Hydro-Quebec Takes Over Assets Of New Brunswick Power

October 30, 2009 6:04 a.m. EST

Fredericton, New Brunswick (AHN) - Quebec Premier Jean Charest and New Brunswick Premier Shawn Graham announced on Thursday the takeover by Hydro-Quebec of most of the assets of New Brunswick Power. The two premiers signed a Memorandum of Understanding to close the agreement.

The $10 billion deal will involve payment by Hydro-Quebec of $4.7 billion for NB Power's assets and assumption of NB's debts estimated at about $5 billion. It is expected to be beneficial to both companies and residents of the two Canadian provinces.

New Brunswick residents are expected to enjoy lower rates in the future, a cut in the province's debt and a secure and reliable power source. Hydro-Quebec, in turn, will have an additional 370,000 electricity customers and gain from New Brunswick's strategic location in the northeastern part of North America. Hydro-Quebec expects the agreement to be profitable and a return on equity of more than 10 percent from the first year of running the new acquisition.

Hydro-Quebec will get the Point Lepreau nuclear generating facility, hydro plants, peaking power plants, and transmission and distribution assets of NB Power. However, NB Power will keep the Coleson Cove and Belledune thermal generation facilities and supply power to Hydro-Quebec based on terms of tolling agreements.

Graham said in a statement, "The elimination of NB Power's massive debt will help us attain self-sufficiency and relieve our children and grandchildren of this burden." Charest added, "This agreement creates an unprecedented energy partnership in Canada. It will also provide Quebec with a strategic geographic position with regard to the markets of Atlantic Canada and New England."

However, the deal was criticized by Newfoundland and Labrador Premier Danny Wiliams, who said it creates a virtual power monopoly for Hydro-Quebec in Eastern Canada.