Hydro deal with Quebec to save Ontario electricity grid $70M

Ontario will import enough electricity from Quebec to power a city of more than 200,000 people under a seven-year agreement signed Friday, but the provinces won't say how much Ontario is paying Hydro Quebec.

Premiers Kathleen Wynne and Philippe Couillard signed the deal,which will see Ontario import up to two terawatt hours ofelectricity from Quebec annually, allowing the province to reduceits use of natural gas to generate power.

"We wanted to do this, but I said it would have to be a gooddeal for the people of Ontario,"said Wynne. "And it is a gooddeal for Ontario, and for Quebec."

The agreement is expected to save Ontario's electricity systemabout $70 million in costs over the seven years, but the twogovernment's cited "commercial sensitivities" for refusing to sayhow much Ontario will pay for the electricity.

However, Montreal newspaper La Presse reports the agreement isworth $1-billion, and calculates Ontario will pay five cents akilowatt hour for the electricity.

The agreement will also allow Ontario to reduce its greenhousegas emissions by one million tonnes a year by replacing gas-firedgeneration with clean power generated from Quebec's hydro dams.

"The reality about gas plants is that they are peaker, theyoften sit idle when that power is not needed," and are turned onwhen there's high demand, said Wynne. "The whole point of the gasplants is they are only used when that power is needed."

Wynne declined to say how much the $70 million in reduced costswould impact electricity bills in Ontario, if at all.

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NDP environment critic Peter Tabuns welcomed the import of moreclean power from Quebec, but said the impact on consumers'electricity bills and the actual reduction in greenhouse gasemissions from the agreement will be minuscule.

"Scientists and economists will be able to detect it," saidTabuns, "but ordinary people will not be able to detect it."

Ontario plans to join the cap-and-trade market with Quebec andCalifornia next January, and Canada's two largest provinces havebeen finding more ways to work together on initiatives to combatclimate change.

There has long been talk of an east-west power grid in Canada,and Couillard said it only makes sense to start with the twolargest, neighbouring provinces.

"We always said when this question was mentioned that first andforemost the priority should be given to regional deals, andQuebec-Ontario is the most obvious example of that," saidCouillard.

Environmentalists have long urged Ontario to import more cleanpower from Quebec's hydro-electric dams, but officials always saidthat would require huge and expensive upgrades to the transmissionlines linking the two provinces.

However, the provinces say the existing transmission lines cansupport their new power agreement.

"The reality seems to be the transmission lines can handle afair chunk of power and we should be looking at this as an option todeal with high hydro rates," said Tabuns.

Green Party of Ontario Leader Mike Schreiner called the Quebecdeal a step in the right direction, but said the province should notextend the life of the Pickering nuclear station or rebuild thereactors at the Darlington station.

"The Liberals made the right decision to import low cost waterpower from Quebec," Schreiner said in a release. "Now they need tosave billions by closing Pickering on schedule and cancelling theDarlington rebuild."

The new agreement will also allow Ontario to keep up to 500gigawatt hours of power behind Quebec's dams in what is called a"pump storage" system, which will allow the province to reduce itssurplus generation.

Wynne's Liberals face daily attacks from the opposition oversoaring electricity prices, and the government is looking to dowhatever it can to ease upward pressure on rates.

"This is one in the list of things that we are doing to removecosts from the system, whether it's the suspension of the long-termenergy plan, whether it's renegotiating the Samsung (green energy)deal ...and removing the eight per cent provincial portion of the HST(from hydro bills) as of January," she said.

Ontario already has a surplus of power, and has signed 20-yearcontracts for electricity from two new natural-gas fired generatingstations being built in Sarnia and Napanee.

Those gas-fired plants were originally going to be built inMississauga and Oakville until the Liberals cancelled them daysbefore the 2011 election, which the auditor general said would costratepayers up to $1.1 billion.