Anger erupts over conflicting coal bed decisions

Hydro-Que9bec COVID-19 M&A Pause signals a halt to international expansion as falling electricity demand, weaker exports, and revenue pressure shift capital to the Quebec economy, prioritizing domestic investment, strategic plan revisions, and risk management.

Key Points

Hydro-Que9bec COVID-19 M&A Pause halts overseas deals, shifting investment to Quebec as demand, exports and revenue fall.

✅ International M&A on hold; capital reallocated to Quebec projects

✅ Lower electricity demand reduces exports and spot prices

✅ Strategic plan and 2020 guidance revised downward

COVID-19 is forcing Hydro-Québec to pull the plug on its global ambitions — for now, even as its electricity ambitions have reopened old wounds in Newfoundland and Labrador in recent years.

Quebec’s state-owned power generator and distributor has put international mergers and acquisitions on hold for the foreseeable future because of the COVID-19 crisis, chief financial officer Jean-Hugues Lafleur said Friday.

Former chief executive officer Éric Martel, who left last month, had made foreign expansion a key tenet of his growth strategy.

“We’re in revision mode” as pertains to acquisitions, Lafleur told reporters on a conference call, as the company pursues a long-term strategy to wean the province off fossil fuels at home as well. “I don’t see how Hydro-Québec could take $5 billion now and invest it in Chile because we have an investment opportunity there. Instead, the $5 billion will be invested here to support the Quebec economy. We’re going to make sure the Quebec economy recovers the right way before we go abroad.”

Lafleur spoke after Hydro-Québec reported a 14-per-cent drop in first-quarter profit and warned full-year results will fall short of expectations as COVID-19 weighs on power demand.

Net income in the three-month period ended March 31 was $1.53 billion, down from $1.77 billion a year ago, Hydro-Québec said in a statement. Revenue fell about six per cent to $4.37 billion.

“Due to the economic downturn resulting from the current crisis, we’re anticipating lower electricity sales in all of our markets,” Lafleur said. “Consequently, the financial outlook for 2020 set out in the strategic plan 2020–2024, which also reflects the province’s no-nuclear stance, will be revised downward.”

It’s still too early to determine the scope of the revision, the company said in its quarterly report. Hydro-Québec was targeting net income of between $2.8 billion and $3 billion in 2020, according to its strategic plan.

The first quarter was the utility’s last under Martel, who quit to take over at jetmaker Bombardier Inc. Quebec appointed former Énergir CEO Sophie Brochu to replace him, effective April 6.

First-quarter results “weren’t significantly affected” by the pandemic, Lafleur said on a conference call with reporters. Electricity sales generated $294 million less than a year ago due primarily to milder temperatures, he said.

Results will start to reflect COVID-19’s impact in the second quarter, though NB Power has signed three deals to bring more Quebec electricity into the province that could cushion some exports.

Electricity consumption in Quebec has fallen five per cent in the past two months, paced by an 11-per-cent plunge for commercial and institutional clients, and cities such as Ottawa saw a demand plunge during closures.

Industrial customers such as pulp and paper producers have also curbed power use, and it’s hard to see demand rebounding this year, Lafleur said.

“What we’ve lost since the start of the pandemic is not coming back,” he said.

Demand on export markets, meanwhile, has shrunk between six per cent and nine per cent since mid-March. The drop has been particularly steep in Ontario, reaching as much as 12 per cent, after the province chose not to renew its electricity deal with Quebec earlier this year, compared with declines of up to five per cent in New England and eight per cent in New York.

Spot prices in the U.S. have retreated in tandem, falling this week to as low as 1.5 U.S. cents per kilowatt-hour, Lafleur said. Hydro-Québec’s hedging strategy — which involves entering into fixed-price sales contracts about a year ahead of time — allowed the company to export power for an average of 4.9 U.S. cents per kilowatt-hour in the first quarter, compared with the 2.2 cents it would have otherwise made.

Investments will decline this year as construction activity proceeds at reduced speed, Lafleur said. Hydro-Québec was initially planning to invest about $4 billion in the province, he said, as it works to increase hydropower capacity to more than 37,000 MW across its fleet.

