Executive Council
Natural Resources
April 2, 2009Historic
Arrangement Sees Newfoundland and Labrador Wheel Upper Churchill Power
Through Quebec to North American Markets
For the first time in the province�s history,
Newfoundland and Labrador is now wheeling hydroelectric power through
neighbouring Quebec into the North American marketplace. The Honourable
Danny Williams, Premier of Newfoundland and Labrador, today announced
that the province�s energy corporation, Nalcor Energy, through its
subsidiary, Newfoundland and Labrador Hydro (Hydro) has signed an
agreement to wheel power through Quebec to the Canadian � United States
border.
�This is truly a historic and momentous occasion for the people of our
province, as never before have we been granted access through the
province of Quebec with our own power,� said Premier Danny Williams.
�Today marks another significant milestone for us as a people, as we
continue on our path to self-reliance and long-term prosperity. This
power sales arrangement puts us squarely in the game as a
hydroelectricity producer and seller. We have clean, hydroelectric
generation being sold from Newfoundland and Labrador and finding its way
into the North American market place. Just as we have taken equity
stakes in our offshore resources, we see tremendous potential for long
term value in entering this business and will continue to assess this
potential.�
Hydro signed a Transmission Service Agreement with
Hydro Quebec (HQ) under HQ�s Open Access Transmission Tariff for power
transmission from the Labrador to the Canada-U.S. border. Hydro is then
selling power on the Canadian side of the border to Emera Energy Inc.
Emera Energy began selling that power to the energy markets in Canada
and the United States on April 1, 2009. This power is from the recall
block that Newfoundland and Labrador has access to from the Upper
Churchill project.
NL Hydro has had a power purchase agreement (PPA) with
Hydro Quebec for a block of recall power from the Upper Churchill since
1998. The original contract was renewed for a three year term in 2001
and again in 2004 for a five year term. This renewal expired on March
31, 2009. Hydro has the right to recall 300 MW at the same price as HQ�s
current pricing under the 1969 Churchill Falls power contract. On
average, NL Hydro uses approximately 170 MW of power for use in Labrador
leaving approximately 130 MW available for export after domestic and
industrial requirements in Labrador are met.
As with past recall arrangements only energy surplus
to the province�s own needs would be exported outside from the province.
Hydro�s priority will be to continue to meet local and domestic needs
within Labrador. The company expects to be selling up to 250 MW of power
which is the maximum available during the summer months.
�This is a significant development for us to share our
excess green renewable energy with the rest of North America through our
transmission access through Quebec and our subsequent arrangement
directly with Emera Energy,� said the Honourable Kathy Dunderdale,
Minister of Natural Resources. �These markets are seeking clean,
reliable energy, which we have in abundance. The recall block
availability and this arrangement allows us to build our reputation and
experience as a reliable supplier of clean energy now and into the
future.�
The most recent contract with Quebec Hydro expired on
March 31, 2009. Having assessed all options, Nalcor Energy determined
the most strategic and valuable decision moving forward is this
arrangement as opposed to entering another power purchase agreement with
Quebec at this time.
�The decisions around these transmission and power
sales arrangements were made in alignment with our long term business
strategy and opportunities,� said Ed Martin, CEO, Nalcor Energy. �Over
the decades to come there will be tremendous opportunities in the
Canadian and U.S. markets for clean, renewable power and we have a
product that the market is demanding now and we foresee a growing demand
into the future.
�The various options were subject to the usual rigour
of any investment decision we make,� explained Mr. Martin. �The upside
of this arrangement will provide more revenue to the company than the
recall arrangements with HQ have in the past.�
Markets in the US Northeast are attractive for
electricity exporters in Canada. These large markets are open,
competitive and have a significant need for clean hydroelectricity.
�This is an exciting opportunity for both Nalcor and
Emera Energy,� said Wayne O`Connor Chief Operating Officer of Emera
Energy. �We are proud to play a part and look forward to working
together to bring this valuable resource to markets across northeast
North America.�
�What we are talking about today is our future, and the future of
generations who will follow us,� said Premier Williams. �Our province�s
first Energy Plan which we released a couple of years ago, set in place
a plan to develop our resources with a view to 2041 when we finally take
full control of the Upper Churchill project. Today�s announcement is one
more step on that road. Our view is long term and we will not be swayed
by short term thinking.�
Premier Williams added this is the first step on the road to the
province selling power directly into North American markets. �At the
present time, we are working with Emera Energy to have our power get to
these markets,� said Premier Williams. �In other words, we have
concluded a sale agreement with them so that with their considerable
expertise in the industry, this power, originating from our province may
be sold into markets. Obviously, this is something entirely new for us
as a province and so we retained the best expertise possible in these
early days. Our goal is to eventually develop the expertise at Nalcor so
that we can act as seller into final markets. We understand from Emera
that power from Labrador today is being sold directly into the United
States; destination � New York. Newfoundland and Labrador is taking a
bite out of the big apple.�
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2009 04 02
12:10 p.m.