Hydro-Quebec very nearly found itself at the centre of a trade war between Canada and the U.S. last month.
The hostilities started when a U.S. Senator denounced Hydro as a threat to America’s “economic and national security.”
On the surface, Senator James Jeffords of Vermont is angry that Hydro charges his state the highest rates for electricity anywhere in America. But lurking just under the surface of the dispute is the ice storm of 1998. The brutal storm knocked out power to 3 million Quebecers for up to 32 days.
Vermont lost power from Hydro-Quebec for a month. The state’s utilities are especially upset because their contract forced them to keep paying Hydro-Quebec – $18 million U.S. – even while the power was off.
The utilities say Hydro-Quebec breached its $4-billion U.S. contract with Vermont during the storm. They accuse Hydro of neglecting its power grid so much it was vulnerable to the storm.
“We are arguing (Hydro’s) system is unreliable,” said Bob Rogan, vice-president at Central Vermont Public Service, the state’s biggest utility with 150,000 customers.
Senator Jeffords waded into the issue last month, charging in a letter to Hydro-Quebec that the utility “has demonstrated unwarranted market power in the United States.”
Jeffords asked U.S. President Bill Clinton to investigate Hydro-Quebec’s actions. He also tried to get the U.S. Senate to rip up Hydro’s contract with Vermont, but other senators backed away from this idea after Canada’s ambassador to the U.S., Raymond Chrétien, said it could lead to a trade war.
Vermont’s utilities have been in arbitration with Hydro-Quebec over the contract and the ice storm for a year and a half.
David Carle, an aide to Vermont’s other senator, Patrick Leahy, told The Nation that Hydro-Quebec “has been a barrier to arbitration. It is a very serious issue. The senator strongly believes that Hydro-Quebec should approach the issue in good faith.” The arbitration process is shrouded in secrecy. The names of the three arbitrators are confidential, and the hearings are being held behind closed doors.
The first round of hearings started on Aug. 31, and lasted 10 days. A date will soon be set for the start of the second and most important round of hearings, in which the two sides will have 60 days to debate why the lines collapsed in the ice storm.
Rogan said getting any documents out of Hydro has been like pulling teeth. “That seems to be a pattern. Since the ice storm, it has been extremely difficult to get information out of Hydro-Quebec,” he said.
“It’s part of the reason we embarked on the arbitration. It’s one of the reasons that led to the escalation of the dispute.”
Hydro-Quebec was finally forced to release several truckloads of confidential documents to the Vermont utilities.
Vermonters will pay Hydro 6.8 cents U.S. per kilowatt-hour next year; the market rate is expected to be about 3.5 cents.
Vermont’s two largest utilities have said the Hydro contract could push them into bankruptcy.