Physical distancing measures “are having an impact on productivity,” Lafleur said. “We can’t work the way we wanted, and project costs are going to be affected. Anytime we send workers north on a plane, we need to leave an empty seat beside them.”

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25% Tariff on Canadian Imports threatens New York energy markets, disrupting hydroelectric power and natural gas supply chains, raising electricity prices, increasing gas costs, and intensifying trade tensions, policy uncertainty, and cross-border logistics risks.

Key Points

A U.S. policy imposing 25% duties on Canadian goods, risking higher New York electricity and natural gas costs.

✅ Hydroelectric and gas imports face costlier cross-border flows

✅ Higher utility bills for NY households and businesses

✅ Supply chain volatility and policy uncertainty increase

President Donald Trump announced the imposition of a 25% tariff on all imports from Canada, citing concerns over drug trafficking and illegal immigration. This decision has raised significant concerns among experts and residents in New York, who warn that the tariff could lead to increased electricity and gas prices in the state.

Impact on New York's Energy Sector

New York relies heavily on energy imports from Canada, particularly electricity and natural gas. Canada is a major supplier of hydroelectric power to the northeastern United States, including New York, with its electricity exports at risk amid trade tensions. The imposition of a 25% tariff on Canadian goods could disrupt this supply chain, leading to higher energy costs for consumers and businesses in New York. Justin Wilcox, an energy analyst, stated, "If the tariff is implemented, it could lead to increased costs for electricity and gas, affecting both consumers and businesses."

Potential Economic Consequences

The increased energy costs could have broader economic implications for New York, and some experts advise against cutting Quebec's exports to avoid exacerbating market volatility. Higher electricity and gas prices may lead to increased operational costs for businesses, potentially resulting in higher prices for goods and services, while tariff threats have boosted support for Canadian energy projects that could reshape regional supply. This could exacerbate the cost-of-living challenges faced by residents and strain the state's economy.

Political and Diplomatic Reactions

The tariff has also sparked political and diplomatic reactions, including threats to cut U.S. electricity exports from Ontario that raised tensions. New York Governor Kathy Hochul expressed concern over the potential economic impact, stating, "We are closely monitoring the situation and are prepared to take necessary actions to protect New York's economy." Additionally, Canadian officials have expressed their disapproval of the tariff, and Ontario Premier Doug Ford's Washington meeting underscored ongoing discussions, emphasizing the importance of the trade relationship between the two countries.

Historical Context

This development is part of a broader pattern of trade tensions between the United States and its neighbors. In 2018, the U.S. imposed tariffs on Canadian steel and aluminum, leading to retaliatory measures from Canada. The current situation underscores the ongoing challenges in international trade relations, where a recent tariff threat delayed Quebec's green energy bill and highlighted the potential domestic impacts of such policies.

The imposition of a 25% tariff on Canadian imports by President Trump has raised significant concerns in New York regarding potential increases in electricity and gas prices. Experts warn that this could lead to higher costs for consumers and businesses, with broader economic implications for the state. As the situation develops, it will be crucial to monitor the responses from both state and federal officials, as well as how Canadians support tariffs on energy and minerals may influence policy, and the potential for diplomatic negotiations to address these trade tensions.

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Smart Renewables and Electrification Pathways Program enables clean energy and grid modernization across Canada, funding wind, solar, hydro, geothermal, tidal, and storage to cut GHG emissions and accelerate electrification toward a net-zero economy.

Key Points

A $964M Canadian program funding clean power and grid upgrades to cut emissions and build net-zero electrified economy.

✅ Funds wind, solar, hydro, geothermal, tidal, and storage projects

✅ Modernizes grids for reliability, digitalization, and resilience

✅ Supports net-zero by 2050 with Indigenous and utility partners

Harnessing Canada's immense clean energy resources requires transformational investments to modernize our electricity grid. The Government of Canada is investing in renewable energy and upgrading the electricity grid, moving toward an electric, connected and clean economy, to make clean, affordable electricity options more accessible in communities across Canada.

