New England plugs into Canadian energy

Energy isn't cheap in New England, as anyone who has ever gasped at an electric bill knows. Nearly half of the region's electricity comes from antiquated, oil-fired generators that gulp 50 million gallons of Mideast crude a year. Nuclear power plants have proved costly to build. There aren't many big rivers to provide hydroelectric power. And New England is the last stop on a very long gas pipeline stretching across the United States.

Enter Canada. Suppliers there have been trumpeting the hydroelectric power to be had from Quebec, natural gas from Alberta and Nova Scotia, and nuclear power from New Brunswick. And utilities here have been answering the call, hammering out deals to bring this energy to New England by the late 1980s.

Eventually, the new supplies could dampen electric rate hikes, cut oil imports, reduce pressure to build new power plants, and provide a steady source of natural gas.

But some energy analysts see problems arising from increased Canadian energy imports. They wonder if the lessons learned from US dependence on foreign oil are being partly forgotten for the specter of another type of plentiful, imported energy. US Energy Secretary Donald P. Hodel recently warned that utilities buying Canadian electricity might find themselves so dependent that when the contracts came up for renewal, they would be forced to comply no matter what the price.

Some industry executives say they are keeping those concerns in mind during current negotiations with Canada. ''Our plans may reduce our present 47 percent dependency on oil down to the 20 percent level'' by 1990, says Philip Otness, executive director of the New England Power Pool (NEPOOL). The emphasis, he says , will be on keeping a healthy mix of energy supplies. ''We remember what happened in the '70s.''

To date, the eastern Canadian provinces have presented these possibilities to New Englanders:

Natural gas. In 1979 Mobil Oil Canada and its partners discovered natural gas in the undersea Venture fields off Nova Scotia's Sable Island. Current estimates peg Scotian offshore gas reserves at more than 18 trillion cubic feet - more than the US would use in 30 years at current rates of consumption.

William Mason, president of Toronto's Mobil Oil Canada, says in five years the Venture field alone could be producing 400 million cubic feet of natural gas - far more than local demand could absorb. Seventy-five percent of that could be exported to the US, he adds.

Plans now are being laid to pump natural gas to the Northeast via an 800-mile underground pipeline. First stop: New England, which is expected to get about half of the Venture exports.

''We've been the last tap on the gas pipeline for so long,'' says John Kelly, director of Maine's Office of Energy Resources. ''Now that we're finally going to be first, you can be sure it will make a difference in how much we use.'' The hope among New England utilities is that Canadian natural gas will become a convenient alternative to oil, almost all of which is imported from overseas.

But obstacles remain. For one, currently there is a natural gas surplus in the US. Some gas company officials here are concerned there will not be a market for the gas once it arrives. They are reluctant to accept contracts that include a standard ''take-or-pay'' clause requiring gas distributors to accept and pay for a predetermined amount of gas - even if they can't use it. The Federal Energy Regulatory Commission, which must approve international projects, is studying the problem.

Most industry officials think the pipeline will be built, however. ''The pipeline will be finished just after the gas surplus disappears,'' Mr. Mason says. And Canadian officials showed flexibility Monday by lowering the gas price floor by 30 percent.

Target date for the first natural gas shipments is 1988. Two US pipeline companies and a consortium of Northeastern gas utilities are competing to build the pipeline. ''When you get 11 chief executives from as many states (and provinces) saying they want this to come about, you can be sure something's going to happen,'' says Connie LaPoint of the New England Governors Conference.

Hydropower. Quebec's energy resources, as developed by the province's energy monopoly, Hydro-Quebec, are virtually limitless - 98.5 percent of Hydro-Quebec's electricity comes from damming rivers. Quebecers pay four to five cents per kilowatt hour; Boston Edison charges its customers nine cents.

Because of a massive construction program in the early '70s, Hydro-Quebec has a ballooning energy surplus. It could have generated as much as $700 million more power this year, if there had been enough customers.

A partial solution is two massive hydroelectric deals - one signed in March 1983 and the other signed last month - with New England utility officials. Under the 1983 agreement, known as Phase I, Hydro-Quebec will relay 3 billion kilowatt hours of electricty a year to New England beginning March 1986. Phase II, last month's agreement, pledges 7 billion kilowatt hours annually for 10 years starting in 1990. Construction of power lines to transmit the energy is expected to begin in Vermont and New Hampshire this fall.

For all this, some utility officials voiced concerns during Phase II negotiations about the reliability of the Hydro-Quebec supply. Most of the power is generated at the company's La Grande Complex near James Bay, about 600 miles north of Montreal. Some are concerned an interruption in the lengthy transmission could black out major portions of the New England power grid.

Such occurrences are unlikely, insists Jacques Guevremont, vice-president and chief negotiator for Hydro-Quebec. ''Our system is solid and we provide a reliable product.''

Despite these questions, the option seems attractive to many New England utilities. NEPOOL chairman William Ellis has said the link to Quebec hydroelectricity is supposed to hold back 11 million barrels of oil and, over the course of the agreement, save customers nearly a billion dollars.

Nuclear energy. New Brunswick, a small province with small energy demands, finds it more efficient to build big power plants and then export the excess energy they generate. New England has had an electricity importation deal of one type or another with the province since 1957.

Now New Brunswick wants to construct a second nuclear reactor at Point Lepreau, about 70 miles north of the Maine-Canadian border, if New England agrees to buy all the power. The plant would be, in effect, a New England plant on Canadian soil.

New Brunswick officials say if New England power companies sign the deal by September, the plant - about two-thirds the size of the beleaguered Unit II reactor at Seabrook, N.H. - will be up and running by 1990. Linwood Titus, planning manager for the New Brunswick Power Commission, says, ''as soon as they give the word, we're ready to go ahead.'' New England power companies are still considering the proposal, saying their energy needs through 1995 can be met with current plans.

Tidal power. Nova Scotia also wants to harness the 36-foot tides that swell into the Bay of Fundy. After years of talk, an experimental, 20-kilowatt tidal-power electric generator will begin operation this fall. If it is a success, the project could be scaled up to full size with an annual output of 12 billion kilowatt hours - more than twice the yearly output of the Maine Yankee nuclear plant.

There are still many stumbling blocks. Enviromentalists are concerned the project's dams could alter tides and damage the New England coastline. And the cost of the project is huge: about $25 billion.

If these energy deals prove attractive, they may dramatically change the way utilities here do business. Ordinarily, a power company builds its own electrical plants when it needs more electricity. But now many utility officials are talking about someday importing large amounts of Canadian electricity as ''firm capacity'' - the kind of guaranteed power they get from their own generators.

Such a situation may offset pressure for the utilities to build some power plants here. For example, some utilities used the energy-importation agreements with Hydro-Quebec as one argument against a second nuclear reactor in Seabrook, N.H.

On the other hand, NEPOOL, whose members generate 98 percent of New England's electricity, insists the region needs to keep an energy mix that includes Canadian and Seabrook electricity. And state regulatory officials require energy brought in from outside a utility's own system to be passed on at cost to the consumer - so the utility makes no profit by importing. This could counterbalance a utility's preference for long-term foreign energy sources, says Maine's Mr. Kelly.

Even so, Vermont withdrew support from Seabrook Unit II last year when the state cut its own deal to import hydroelectric power from Hydro-Quebec. Claiming the arrangement would ''save Vermonters about $100 million'' in electric bills, Gov. Richard A. Snelling (R) said the Seabrook reactors ''no longer offer the hope of really inexpensive power.''