HydroQuebec to decide on U.S. link soon

QUEBEC - HydroQuebec, which earned 22 percent of its profit from U.S. power exports last year, plans to decide this year whether to begin development of a $1 billion transmission line to boost electricity sales to New England, said Chief Executive Officer Thierry Vandal.

The proposed line, a partnership with Northeast Utilities and Bostonbased NSTAR, would link hydroelectric dams in Quebec to transmission lines in southern New Hampshire. The line would deliver up to 1,200 megawatts, enough for about 960,000 typical U.S. homes.

HydroQuebec is in discussions with partners and utility regulators over how to share the cost of building the line, and trying to determine whether low power prices in the U.S. and the higher value of CanadaÂ’s currency against the dollar would make building it too risky.

“Export markets haven’t been very strong, gas prices are low, and this is what determines power prices,” Vandal said in a phone interview. “The Canadian dollar is high, and as exporters, this is bad news for us.”

The U.S. Federal Energy Regulatory Commission last May granted preliminary approval of the proposal, under which Springfield, Massachusettsbased Northeast Utilities and NSTAR would negotiate exclusively with HydroQuebec to use the line.

NSTAR is “fully committed” to the project and negotiating the costs, said Caroline Allen, a spokeswoman.

Al Lara, a spokesman for Northeast Utilities, said the companies are negotiating agreements for power purchases, transmission rights and construction.

“We think it is going to be a great project,” Lara said in an interview. “Negotiations are ongoing, and going well.”

HydroQuebec, based in Montreal, plans to spend about $25 billion US $24.8 billion to build new generating stations over the next five years, including two new dams in northern Quebec that will add 1,500 megawatts for export, Vandal said.

Power sales outside of Quebec, mostly to U.S. customers, accounted for about 10 percent of HydroQuebecÂ’s revenue last year and 22 percent of the its profit, he said.

“All you need is a hot summer with lots of demand for air conditioning and the situation will change,” Vandal said. “So we’re not losing hope for 2010.”

In March, Quebec signed an agreement with two Vermont utilities, Green Mountain Power Corp. and Central Vermont Public Service Corp., to sell as much as 225 megawatts of electricity annually from 2012 until 2038. HydroQuebec plans to sell the power for about 6 to 7 cents a kilowatthour in 2012, and prices will fluctuate according to demand on the market, Vandal said in a recent speech in Montreal.

HydroQuebec began exporting electricity to New England with a line that was completed in the 1980s, Vandal said.

“This line is entering its fourth decade of existence, and it has become an essential piece of infrastructure, both for us and for New England,” Vandal said. “We see the New Hampshire line having the same impact for everyone, and we are confident that the value of the New Hampshire line will similarly increase over time.”

Northeast Utilities owns ConnecticutÂ’s largest utility, while NSTAR is the biggest Massachusetts investorowned electric and gas utility. HydroQuebec, whose shares are held by the government, is CanadaÂ’s largest electric utility.