The Honourable Seamus O'Regan Jr., Minister of Natural Resources, today launched a $964-million program, alongside a recent federal green electricity contract in Alberta that underscores momentum, to support smart renewable energy and grid modernization projects that will lower emissions by investing in clean energy technologies, like wind, solar, storage, hydro, geothermal and tidal energy across Atlantic Canada.

The Smart Renewables and Electrification Pathways Program (SREPs) supports building Canada's low-emissions energy future and a renewable, electrified economy through projects that focus on non-emitting, cleaner energy technologies, such as storage, and modernizing electricity system operations.

Investing in these technologies reduces greenhouse gas emissions by creating a cleaner, more connected electrical system, supporting progress toward zero-emissions electricity by 2035 goals, while helping Canada reach net-zero emissions by 2050.

Minister O'Regan launched the program during the Canadian Electricity Association's (CEA) virtual regulatory forum on Electricity Regulation & the Four Disruptors – Decarbonization, Decentralization, Digitalization and Democratization, highlighting evolving regulatory approaches as B.C. streamlines clean energy approvals to support deployment nationwide. The launch also coincides with Canadian Environment Week, which celebrates Canada's environmental accomplishments and encourages Canadians to contribute to conserving and protecting the environment.

Through SREPs and other programming, the government is working with provinces and territories, with the Prairie Provinces leading renewable growth in the years ahead, utilities, Indigenous partners and others, including diverse businesses and communities, to deliver these clean and reliable energy initiatives. With Canadian innovation, technology and skilled energy workers, we can provide more communities, households and businesses with an increased supply of clean electricity and a cleaner electrical grid.

To help interested stakeholders find information on SREPs, a new webpage has been launched, which includes a comprehensive guide for eligible projects.

This supports Canada's strengthened climate plan, A Healthy Environment and a Healthy Economy. Canada is advancing projects that support the clean grid of the future and seize opportunities in the global electricity market to boost competitiveness. Collectively with investments from the Fall Economic Statement 2020 and Budget 2021, Canada will achieve our climate change commitments and ensure a healthier environment and more prosperous economy for future generations.

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ABO Wind Tunisia 10MW Solar Project will build a photovoltaic park in Gabes with a STEG PPA, fixed tariff, 2,500 m grid connection, producing 18 million kWh annually, targeted for 2020 commissioning with local partners.

Key Points

A 10MW photovoltaic park in Gabes with a 20-year STEG PPA and fixed tariff, slated for 2020 commissioning.

✅ 18 million kWh/year; 2,500 m grid tie, 20-year fixed tariff

✅ Electricity supplied to STEG under PPA; 2020 commissioning

✅ Located in Gabes; built with local partners, 10MW capacity

ABO Wind has received a permit and a tariff for a 10MW photovoltaic project in Tunisia, amid global activity such as Spain's 90MW wind project now underway, which it plans to build and commission in 2020.

The solar park, in the governorate of Gabes, is 400km south of the country’s capital Tunis and aligns with renewable funding initiatives seen across developing markets.

The developer said it plans to build the project next year in close cooperation with local partners, as regional markets from North Africa to the Gulf expand, with Saudi Arabia boosting wind capacity as well.

ABO Wind department head Nicolas Konig said: “The solar park will produce more than 18 million kilowatt hours of electricity per year and will feed it into the grid at a distance of 2500 metres.”

The developer will conclude an electricity supply contract with the state-owned energy supplier (Societe tunisienne de l’electricite et du gaz (STEG), which will provide a fixed remuneration over 20 years, a model echoed by Germany's wind-solar tender for the electricity fed into the grid.

Earlier this year, ABO Wind had already secured a tariff for a wind farm with a capacity of 30MW in a tender, 35km south-east of Tunis, underscoring Tunisia's wind investments under its long-term plan.

The company is working on half a dozen Tunisian wind and solar projects, as institutions like the World Bank support wind growth in developing countries.

“We are making good progress on our way to assemble a portfolio of several ready-to-build wind and solar projects attractive to investors, as Saudi clean energy targets continue to expand globally,” said ABO Wind general manager responsible for international business development Patrik Fischer.

