Nalcor Energy expected to obtain open access transmission in Quebec in exchange for a fair tariff, much like Hydro-Qubec enjoys in the United States, Williams said.

But it has "encountered obstacles" and been forced to lodge four complaints with the regulatory authority in Quebec about the tactics being used by Hydro-Qubec to "delay and inhibit" Nalcor's progress, he said.

"I have great fears and reservations about the stranglehold that Hydro-Qubec could put in place over the Atlantic region, and I hope that you share this concern given your extensive statements on your desire to see your province as an energy hub."

Williams suggested one potential effect of Hydro-Qubec's dominance could be the premature cessation of current discussions between Nalcor Energy and NB Power to sell competitively priced Lower Churchill power to New Brunswick and advance the long-term mutual interests of both provinces in conjunction with Nova Scotia and P.E.I.

He stressed that while Nalcor Energy used to be in "poor financial shape," it is "now a crown jewel in our province's energy assets and is helping to shape our future.

"We hope our experiences in Newfoundland and Labrador can assist you in evaluating the options that lie before your government."