Governor, Premier Announce Preliminary Vermont-Hydro-Québec Agreement
March 11 2010 - 1:30PM
Marketwired
Vermont's two largest utilities today signed a memorandum of
understanding with provincial utility Hydro-Québec that sets the
stage for a new power supply contract for Vermont customers.
Vermont Gov. Jim Douglas hailed the accord, which he said would
be good for Vermont and Québec. "Reaching a new long-term agreement
with Hydro-Québec is a good deal for ratepayers and strengthens the
state's economic future," Douglas said. "This new contract will
provide stable, clean, renewable power at a competitive price
through 2038. Energy trade is the centerpiece of our longstanding
and valued trading relationship with the Province of Quebec -- a
relationship that Lt. Gov. Dubie and I have worked hard to
strengthen over the past seven years. The agreement reached today
is the result of many hours of hard work by my administration
working in a collaborative fashion with CVPS and GMP."
"Québec and Vermont have an established relationship in multiple
sectors. Today's agreement is yet another example of this
collaboration. Under this agreement Québec will continue to provide
clean renewable electricity to Vermont. Today Québec strengthens
its commercial ties with Vermont; together we continue to pursue
the fight against climate change," said Jean Charest, Premier of
Québec.
Central Vermont Public Service (NYSE: CV) and Green Mountain
Power seek similar volumes to what they receive from Hydro-Québec
today, and to make power available to other Vermont utilities.
Under the MOU, the term sheet is confidential to protect
market-sensitive information, but the companies announced that they
anticipate purchases totaling up to about 225 megawatts starting in
November 2012 and ending in 2038. The term sheet includes a
price-smoothing mechanism that will shield customers from volatile
market spikes over this period.
"This agreement sets the stage for a new contract that will help
us maintain what is arguably the cleanest power supply in the
nation, while ensuring a relatively stable and affordable future
for our customers," CVPS President Bob Young and GMP President Mary
Powell said in a joint statement. "It continues a relationship that
has helped us provide competitive rates in the northeast, with
minimal air and greenhouse impacts. This is an enormous step
forward as we continue to plan Vermont's energy future."
"This agreement is the natural extension of a business
relationship that has benefited both Hydro-Québec and our Vermont
customers," said Thierry Vandal, President and Chief Executive
Officer of Hydro-Québec. "It will allow us to optimize our exports
of clean renewable electricity, and Vermonters will continue to
benefit from a reliable energy source at a stable and competitive
price."
Under the accord, announced at a meeting with Premier Charest
and Gov. Douglas, CVPS, GMP and Hydro-Québec will negotiate final
terms of the agreement over the next few months. The final 26-year
agreement is expected to provide broad, scheduled energy delivery
at a good value for customers.
"The market is extremely volatile, with tremendous highs and
lows," the companies said. "The contract will tend to keep
Vermont's purchases near the middle of the market, protecting
Vermont consumers from the highest price swings and Hydro-Québec
from the lowest price swings."
Young said the memorandum of understanding will help secure a
major segment of CVPS's power supply as existing contracts with
Hydro-Québec and Vermont Yankee come to a close starting in 2012.
"Hydro-Québec's clean, sustainable hydroelectric projects and
relative price stability provide exactly the kind of power
Vermonters have told us they would like," Young said. "We have
always provided an energy mix with very low emissions, and this
agreement will help us ensure that tradition for the next
generation of our customers."
Powell said: "A major component of our energy strategy, launched
two years ago, was to pursue a broader, more strategic partnership
with Hydro-Québec in order to benefit from its highly reliable,
very low-carbon power system. Our agreement today is a major step
in that direction and also ensures significant economic value for
Vermont consumers."
Vermont and Québec have had an energy partnership for a very
long time. Energy trading between Vermont and Québec has been an
important component of Vermont's energy supply since the early
1980s, when longer-term power deals were inaugurated. The current
Vermont-Hydro-Québec contract, which was signed on Dec. 4, 1987,
expires in 2016.
One of the key provisions of the agreement is for the Vermont
General Assembly to enact legislation to designate large hydro,
which would include Hydro-Québec power, as renewable. Any renewable
energy credit revenues for HQ power delivered over the Highgate
Interconnection would be shared between the Vermont companies,
benefiting their customers, and Hydro-Québec.
The accord was signed by CVPS (NYSE: CV), GMP and H.Q. Energy
Services (U.S.) Inc., an indirect wholly owned subsidiary of
Hydro-Québec. It commits the parties to negotiate in good faith a
power purchase agreement based on the non-binding term sheet.
According to the memorandum, the parties intend to negotiate the
material terms of the power purchase agreement no later than June
30, 2010 to allow the parties to obtain all necessary internal
organizational approvals and execute the agreement no later than
July 31, 2010. The final agreement will be subject to Vermont
Public Service Board approval and certain other conditions.
The binding terms of a power purchase agreement will be
established only upon execution of a contract acceptable to each
party. Should execution of the agreement by all parties fail to
occur for any reason prior to July 31, 2010, the memorandum of
understanding and the obligations of the parties to negotiate a
final agreement will terminate.
Media contacts : Hugo D'Amours Press secretary Office of the
Premier of Québec Telephone : 418 643-5321 David Coriell
Communications director Office of the Governor of Vermont 802
828-3333 Central Vermont Public Service Steve Costello (802)
747-5427 Green Mountain Power Robert Dostis (802) 655-8412
Marc-Brian Chamberland Head of public affairs and media
Hydro-Québec Telephone : 514 289 6222
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