Friday, October 20, 2000 Hydro-Quebec cuts U.S. power sales to meet rising demand

NEW YORK (Reuters) - In a move that will reshape the U.S. Northeast power market, Hydro-Quebec has begun to implement its Strategic Plan for 2000-2004 by cutting long-term power sales to the U.S. and shifting focus to short-term deals.

The utility's strategic plan was designed to meet Quebec's rising demand for power, projected to grow by 12 per cent over four years, while delaying the need to invest in construction of costly new plants.

"With the load growth in Quebec... and no new large generating facilities on line recently... our exports to the U.S. will decrease over time," Daniel Garant, Hydro-Quebec's managing director for wholesale markets and project development with the company's generation business unit, told Reuters in an interview Thursday.

"There should be no surprise to the U.S. markets that we are reducing our sales to the U.S. It was clearly spelled out in our Strategic Plan for 2000-2004," Garant said, noting the provincially-owned utility released the plan in October 1999.

In the past, New York and New England counted on Hydro-Quebec to provide thousands of megawatts of low-cost hydropower sales every day.

"Exports of low cost power in long-term contracts (to U.S. utilities) reflects the past. Quebec's needs must come first," Garant stressed.

Quebec's thirst for new domestic power was expected to grow annually by 17.4 terawatt hours (TWh), or 12 per cent, from 1999 to 2004, Hydro-Quebec's strategic plan said.

A terawatt hour is equal to one million megawatt hours. One megawatt provides enough power to light 1,000 homes.

Yearly domestic power sales to industrial and commercial customers are expected to grow by 10.4 TWh, or nearly 17 per cent, from 1999 to 2004.

The province's total power consumption was expected to rise from 146.6 TWh in 1999 to 164.1 TWh in 2004. Hydro-Quebec forecasts domestic power sales of 200 TWh by 2010.

Hydro-Quebec expects to meet most of its growing electric needs by reducing long-term sales to foreign customers, primarily in the U.S. Northeast, from 16 TWh in 1999 to two TWh in 2004. Most of those contracts will expire by 2002.

In its short-term deals to the U.S. market, Hydro-Quebec, which sold five TWh in 1999, plans to continue selling about five TWh a year through 2004.

"We will be more selective in our power exports to the U.S.... concentrating on getting the greatest value for our power in shorter term contracts," Garant said.

After reducing long-term contracts, Hydro-Quebec will still have to build some new transmission and generation facilities to meet its projected load growth.

In the James Bay area of northern Quebec, the crown company was building two hydroelectric stations that will generate a total of about three TWh per year: Sainte-Marguerite-3 and the new Grand-Mere generating station, which will replace an existing plant.

In the Betsiamites watershed region, the company planned to add 0.9 TWh per year with the partial diversion of rivers toward existing generating stations.

On the border with Ontario, Hydro-Quebec wants to build a 1,250-megawatt interconnection by 2003. That project, which many U.S. electricity traders said was an attempt by the utility to sell power to the U.S. Midwest through Ontario, was still being evaluated by regulators for the project's environmental impact.

Garant, however, said the primary purpose of the Ontario interconnect was to enhance the reliability of the Outaouais region of Quebec northeast of Ottawa, which was left in the dark for weeks following an ice storm in January 1998.

For the future, Hydro-Quebec said in its Strategic Plan it will continue working to complete the development of Quebec's hydroelectric potential.

http://www.canoe.ca/MoneyNews/oct20_hydroquebec-rtr.html

-- Martin Thompson (mthom1927@aol.com), October 20, 2000