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Ontario Electricity Export Retaliation signals tariff-fueled trade tensions as Doug Ford leverages cross-border energy flows to the U.S., risking grid reliability, higher power prices, and escalating a Canada-U.S. trade war over protectionist policies.

Key Points

A policy threat by Ontario to cut power exports to U.S. states in response to tariffs, leveraging grid dependence.

✅ Powers about 1.5M U.S. homes in NY, MI, and MN

✅ Risks price spikes, shortages, and legal challenges

✅ Part of Canada's CAD 30B retaliatory tariff package

In a move that underscores the escalating trade tensions between Canada and the United States, Ontario Premier Doug Ford has threatened to halt electricity exports to U.S. states in retaliation for the Trump administration's recent tariffs. This bold stance highlights Ontario's significant role in powering regions across the U.S. and serves as a warning about the potential consequences of trade disputes.

The Leverage of Ontario's Electricity

Ontario's electricity exports are not merely supplementary; they are essential to the energy supply of several U.S. states. The province provides power to approximately 1.5 million homes in states such as New York, Michigan, and Minnesota, even as it eyes energy independence through domestic initiatives. This substantial export positions Ontario as a key player in the regional energy market, giving the province considerable leverage in trade negotiations.

Premier Ford's Ultimatum

Responding to the Trump administration's imposition of a 25% tariff on Canadian imports, Premier Ford, following a Washington meeting, declared, "If they want to play tough, we can play tough." He further emphasized his readiness to act, stating, "I’ll cut them off with a smile on my face." This rhetoric underscores Ontario's willingness to use its energy exports as a bargaining chip in the trade dispute.

Economic and Political Ramifications

The potential cessation of electricity exports to the U.S. would have profound economic implications. U.S. states that rely on Ontario's power could face energy shortages, leading to increased prices, particularly New York energy prices, and potential disruptions. Such an action would not only strain the energy supply but also escalate political tensions, potentially affecting other areas of bilateral cooperation.

Canada's Retaliatory Measures

Ontario's threat is part of a broader Canadian strategy to counteract U.S. tariffs. Prime Minister Justin Trudeau has announced retaliatory tariffs on U.S. goods worth approximately CAD 30 billion, targeting products such as food, textiles, and furniture. These measures aim to pressure the U.S. administration into reconsidering its trade policies.

The Risk of Escalation

While leveraging energy exports provides Ontario with a potent tool, it also carries significant risks, as experts warn against cutting Quebec's energy exports amid tariff tensions. Such actions could lead to a full-blown trade war, with both countries imposing tariffs and export restrictions. The resulting economic fallout could affect various sectors, from manufacturing to agriculture, and lead to job losses and increased consumer prices.

International Trade Relations

The dispute also raises questions about the stability of international trade agreements and the rules governing cross-border energy transactions. Both Canada and the U.S. are signatories to various trade agreements that promote the free flow of goods and services, including energy. Actions like export bans could violate these agreements and lead to legal challenges.

Public Sentiment and Nationalism

The trade tensions have sparked a surge in Canadian nationalism, with public sentiment largely supporting tariffs on energy and minerals as retaliatory measures. This sentiment is evident in actions such as boycotting American products and expressing discontent at public events. However, while national pride is a unifying force, it does not mitigate the potential economic hardships that may result from prolonged trade disputes.

The Path Forward

Navigating this complex situation requires careful diplomacy and negotiation. Both Canada and the U.S. must weigh the benefits of trade against the potential costs of escalating tensions. Engaging in dialogue, seeking compromise, and adhering to international trade laws are essential steps to prevent further deterioration of relations and to ensure the stability of both economies.

Ontario's threat to cut off electricity exports to the U.S. serves as a stark reminder of the interconnectedness of global trade and the potential consequences of protectionist policies. While such measures can be effective in drawing attention to grievances, they also risk significant economic and political fallout. As the situation develops, it will be crucial to monitor the responses of both governments and the impact on industries and consumers alike, including growing support for Canadian energy projects among stakeholders.

