TransCanada facing turbine delay penalties

MONTREAL -- - Calgary-based TransCanada Corp. is facing some major penalties for delays at a large gas turbine it was contracted to build for Hydro-Québec, even though it is the Quebec government that is holding up the power project.

Construction was to start this month on the $500-million power plant at Bécancour, Quebec's first big gas-powered electricity plant, with delivery to the provincial utility to begin in September, 2006.

Now the government has withheld its approval until a new decision, expected by the end of June, is rendered by the Quebec Energy Board.

An official for TransCanada said the company is still hopeful it will reach a deal to avoid paying penalties that could surpass $90,000 a day.

Hydro-Québec selected TransCanada's bid for the Bécancour project after the Quebec Energy Board quietly recognized the utility needed the additional power. But then a later and larger proposed project southeast of Montreal, called Suroit, went to public hearings. Opposition by residents and environmentalists was so strong that the Quebec government demanded another entire review of the province's energy needs, putting Bécancour on the back burner. A Hydro-Québec Distribution spokesman said that if the government does not approve Bécancour, "it means buying electricity at a higher price from the market, like from the U.S. or Ontario."