October 18-25, 2004

Hydro-Quebec 5-year Energy Efficiency Plan will save clients $1B in electricity costs

Hydro-Quebec Distribution's Energy Efficiency Plan for 2005-2010 will save Hydro-Quebec customers nearly $1 billion on their electricity bill by the time the plan is implemented, Hydro-Quebec president and CEO AndrÈ CaillÈ said last week. The plan, submitted to the Quebec Energy Board for approval, calls for $1 billion worth of investments by Hydro-Quebec Distribution; this is four times more than the previous plan.

"By 2010, Hydro-Quebec Distribution and its customers will save three TWh [terawatt-hours], or the equivalent of 1.5 times the electricity consumption of all households in the Mauricie region," said AndrÈ Boulanger, president of Hydro-Quebec Distribution. "The energy saved is about the same as the quantity of wind power that will be produced in the GaspÈ Peninsula under the call for tenders announced three weeks ago," he added Boulanger. The Energy Efficiency Plan will be the subject of public hearings in the coming months.

Earlier this month, Hydro-Quebec Distribution selected six bids from Cartier Wind Energy and two from Northland Power/Northland Power Income Fund for a total of 990 megawatts (MW) in response to its call for tenders for the purchase of wind-generated electricity. The utility has chosen technology from GE Wind, a manufacturer of wind turbines. Hydro-Quebec's CaillÈ noted that the initiative will consolidate the company's position as "the largest purchaser of wind power in Canada."

The wind farms and wind turbine enclosure assembly plants will be located in the regional county municipality (RCM) of Matane and in GaspÈsie-¿les-de-la-Madeleine. These projects will generate an overall investment of $1.9 billion. Each project must have a certain minimum content in terms of in-region spending and investment. This minimum regional content is based on the scheduled delivery dates: i.e. 40% for deliveries beginning December 1, 2006, 50% for deliveries starting December 1, 2007, and 60% for deliveries that commence between 2008 and 2012.

The average cost of the eight accepted bids is 6.5 ¢/kWh. The winning bidders have guaranteed an annual energy volume of 3.2 TWh, corresponding to a capacity factor of 36.6%. As a result, the 990 MW from the accepted bids will generate one TWh more than anticipated. Hydro-QuÈbec Distribution plans to finalize 20-year contracts with the bidders by December 15, 2004 and will submit the contracts to the Quebec Energy Board for approval.

In other activities, Hydro-Quebec Distribution has issued a call for tenders for 350 MW of electricity originating from cogeneration, with deliveries to start by December 1, 2009 at the latest. However, deliveries starting in 2008 or earlier are encouraged.

The electricity must be produced by facilities generating electricity and steam located in Quebec with an installed capacity of 200 MW or less and an energy efficiency rate of at least 70%. The Quebec Energy Board's non-monetary criteria for the call for tenders include a criterion encouraging the minimization of greenhouse gas emissions.

A pre-bid conference for interested bidders will be held in English on October 28; the call for tenders registration form is due by November 16, 2004. The deadline for bids is March 15, 2005. An announcement of accepted bids will be made next summer and signing of contracts is expected by the fall of 2005.

Interested bidders are advised to contact Hydro-Quebec Distribution's official representative, Raymond Chabot Grant Thornton, (514) 954-4600, E-mail cogenhqdrep@rcgt.com. Relevant documentation is available on the Hydro-Quebec

Distribution Web site, www.hydroquebec.com/distribution/en/marchequebecois/.

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