Quentin Casey
Telegraph-Journal
November 19, 2009

Power: Profit, savings are the factors influencing P.E.I. and Quebec(in their talks about a possible electrical energy deal), experts say

HALIFAX – Cheap power and domination of the regional electricity grid.

According to energy experts, those are the two biggest factors influencing Prince Edward Island and Quebec in their talks about a possible energy deal.

"P.E.I. has always been fond of renewable power and they pay the highest price for electricity in Canada, last time I checked," said Norman Rubin, of the Toronto-based watchdog group Energy Probe.

"They have the possibility of getting renewable, carbon-free hydroelectricity at a lower price than they’re paying now."

For Quebec and its public utility, Hydro-Québec, the deal offers clear financial rewards, Rubin said.

"Selling a product you make cheap, in a market where people are paying dearly for it, is classic Business 101 on how to get rich," he said. "Quebec makes a profit and P.E.I. saves. Let’s make a deal."

That’s exactly what the two governments are attempting to do.

Last week, Quebec Premier Jean Charest said the two sides have launched formal talks on a possible energy deal.

At an energy conference in Boston, Charest said the deal would allow Hydro-Québec to sell cheap and renewable power to P.E.I.

The giant hydroelectric utility is interested in laying a cable to ship electricity to Quebec’s Îles de la Madeleine off the coast of P.E.I., as well as possibly purchasing the province’s privately-owned distribution network, he said.

P.E.I. Premier Robert Ghiz said the deal would see the Island purchase about 100 megawatts of electricity from Hydro-Québec.

"Right now most of our electricity is oil-based so it’s expensive and non-renewable. This deal would provide P.E.I. with cheaper and cleaner electricity," he said.

The announcement of a potential P.E.I. energy deal comes just weeks after New Brunswick and Quebec signed a tentative multi-billion dollar deal to sell most of NB Power’s assets to Hydro-Québec.

Gordon Weil, a Maine-based energy consultant, says the presence of Hydro-Québec in New Brunswick creates a new reality for P.E.I. – particularly because most of the Island’s electricity comes from the soon-to-be-gobbled NB Power.

"In a way, P.E.I. has been something of a captive to NB Power," Weil said. "Now NB Power disappears and is replaced by Hydro-Québec. So it’s reasonable to say, ‘I’d like to know what’s going to happen to my power supply.’"

The situation on P.E.I., however, appears more complicated than in New Brunswick – thanks to a different electricity set up.

The province has two utilities, the smallest being the City of Summerside Electric Utility. Owned by the city, the small outfit supplies power to Summerside and the surrounding area.

The rest of the province is serviced by Maritime Electric, which is owned by Fortis Inc., a Newfoundland-based utility with holdings in six Canadian provinces and three Caribbean countries.

Maritime Electric provides the bulk of P.E.I.’s power, but produces little of it. Most of the utility’s power is purchased from NB Power. As well, some power is purchased from the PEI Energy Corporation, a Crown agency that owns two wind farms on the Island.

Maritime Electric, however, owns most of the Island’s power grid, with the exception of Summerside’s holdings and a small corridor owned by the PEI Energy Corp.

Also in the mix is the government, which regulates the power industry. As well, there are two private wind farms that export power off the Island.

Weil said the big question mark surrounds Maritime Electric: Will Quebec try to nab the utility to control the grid?

"What Hydro-Québec is trying to do is create, among other things, a regional market which it would dominate," he said. "Hydro-Québec wants to create a Maritime market that really works – one that it is in a position to control."

A call placed to Maritime Electric was not returned on Wednesday.