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Ontario energy minister denies Quebec electricity deal reports

Ontario Energy Minister Glenn Thibeault denied reports that the province had reached a draft agreement to buy electricity from neighboring Quebec at a rate that could threaten the viability of renewable and nuclear power in Canada's most-populous province.

The press office of Thibeault's governing Liberal Party on Aug. 8 released an image of a letter dated July 27 from the minister to his Quebec counterpart, Pierre Arcand, stating Ontario's rejection of the proposed deal. Thibeault said the deal between the Independent Electricity System Operator, which is responsible for acquiring power for the provincial grid, and government-owned Hydro-Québec would require unacceptable changes in his province's generation market.

"Specifically, the current HQ [Hydro-Québec] offer would require significant curtailment of domestic renewables [i.e. wind, hydro and solar power], increase surplus baseload generation[, or SBG,] and result in increased costs to Ontario ratepayers," the letter said. "HQ's proposal would increase average residential electricity bills by approximately [C]$30 per year."

The letter was released via the Twitter account of the Ontario Liberal Press Secretary. It had not been posted to the Ontario Ministry of Energy's website as of Aug. 8. Montreal newspaper La Presse reported it had details of a June 22 draft agreement that said Hydro-Québec would enter into a 20-year agreement with the Ontario grid operator, known as the IESO, that would see the company export 8 TWh annually at an average price of 6.12 Canadian cents per kWh, compared with an average 4.8 Canadian cents/kWh average export price in 2016. The French-language article was posted to the newspaper's website.

In his letter Thibeault referenced a June proposal and said his government is preparing a term sheet for Quebec that would outline its objectives for a longer-term power agreement. Ontario already has a seven-year pact with Quebec that will see it buy 2 TWh from Hydro-Québec annually starting this year.

The Aug. 8 La Presse article drew swift response from organizations involved in Ontario's energy industry. The Ontario Energy Association, which represents the largest companies in the province's energy sector, including utility owners Enbridge Inc. and Hydro One Ltd., said in a statement that it was disappointed that the government was engaged in secret negotiations for power purchases,

"This procurement process lacks transparency, contradicts the government's announced direction to move to a 'technology agnostic capacity auction' for purchasing future capacity, and seriously undermines the IESO's Market Renewal initiative," association CEO Vince Brescia said in the statement. "If this particular deal is pursued, Ontarians will not get the benefit of competition to ensure it is the best of all possible options for the province, and companies who have invested in Ontario and have employees here will not get the opportunity to provide alternatives."

The Society of Energy Professionals, a union representing engineers, scientists, supervisors and lawyers in Ontario's energy sector, said the C$12 billion deal was biased toward Quebec and could lead to the early closure of Ontario Power Generation Inc.'s Pickering Nuclear Generating Station and the loss of 4,500 jobs.

"I certainly see Quebec's interests reflected in the deal," society president Scott Travers said in a statement. "Ontario's interests in this are not so clear. This is not a deal that advances Ontario's emission-reduction targets. It will increase costs to the ratepayer and hurt Ontario's economy. All of the costs and risks seem to fall on Ontario."

The Ontario Waterpower Association called on the government to increase domestic production of hydroelectricity before seeking an increase in imports.

"Ontario's existing waterpower facilities are a reliable, cost-effective and long-lasting source of electricity in this province," Paul Norris, president of the association, said in a statement. "We should be looking at all opportunities to maximize production from these facilities as a first priority."

Hydro-Québec is a major exporter of power to New York and other northeastern states.