Hydro-Québec says U.S. export deal will keep local hikes below inflation

MONTREAL• Quebecers won’t get a break on already low hydroelectricity rates but a massive export deal with Massachusetts will give the public utility flexibility to keep increases below inflation, Hydro- Québec’s CEO said Friday.

“It relieves some pressure,” Eric Martel said. “It gives us a certain flexibility for things to come.”

The biggest export contract in Hydro- Québec’s history, run with U.S. partner Eversource Energy, would send up to 9.45 terawatt hours of electricity per year from Quebec’s hydroelectric plants to Massachusetts.

Hydro- Québec promised several years ago to keep domestic power rates below inflation and to increase the utility’s profitability. It kept the rate promise over the last three years with annual increases of 0.7 per cent.

The $ 10- billion deal over 20 years with the New England state will generate higher returns, he told reporters.

Martel wouldn’t provide the rate Massachusetts would pay but said it is above the three cents per kilowatt-hour cost to produce and transport the energy.

He told reporters Friday that the contract will be profitable, largely because electricity prices are stable and the firm has the available production capacity.

That’s good news for all Quebecers because the government will receive a larger dividend from the Crown corporation, added Energy Minister Pierre Moreau. “Whenever the profit goes up it’s good news for the shareholders, which is the government of Quebec and basically all Quebecers,” he added.

The contract, expected to be signed in March, could generate up to $500 million in annual revenues.

In 2016, Hydro- Québec’s exports represented $ 803 million of its $ 2.86- billion profit.

The contract will also help the utility achieve its goal of doubling revenues to about $27 billion by 2030.