MONTPELIER - Gov. Peter Shumlin and utility leaders Monday, April 18 hailed the Public Service Board's approval of a 26-year contract with Hydro-Qu bec, a key element of Vermont's energy future.
"I am glad that the Public Service Board approved this agreement for clean, reliable, and favorably priced power for Vermonters," Gov. Shumlin said. "Hydro-Qu bec has been an important partner in Vermont for many years, and will continue to be a key player in Vermont's energy future."
The PSB order, issued April 15, is the culmination of a more than a year-long process that began with the signing of a memorandum of understanding between Central Vermont Public Service (NYSE-CV), Green Mountain Power and Hydro-Qu bec in March 2010. The MOU led to a contract last August, now approved by the PSB, which will benefit not only CVPS and GMP customers, but people across Vermont.
"We are very pleased that the Public Service Board has validated our belief that this will be a very favorable contract for Vermont," CVPS President Larry Reilly and GMP President Mary Powell said in a joint statement. "This approval ensures a large, clean, renewable baseload energy source in our portfolios that will be competitively priced and reliable."
The PSB concurred. "The proposed HQ (agreement) would provide a number of benefits to the Vermont utilities and their ratepayers," the board said. "First, over the term of the contract the price of power is expected to be competitive with or favorable to market prices, and is less expensive than currently available sources of power with similar characteristics. Second, the price for this power is expected to be more stable than purely market-based purchases due to the formula for determining its future price.
"This formula is based not only on market prices for power but also on inflation, and includes a buffering feature that limits year-to-year price fluctuations," the board said. "Third, the Vermont utilities will receive environmental attributes associated with the energy delivered by HQUS into the New England market in an amount matching the Vermont utilities' purchases under the HQ PPA and reflecting at least 90 percent hydroelectricity, which Vermont law recognizes as renewable."
Under the agreement, Vermont will purchase up to 225 megawatts of energy starting in November 2012 and ending in 2038. Hydro-Qu bec's generating fleet is 98 percent hydroelectric. The agreement includes a price-smoothing mechanism that will shield customers from volatile market prices.
The price will start at approximately 5.8 cents per kilowatt-hour.
Vermont has purchased energy from Quebec for decades. In the early 1980s, the first longer-term power deals were established. The current Vermont-Hydro-Qu bec contract, which was signed on Dec. 4, 1987, phases out largely in 2016. The current contract has proven to be a sound agreement for Vermont, helping GMP and CVPS maintain clean portfolios and rates that are among the lowest in New England.
The new energy contract was negotiated between CVPS, GMP and H.Q. Energy Services (U.S.) Inc., an indirect wholly owned subsidiary of Hydro-Qu bec. Other Vermont utilities that have confirmed their intent to purchase energy under this agreement are Vermont Public Power Supply Authority, Vermont Electric Cooperative Inc., Vermont Marble Power Division of Omya Industries Inc., the Town of Stowe Electric Department and the Burlington Electric Department.