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Hydro-Quebec is heading for lower profits and higher electricity rates unless it invests significantly in energy efficiency incentive programs and enters into a power-exchange deal with Ontario, according to a report released today by two environment groups.


Because demand for electricity peaks in Quebec in cold winter months, while demand in Ontario peaks in summer due to heavy use of air conditioning in that province, Quebec has surplus generating capacity in summer and Ontario has surplus generating capacity in winter.


"By more closely co-ordinating the two province's power systems, Hydro-Quebec's need to build new high-cost hydroelectric generating capacity to meet its winter peak demands will be reduced," according to the report produced jointly by Montreal-based Equiterre and Toronto-based Ontario Clean Air Alliance.


"Similarly, Ontario's need to build new high-cost natural-gas-fired power plants to provide peak power on hot summer days will also be reduced."


According to Hydro-Quebec's current strategic plan, which covers the period 2009-2013, electricity rates will climb by eight per cent over that period, while net profits will fall by 24 per cent.


Hydro-Quebec's profits are falling and rates rising for three reasons, according to the report. The cost of building new power stations is much higher than earlier projects, electricity demand is rising, and profits from electricity exports are forecast to fall sharply.


The report says Hydro-Quebec is not pursuing energy efficiency aggressively enough. Since Quebec has the highest per-person electricity consumption rate in the world, there is great potential for conservation.


Stronger energy efficiency incentive programs would "simultaneously reduce customers' electricity bills, make Quebec industries more competitive and free up more of its existing hydro-electricity generating capacity for highly profitable exports to Ontario and the U.S."


And if Quebec exports more electricity to Ontario and the U.S., these jurisdictions will not have to burn as much coal or natural gas, thus lowering greenhouse gas emissions, the report notes.


Equiterre's Steven Guilbeault said no one is suggesting


Quebec should stop construction on new hydro projects already under way. But he said energy efficiency programs should be greatly expanded before any new power stations -even those powered by greener sources like wind or biomass -are considered.


Hydro-Quebec could increase its profits by $473 million per year by beefing up its incentive programs for energy efficiency, the report suggests.


But Hydro-Quebec disagrees with the report's conclusions.


"They say we should buy wind power from Ontario, but they don't say that wind power costs 13 to 20 cents per kilowatt hour, which is much more expensive than our production costs at our Romaine project, for example," said Hydro-Quebec spokesperson Marc-Brian Chamberland, adding that Quebec and Ontario already buy some energy from each other.


He said the utility is already doing a lot with energy efficiency programs and intends to do more.


"It's easy to suggest in a 10-page report that we can do a lot more," he said. "They say we should stop building power plants in Quebec, buy more expensive energy from Ontario and somehow get $500 million more (per year) through energy efficiency ... I don't see it."


To read the report, titled Higher Profits and Lower Bills: A New Electricity Strategy for Hydro-Quebec, go to: http://www.equiterre.org/publications


(Courtesy of The Montreal Gazette)

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There already is a big "high-voltage DC" line to Ontario.


Ontario is doing a whole lot of crazy and stupid things in regards to electricity. Jozef McGuinty said when he was elected he'd close the coal plants "to save the environment", instead they are still running, but the cost of electricity (to consumers) has multiplied and unsustainable subsidies (like 90 cents per kWh) are being paid out for "wind and solar" and still the lights go dark every so often because the distribution network in TO is garbage...


The "export" thing for Quebec is oversold, HQ pushes hard for it but at a high price, nobody really wants to buy this electricity! But it is there and NYSEG, GMP, Ontario need the juice.


The concept of "efficiency" is crap, people need more and more electricity just to live their lives, particularly in Quebec where many homes are heated with baseboards. Telling people to shut the lights off so they save 5 cents of electricity is silly when they are spending $2000 to run the baseboards. Nowhere else in the world except maybe Iceland do people use electricity for heat, but our electricity is relatively inexpensive and it is a good solution for many now that oil prices are stupid high. That is why our per-capita consumption is high, the heating is the elephant in the room, we could throw away the lights and never watch TV and still the rate would be the highest.


Albertans consume much fewer kWh than we do, but in every Albertan's house, the heat is from natural gas, the hot water is from natural gas, and usually, the stove is gas and the dryer is gas. For a household, that is like 80% or more of the energy consumption. But Albertans have a LOT of natural gas, and not much water, we have a LOT of water and not much gas!


There is a huge amount of hydroelectric potential in Quebec, and a huge amount of installed hydroelectric capacity. Hydro is by far the cheapest and best (no fuel cost, no air or heat pollution, long lifespan and infrequent maintenance...) form of electric generation. HQ has done a little of wind and solar to look "green" (and also a couple of nuclear plants) but they should not waste their time with such useless toys when they have such mighty rivers waiting to be tamed. Somewhere like California doesn't have so much water, and has a lot more sun, and even there solar is pretty much a waste...

Edited by Cyrus
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The "export" thing for Quebec is oversold, HQ pushes hard for it but at a high price, nobody really wants to buy this electricity! But it is there and NYSEG, GMP, Ontario need the juice.


actually, electricity prices on the market are being driven down by HQ own increase in what is being sold in the USA.


Prices on the market, which is what a utility pays to get the electricity it can't produce, are being fixed by 2 methods, one being fixed capacity contract, where one producer agrees to sell X amount of energy at Y price, usually really close to production + transport price. The second part comes from variable demand, in which case, the price paid is being determined by the marginal producer, the last one being able to fill in the capacity required. The lowest cost producer are nuclear and hydro-electric plants (nuclear because a shut down is complicated and expensive, so the amount produced is constant over time)


When HQ increase it's capacity being sold in the outside market, it lowers the demand for other higher cost producer, thus reducing the overall market price paid. And unfortunatly, the increase in capacity sold doesn't offset the lower price they get, so overall export profits go down.


At some point, we can almost say that HQ is getting closer to being the marginal producer, at which, the price paid by the market is closed to it's own producing cost, resulting in much lower profits

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