Hyro-Quebec to tender for 1,000 Mw under new law

Under a new regulatory program, Canada’s Hydro-Quebec asked regulators for approval to call for bids on 1,000 Mw of electricity in January in order to meet projected demand in 6 years.

The Canadian crown corporation said it intends to sign 15-20 year contracts and is looking to attract the development of new power plants in Qu௿½c. To insure security of supply, the company said it will only consider bids from companies with power plants in Qu௿½c.

Between 2002 and 2005, Hydro-Quebec said its only option to supply growing demand is on the short-term market. The Canadian utility expects to asks for bids for 210 Mw to serve additional demand in 2004, with the main potential suppliers being Hydro-Quebec Production and brokers in the US Northeast.

Over the longer term, to account for variations in the weather, the company said it will require options of 1.9 tw-hr to cover one standard deviation related to weather risk. Market interest will have to be evaluated since this is a new product, the company explained.

In addition, it expects to use “very” short-term purchases to cover changes in demand caused by weather conditions that exceed the amount of power covered by contract.

The company warned any delay in launching tenders for the long-term contracts will increase the region’s dependence on outside sources. It said the tenders will seek to buy 3-3.5 tw-hr above forecasted average demand to help prepare for potential higher demand, weather risk, and maintenance outages.

Hydro-Quebec said it will call for 300 Mw of firm capacity, 200 Mw of hourly dispatchable power, 400 Mw of dispatchable power, and 100 Mw of base load energy with firm capacity, or dispatchable power. The company said it will give preference to companies that will allow it to postpone start of delivery with advance notice, to reduce contract quantity with advance notice, and flexibility of terms and conditions for scheduling in the case of dispatchable power.

Under amendments to Quebec’s electric power law, the cost of electric power other than what comes from the so-called heritage pool will be determined from tenders. Supply contracts will be awarded to the lowest bidders, including transmission costs. The average cost of electricity from the heritage pool is set a 2.8௿½/kw-hr (Can.).

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