MONTREAL - Political posturing and protectionism are powering opposition to a proposed US$2 billion transmission line to carry cheap electricity from north of the border to New York City, a Quebec energy policy expert says.
A group of 13 state legislators — Republicans and one Democrat — say the new 1,000 megawatt power line from Quebec would damage New York's power industry by costing local jobs without generating the promised US$650 million in annual cost savings to consumers.
"Our state's resources should be used to create jobs in New York, rather than export them to a foreign country," they wrote in a letter to Democratic Governor Andrew Cuomo.
Pierre-Olivier Pineau, associate business professor at Montreal's HEC, said the concern is understandable because of protectionism advocated by state and provincial governments through renewable energy subsidies to promote green jobs.
Even Quebec requires that all wind power it buys be produced in the province.
"Energy is highly politicized in the U.S. and in Canada so there's no other reason beyond politics. It doesn't make business sense, it doesn't make environmental sense to oppose this project," he said in an interview.
If New York of New England want to have more green power at lower prices then they have to consider buying it from Quebec or Labrador, said Pineau, who believes the project will be built.
Eastern state governors besides New York and their provincial counterparts recently created a working work to look at integrating electricity markets.
"Of course there is local resistance because of these green jobs, but if you want to be rational and you want to do commerce then we have to go beyond these short-term green jobs."
The new line would be beneficial in the long run for Quebec's public utility and New York consumers, but failure to win approval would have only a marginal impact on both sides, Pineau said.
New York already has a 1,500 megawatt power line from Quebec, which still has excess capacity to increase electricity exports. But the new line that will connect Manhattan through cables under the Hudson River will allow Quebec to increase supply during peak consumption hours that attract premium pricing.
"It's not so much that we need the line to export the additional energy... it's that we need the line to export at the peak hours at the very highly profitable hours."
Some of the exported energy would come from Quebec's new La Romaine generating station that will be fully built by 2020, but will begin contributing energy around 2016 when the transmission line is scheduled to be built.
Hydro-Quebec said it is "pursuing discussions" with its partner Transmission Developers but nothing is signed or confirmed.
"We're just looking at the possibility of participating in the project," a spokeswoman for the utility said.
"There has been a transmission service request on Quebec's portion and an impact study is currently underway and this will allow us to estimate the potential costs of Quebec's portion of the project."
In New York, the senators opposed the project in a letter to the commission that regulates energy transmission and generation that is expected to decide the fate of the Champlain-Hudson Power Express proposal within weeks.
"Our state's resources should be used to create jobs in New York, rather than export them to a foreign country," wrote the senators, led by Sen. George Maziarz, of hydropower-rich Niagara County.
The Republican said he doesn't believe the Quebec line would save any money. New York City residential and business customers pay among the highest electricity rates in North America. Residential rates last year were 22.15 cents Cdn per kilowatt-hour compared to 6.82 cents Cdn in Montreal, according to a Hydro-Quebec report.
"They are going to come in and lower the energy cost, then once they put all of the upstate generators out of business, then the cost goes up," Maziarz said in an interview.
The project has the backing of Democratic Gov. Andrew Cuomo, who aims trim New York City's very expensive energy bills by about two to three per cent.
About half the energy will be used in New York City, but Transmission Developers CEO Donald Jessome said ratepayers will see price breaks from Long Island to the Albany area. Long Island and the northern suburbs will each get about 20 per cent of the lower-cost energy while the Albany area will get about 10 per cent, he said.
The company projects about 2,400 jobs could be created in the private sector each year because of the energy savings that could then be spent by companies and individuals. In addition, the private company's investment means the state won't have to spend as much taxpayer money on transmission lines, Jessome said.
The line also promises to reduce power plant air pollution and make the state less dependent on the Indian Point nuclear power plant which Cuomo has said he wants to close as new energy comes onstream.
— With files from The Associated Press.