13 December 2009

On the one hand…

Jean-Thomas Bernard, economics professor at Laval, finds the Hydro-Quebec move to the Maritimes a bit puzzling since he believes that HQ will have to bring expensive power online to feed the Maritimes.

"My position is that cheap hydro is gone, definitely gone," Bernard said.

"We still have a fair amount of (undeveloped) hydro but this is expensive hydro. We're talking about 10 cents (per kilowatt hour), 12 cents," he said, referring specifically to the Romaine megaproject far from Montreal on the province's north shore - poised to begin bringing 1,550 megawatts of power online for Hydro-Québec in 2014.

On the other hand, Jean-Thomas Bernard also thinks that New Brunswick would actually win from this deal:

However, Bernard said in the long-term Hydro-Québec may regret this deal because the corporation may wind up selling its power to New Brunswick at a much cheaper rate than to its other customers in the United States or in Ontario.

The same issue is at the heart of both Bernard’s comments.  He is looking at the pricing issue and the cost of developing new power projects.

In the short-term HQ gains markets;  in the medium to long term it may face a situation where it could sell the power more lucratively elsewhere but be forced to sell at lower prices in New Brunswick under the terms of the MOU.

It’s an interesting observation about a complex issue.

But here’s an idea for you to consider:  if La Romaine and other new HQ projects are being developed at the price of around 10 to 12 cents per kilowatt hour, how would the Lower Churchill compare to that?