Hydro-Quebec To Buy New Brunswick Power Assets For C$4.75 Billion

Hydro-Quebec (HQB.YY) said Thursday it entered an agreement to buy most of the assets of New Brunswick Power for C$4.75 billion (US$4.4 billion), a deal that would increase the size of one of North America's largest utility companies and give it a transmission corridor into United States power markets.

Hydro-Quebec and New Brunswick Power are owned, respectively, by the Canadian provincial governments of Quebec and New Brunswick, and the deal has already drawn criticism from Quebec's provincial rivals. The Canadian Press reported that Newfoundland and Labrador Premier Danny Williams said he'll fight the deal, saying it threatens the interests of all Canadians.

Merchant generators in New England could also be threatened by the combination, since it would give Hydro-Quebec a route to compete in U.S. markets through New Brunswick's transmission lines into Maine. Hydro-Quebec has been eyeing the Northeastern power markets for some time, recently discussing the possibility of new transmission lines into the U.S. with Northeast Utilities (NU) and NStar (NST).

The deal, which is expected to close by March 31, would eliminate New Brunswick Power's debt of C$4.75 billion. Hydro-Quebec would take over New Brunswick's nuclear generating facility at Point Lepreau, its hydropower assets, peaking power plants and transmission and distribution system. New Brunswick Power would continue as a separate entity, operating thermal power facilities at Coleson Cove and Belledune, supplying electricity to Hydro-Quebec through tolling agreements.

- By Edward Welsch, Dow Jones Newswires; 613-237-0669; [e-mail]

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