http://www.canada.com/montreal/montrealgazette/story.asp?id=FA11D0D4-9AF4-4D 5E-8B7A-5EDBDC5AA420 Hydro-Québec takes case for Suroît generator to Régie today Utility boss disputes pollution claims. Critics say Hydro's export sales to U.S. draining reservoirs, creating shortfall KEVIN DOUGHERTY The Gazette, Wednesday, March 10, 2004 Hydro-Québec gets its day in court today when it presents its case for building the controversial Suroît natural gas-fired generator. Opponents of Suroît fear that the Régie de l'énergie, which has a mandate to re-examine the need for Suroît, tilts in favour of Hydro-Québec. But last month, the Régie said no to the publicly owned utility's request for a 2.9-per-cent rate hike. It disputed Hydro-Québec's cost figures and gave it a more modest 1.4-per-cent rate increase starting April 1. The rate decision did not please Hydro-Québec, but its president, André Caillé, is determined to prove Quebec needs the $550-million Suroît project despite opposition from townspeople in Beauharnois, where it would be built. Environmentalists, consumer advocates and Roman Catholic nuns have also lined up against it. Hydro power supplies 95 per cent of Quebec's electricity, but building new dams takes time, Caillé told a recent Canadian Club luncheon recently. He said water levels in Hydro's reservoirs have fallen in the last year by 24 terawatt-hours, roughly the amount of electricity Montreal consumes in a year. At the same time, demand for power rose by nine terawatt-hours, enough to meet the needs of Quebec City for a year. Opponents say Suroît would spew out greenhouse gases equivalent to 600,000 cars, but Caillé insisted this is not pollution. "I have to say that CO2 (carbon dioxide) is an element present in our daily lives," he said in his speech. "Those of you who had mineral water this noon have just drunk your dose of carbonic gas." "That's what George Bush would say," countered Steven Guilbeault of the environmentalist group Greenpeace, adding it sounds funny coming from Caillé because Hydro-Québec supports the Kyoto Accord to limit emissions of the greenhouse gases blamed for climate change. But Guilbeault sees no hint in the rate decision the energy board will rule against Suroît. The decision on the plant will once again put the Régie, created in 1997 to set Hydro-Québec's rates, in the media spotlight. Before the Régie, the Quebec government set the rates. The change came because Hydro-Québec, with a monopoly to supply electricity in Quebec and a single shareholder - the Quebec government - wanted to sell surplus energy on the lucrative spot market in the U.S. To be a player in the U.S. market, Hydro-Québec had to look like a private-sector U.S. utility. The Régie was modeled on FERC, the U.S. Federal Energy Regulatory Commission. At the same time, Hydro-Québec transformed itself into three companies: Hydro-Québec Production, running the dams; Hydro-Québec TransÉnergie, transmitting their output; and Hydro-Québec Distribution, delivering power to customers. The Régie was given the mandate to look into all Hydro-Québec activities. But in 2000, consumers and environmentalists went to Quebec Superior Court asking it to rule the government had forced the Régie to side with Hydro-Québec in setting rates. Justice Pierrette Rayle agreed with the consumers. To counter the Rayle decision, the Parti Québécois government adopted Bill 116, making it legal for the government to limit the Régie's powers. Bill 116 said that in setting the utility's rates, the board could not look at how much it costs Hydro-Québec Production to make electricity. Manon Lacharité, of the Union des consommateurs, said recently that her organization wants the Liberal government to abolish Bill 116. In opposition, the Liberals opposed Bill 116, branding it as an effort to jack up electricity rates. Thomas Mulcair, now the Liberal environment minister, called Bill 116 a "tax grab." In ordering the Régie to re-examine Suroît, the government effectively suspended application of Bill 116 until June 30, Lacharité said. As a result, Hydro-Québec has revealed its water shortage, which environmentalists suspected but couldn't prove. Its critics argued Hydro-Québec's export sales on the U.S. spot market were running down its capacity and creating the shortfall Caillé now wants to fill with Suroît. "We are very worried," she added, pointing out the Régie knew the state of Hydro-Québec's reserves and didn't say anything. "Why didn't the Régie sound the alarm?" kdougherty@thegazette.canwest.com
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