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Duke Energy zero-coal 2050 plan outlines a decarbonized energy mix, aligning with Paris goals, cutting greenhouse gas emissions, driven by investor pressure, shifting to natural gas, extending nuclear power, and phasing out coal.

Key Points

An investor-driven scenario to end coal by 2050, shift to natural gas, extend nuclear plants, and manage climate risk.

✅ Eliminates coal from the generation mix by 2050

✅ Prioritizes natural gas transitions without CCS breakthroughs

✅ Extends nuclear plant licenses to limit carbon emissions

One of America’s largest utility companies, Duke Energy, is set to release a report later this month that sketches a drastically changed electricity mix in a carbon-constrained future.

The big picture: Duke is the latest energy company to commit to releasing a report about climate change in response to investor pressure, echoing shifts such as Europe's oil majors going electric across the sector, conveyed by non-binding but symbolically important shareholder resolutions. Duke provides electricity to more than seven million customers in the Carolinas, the Midwest and Florida.

Gritty details: The report is expected to find that coal, currently 33% of Duke’s mix, gone entirely from its portfolio by 2050 in a future scenario where the world has taken steps to cut greenhouse gas emissions, and where global coal-fired electricity use is falling markedly, to a level consistent with keeping global temperatures from rising two degrees Celsius. That’s the big ambition of the 2015 Paris climate deal, but the current commitments aren’t close to reaching that.

What they're saying: “What’s difficult about this is we are trying to overlay what we understand currently about technology,” Lynn Good, Duke CEO, told Axios in an interview on the sidelines of a major energy conference here.

She went on to say that this scenario of zero coal by 2050 doesn’t assume any breakthroughs in technology that captures carbon emissions from coal-fired power plants. “We don’t see that technology today, and we need to make economic decisions to get those units moving and replacing them with natural gas.”

Good also stressed the benefits of its several nuclear power plants, highlighting the role of sustaining U.S. nuclear power in decarbonization, which emit no carbon emissions. She said Duke isn’t considering investing in new nuclear plants, but plans to seek federal relicensing of current plants.

“If I turn them off, the resource that would replace them today is natural gas, so carbon will go up,” Good said. “Our objective is to continue to keep those plants as long as possible.”

What’s next: A spokesman said the other details of their 2050 scenario estimates will be available when the report is officially released by month’s end.

Axios reports that Duke Energy will release a report later this month that detail the utility's efforts to mitigate climate change risks and plan carbon-free electricity investments across its operations. The report includes a scenario that eliminates coal entirely from the company's power mix by 2050. Coal currently makes up about a third of Duke's generation.

Duke CEO Lynn Good told the news outlet the scenario ending coal-fired generation assumes no technological advances in emissions capture, seemingly leaving open the possibility.

Last year, a report by the Union of Concerned Scientists concluded one in four of the remaining operating coal-fired plants in the U.S. are slated for closure or conversion to natural gas, amid falling power-sector carbon emissions across the country. Duke's report is expected to be released by the end of the month.

Duke's report on its carbon plans comes at the behest of shareholders, a trend utility companies have seen growing among investors who are increasingly concerned about companies' sustainability and their financial exposure to climate policy.

Last year, a majority of shareholders of Pennsylvania utility PPL Corp. called on company management to publish a report on how climate change policies and technological innovations will affect the company's bottom line. Almost 60% of shareholders voted in favor of the non-binding proposal.

The vote, reportedly a first for the power sector, followed a similar decision by shareholders of Occidental Petroleum, which was supported by about 66% of shareholders.

Duke's Good told Axios that right now the utility does not see the coal technology on the horizon that would keep it operating plants. “We don't see that technology today, and we need to make economic decisions to get those units moving and replacing them with natural gas," Good said. However, it does not mean the utility is making near-term efforts to erase coal from its power mix. However, some utilities are taking those steps as they prepare for en energy landscape with more carbon regulations.

In addition to the 25% of coal plants heading for closure or conversion, the UCS report also said that another 17% of the nation’s operating coal plants are uneconomic compared with natural gas-fired generation, and could face retirement soon. But there is plenty of ongoing research into "clean coal" possibilities, and the federal government has expressed an interest in smaller, modular coal units.

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