Province announces power purchase agreement in principle
 with Abitibi Consolidated Incorporated

Mines and Energy Minister Paul Dicks announced today that Newfoundland and Labrador Hydro has entered into a power purchase agreement in principle with Abitibi Consolidated Incorporated.

The minister was joined for the announcement by Forest Resources and Agrifoods Minister Kevin Aylward, President and CEO of Newfoundland and Labrador Hydro William Wells, President of Treasury Board Anna Thistle and Gordon Oldford, General Manager of Abitibi�s Grand Falls-Windsor operations.

Mr. Dicks said: "The project calls for the establishment of a new Beeton Unit and the upgrade of the Bishop�s Falls generating station.

"Financing will be handled by the company. Hydro will then enter into a power purchase agreement and buy the incremental energy."

The Beeton Unit and Generating Station upgrade have the potential to generate 32.5 megawatts of additional electricity.

The minister said development of the projects will greatly assist Newfoundland and Labrador Hydro in its efforts to meet the island�s total energy requirements.

Earlier this year, the province gave approval to proceed with the Granite Canal hydroelectric project. This project, capable of providing 40 megawatts of additional energy, will ensure that the province has its required power to meet the electrical demands for the island interconnected system in 2003.

The minister said that this project has been deemed to be in the overall best interest of the province and will be exempted from the Electric Power Control Act and the Public Utilities Board Act.

"All future energy supply options are being considered in the government�s current energy policy review. There are several alternative sources of energy available. It is a matter of selecting the appropriate mix of projects to provide power in a way that is cost-effective, addresses environmental and technological concerns and at the same time meets the island�s overall energy needs," said Mr. Dicks. "The province must be prudent in considering investment in future supply options to meet both consumer and industrial energy requirements."

Mr. Oldford said: "Abitibi Consolidated Incorporated is excited about the opportunity to develop the power potential with the assets at both Bishop�s Falls and Grand Falls-Windsor. We are delighted to be able to play a major role in helping the province to meet its energy requirements."

Minister Aylward said: "Today�s agreement fulfills a commitment made by this government to adopt energy efficient technology including renewable forms of energy that are technically feasible and economically viable. This sends a positive message to hundreds of communities and mill employees throughout this province who depend on a viable forest industry for their economic well being."

Minister Thistle said: "This announcement is positive news for Abitibi Consolidated Incorporated and the entire central region. The project will help Abitibi�s ability to compete in the tough market of the pulp and paper industry. It also represents a significant capital investment by Abitibi into its infrastructure at Grand Falls-Windsor and Bishop�s Falls."

Media contact: Gary Callahan (709) 729-4890.

BACKGROUNDER

Beeton Unit

The Beeton Unit is a new turbine/generator that will be located at the Grand Falls-Windsor generating station. This new unit will capture more of the Exploits River flow that is not used by existing generation and provide more efficient use of the flow currently being utilized.

The generating station at Bishop�s Falls currently produces power at 50 cycles per second. The upgrade will see the system converted to the North American 60 cycle system. Currently, generators at Bishop�s Falls transfer 50 cycle electricity through a transmission line to Grand Falls-Windsor. Some of this power is partially used, some of it is lost during transmission, and the remainder is converted to 60 cycle power using the Grand Falls-Windsor frequency converter. The upgrade will see all generators rewound for 60 cycle generation, therefore eliminating the need for the Grand Falls-Windsor frequency converter and making the system that much more efficient.

• Minister's speaking notes for Grand Falls-Windsor power purchase announcement

2000 10 18 11:45 a.m.