Sale of excess Canadian electricity to US sparks trade controversy

The Green Mountains of Vermont are going to be lighted by the white water of northern Quebec. Vermont has reached an agreement with Hydro Quebec, the provincially owned electric utility, to buy up to $8.6 (Canadian) billion worth of electricity over 25 years. The deal calls for 500 megawatts of power to be sold to the Vermont Joint Owners, a consortium of the Green Mountain Power Company, Central Vermont Public Service, and seven smaller power companies. The group serves about 90 percent of Vermont.

Hydro Quebec already sells 200 megawatts of electricity to Vermont under a contract that expires in 1995. That new deal will carry on until 2015 and, with the new agreement, will provide a total of 500 megawatts.

Hydro Quebec says the sale is its first ``firm'' long-term energy deal. That means the delivery of electricity cannot be interrupted for Quebec's needs.

The electricity sale has to be approved by Canada's National Energy Board, a federal regulatory body. Before it can sell power to the US, the utility has to prove the power is surplus to Canadian needs and isn't cheaper than electricity sold in Canada. The Energy Board recently turned down a sale of electricity to New England states, ordering Hydro Quebec to offer the power to other Canadian provinces first. There were no takers.

This power sale - and others - will allow Quebec to expand its hydroelectric system in the northern part of the province. The provincial premier, Robert Bourassa, plans to build more dams and generating stations to provide power for export. Mr. Bourassa was in office in the early 1970s when he started construction of the James Bay Power project, which supplies the surplus electricity for export. He was ridiculed as a dreamer at the time.

The proposed free-trade agreement between Canada and the United States could change the way electricity is exported to the US. As the rules stand now, the National Energy Board wants electricity that is exported to the US to be more expensive than the cheapest American power. The Americans say that this is a discriminatory trade policy which the free-trade agreement would stop.

There is also the issue of acid rain. Canada has been complaining that acid rain from the US, mainly generated by coal-fired power plants in the Ohio Valley, is killing lakes and trees. But a group of politicians and lobbyists from the American coal industry says the issue is a smoke screen, designed to help Canadian utilities sell more electricity to the US.

A bill was recently introduced in Congress by Rep. Nick J. Rahall II, a Democrat from the coal-producing state of West Virginia, which could reduce Canada's electricity sales to the US. The bill is backed by the Ad Hoc Coalition on International Power and Trade, a coal lobby group that includes Gov. George Sinner of North Dakota and Robert Murray, president of North American Coal Corporation.

The argument is that by importing cheap electricity from Canada, thousands of jobs have been lost in the American coal mining industry and in the construction industry as plans for coal-fired plants have been scrapped.

Electricity exports from Canada earn an estimated C$1 billion a year for government-owned utilities in New Brunswick, Quebec, Ontario, Manitoba, and British Columbia. There is even more excess power available, and sales such as the one to Vermont provide the cash flow to develop new capacity.

Hydro Quebec provides 70 percent of Canadian electricity exports, selling 20 percent of its output to utilities in New England and New York State. It counts on American worries of overreliance on foreign energy sources to help its pitch.

``Do they want to deal with the Arabs or with Quebec?'' asks Quebec Energy Minister John Ciaccia.