Newspaper article The Christian Science Monitor

Hydro-Quebec Flooded by Critics

Newspaper article The Christian Science Monitor

Hydro-Quebec Flooded by Critics

Article excerpt

HYDRO-Quebec, the government-owned power utility, has been charged with subsidizing power-hungry industries to attract new business and jobs to the province.

The utility - and the Quebec government - is also under fire for plans to increase it's electric generating capacity by flooding land in northern Quebec, threatening the livelihood of Indians who hunt and trap there.

Robert Libman, leader of the Equality Party, a small political group, said in the Quebec legislature that Hydro-Quebec was selling electricity to selected customers at 40 percent below cost.

"Hydro is actually selling this power at 1.5 cents a kilowatt hour (Canadian) for the first two years, which is much less even than the 2.4 cents per kilowatt hour it costs to produce the power and much less than the 4.2 cents per kilowatt hour every single Quebecker pays," Mr. Libman said. Hydro-Quebec, he said, has secret deals with big power users, singling out Norsk Hydro, which produces magnesium at a Quebec smelter. Magnesium, titanium, and aluminum smelters all use massive amounts of electricity to make raw metal from ore.

Hydro-Quebec admits that 13 firms, mostly makers of aluminum, titanium, and magnesium, benefit from what critics call subsidies. The power giant calls them "risk- and profit-sharing contracts."

"The idea is to give a high power user - a firm where it is 30 percent of costs - flexibility by offering different rates," says Joseph McNally, vice president of industrial marketing at Hydro-Quebec. "The aim is to encourage industrial development in Quebec."

Under the risk contract, the utility lowers the rates during the initial stages and when profits are poor, and raises the rate when the company is making money. "Over the lifetime of the contract the price evens out," Mr. McNally says.

Hydro-Quebec refuses to discuss the amounts of the discounts involved, citing "confidentiality." Indeed, there is a court order in Quebec that prohibits publication in Canada of the dollar amounts involved in the subsidy.

Electricity is cheap in Quebec, costing less in Montreal than in any city in North America except Seattle and Winnipeg, Manitoba. …

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