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NLIS 7
March 2, 2001
(Mines and Energy)

 

Minister responds to comments by the Opposition on the Recall Power Contract


Mines and Energy Minister Lloyd Matthews responded today to inaccuracies in statements made by Opposition Leader Ed Byrne on the recall sales contract that was recently signed between Newfoundland and Labrador Hydro (NLH) and Hydro Quebec (HQ). 

Mr. Matthews said it is totally inaccurate and misleading for Mr. Byrne to suggest that the province could be earning more than $72 million a year from the sale of this power in New England and New York. 

"The Leader of the Opposition has not taken into consideration the availability and cost of transmission to get to the markets, the cost of marketing this power or the volatility of prices in the deregulated markets," Mr. Matthews said. "For example, Mr. Byrne should know that NLH would require long term transmission bookings in both Quebec and the US which could cost up to $30/ Mwh. This equates to approximately $40 million per year. Taking into consideration other applicable costs associated with these markets, it is unlikely that annual profits from the sale of this power could exceed $26 million per year."

Mr. Matthews said that under the current contract the province is guaranteed $23.90 for every Mwh that we do not use in Labrador. "This equates to net profit of $80 million over the three year term of this contract. When you realistically take into consideration all these factors, I am assured that we are getting the best available return on the sale of this power." 

The minister said discussions were held with other potential customers for this power before renewing this agreement and that the offer from Hydro Quebec was the better deal in terms of providing the guaranteed price we will receive and in terms of flexibility to meet Labrador requirements.

"This is a good contract which provides the province with $80 million of profit over the next three years that we would not otherwise receive, and at the same time provides us with maximum flexibility to meet the power requirements of Labrador. I would like to make it clear that the people of Labrador have first priority in the use of this power," Mr. Matthews said.

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

2001 03 02                                   4:40 p.m.


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