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Hydro-Quebec

Hydro-Quebec

75 Boulevard Rene Levesque West
Montreal, Quebec H2Z 1A4
Canada
Telephone: (514) 289-2211
Fax: (514) 289-3658
Web site: http://www.hydroquebec.com

Joint-Stock Company Owned by the Government of the
Province of Quebec
Incorporated:
1944
Employees: 19,500
Sales: $8.8 billion (1998)
NAIC: 221111 Electric Power Generation, Hydroelectric

Hydro-Quebec is one of the worlds largest generators of green energy. With its subsidiaries, the company constitutes the third largest electric utility in North America. In 1998 Hydro-Quebec provided electricity to more than 3.5 million customers in the Canadian province of Quebec and also supplied electricity to nine municipal systems, one regional cooperative, and 15 electric utilities in the northeastern United States, Ontario, and New Brunswick. As a power marketer, Hydro-Quebec made direct sales to U.S. power wholesalers; through its high-voltage, high-power research center, IREQ, the company was involved in energy-related research and testing. Sales outside Quebec accounted for nearly 11.5 percent of the companys total in 1998.

Montreal Light, Heat & Power Company: 190118

The province of Quebec emerged as one of the worlds major producers of hydroelectricity in the late 19th century. Construction of the provinces first large dam began in 1898, just three years after completion of the worlds first hydroelectric plant at Niagara. Hydroelectricity was a powerful force behind the development of Quebecs economy, since many other industries, including aluminum and carbide production, relied on the cheap, abundant power produced on Quebecs raging rivers.

Montreal Light, Heat & Power Company (MLH&P) was formed in 1901 under the leadership of two powerful Montreal financiers, Louis-Joseph Forget and Herbert S. Holt, from three electric companies (Royal Electric Company, Montreal & St. Lawrence Light & Power Company, and Imperial Electric Light Company) and one gas company (Montreal Gas Company). The new organization soon dominated power distribution in and around the city of Montreal.

In 1916 the Civic Investment & Industrial Company, a holding company, was created to acquire the capital stock of MLH&P and the Cedars Rapids Manufacturing & Power Company. The company name was changed to Montreal Light, Heat & Power Consolidated in 1918 to reflect the incorporation of practically all the gas, electric light, and power business in Montreal as one enterprise.

Consolidation and the Great Depression: 192041

During the 1920s many energy companies were absorbed by MLH&P, and by 1930 the company owned or controlled six of its former competitors, an electric railway, and a coal and coke plant. The monopoly allowed MLH&P to set prices and reap big profits. From 1910 to 1930, domestic electric rates dropped from nine to three cents per kilowatt hour, and costs fell even faster. Holt held Quebecers domestic rates at twice those offered in Ontario. Opposition to the electricity trust focused on these big profits and came primarily from local businessmen. Others were outraged at the perpetual land leases granted to the MLH&P along with rights to use the streets in suburbs within 100 miles of Montreal.

The Great Depression undermined the finances of many hydroelectric companies around Montreal during the 1930s. MLH&P gained control of Beauharnois Power Company, a large producer of energy on the St. Lawrence River, in 1933. It also took advantage of the economic opportunity to acquire municipal utility companies in Pointe Claire, Baie dUrfe, and St. Anne de Bellevue. By 1941, MLH&P owned three hydroelectric plants and operated a fourth in cooperation with Shawinigan Water and Power.

Provincial Control: 1940s

The Lapointe Commission, formed in 1934, recommended the creation of an Electrical Commission in 1935. The Electrical Commission (later named the Provincial Electricity Board), regulated electric distribution, focusing on rates and services. In 1937 the provincial government adopted a bill that favored municipal control of electrical service.

The Quebec Hydro-Electric Commission, better known as Hydro-Quebec, was created on April 14, 1944, and took over the assets of Montreal Light, Heat & Power Consolidated the next day. The new commission compensated MLH&P shareholders in 1947 but did not settle contracts with minority shareholders in MLH&P subsidiaries Beauharnois Light, Heat & Power and Montreal Island Power until 1953. By 1948 the government had gone a long way toward achieving its goals of reducing rates and standardizing service: residential rates were cut by 20 percent and commercial power prices went down 26 percent.

Building to Meet Demand: 1950s

Demand for cheap power was driven by the defense industry. Aluminum, copper, and nickel refining were in high demand during World War II and on into the military build-up during the Cold War. As a result, many major hydro projects were undertaken in the 1950s.

Hydro-Quebecs first bond offering to U.S. markets was used to finance a project on the Bersimis River. In 1953 Hydro-Quebec undertook a project to widen the Beauharnois canal, which diverted water from the St. Lawrence River to drive hydroelectric plants. The project kept Quebec in the forefront of hydroelectric development in Canada. The next year, the company installed the worlds largest submarine power cable, connecting the Bersimis generating facility with the Gaspe Peninsula. The discovery of rich copper mines in this previously undeveloped region raised demand for inexpensive power. The area had been electrified by diesel generators, which cost two to three times as much as hydropower. The cables provided for the complete electrification of the area, 20 percent of which had been without power up to that time.

In 1957 the company sold its gas system to concentrate on water power. After that year, virtually all of Hydro-Quebecs generating capacity came from hydroelectric generators. By the end of the decade, the province of Quebec produced 48.9 percent of Canadas hydroelectricity and was the greatest producer of power per capita in the country. Hydro kept costs low, too: the price per kilowatt hour in Quebec was 33 percent less than that of the United States.

Government Nationalization of Electricity: 1960s

The 1960s were characterized by the purchase by Hydro-Quebec of the private electrical distribution companies. The Shawinigan Water & Power Company, Quebecs largest nongovernment hydroelectric company, was bought out in 1963 in an effort to standardize rates and services throughout the province. Between 1963 and 1965, 45 rural electrical cooperatives and 19 municipal systems came under government control. They had constituted about one-third of Quebecs power sources. The 1960s also brought technological strides for Hydro-Quebec. In 1963 the company co-sponsored extra-high voltage experiments with Pittsfield Massachusettss General Electric Company. The 700-kilovolt tests surpassed U.S. voltage limits by 200 kilovolts.

During the 1950s an unfavorable balance of trade with the United States led the Canadian Exporters Association to discourage electric exports because of U.S. quotas and tariffs on many Canadian products. But in 1963, the federal government began to encourage the export of hydroelectricity to U.S. markets. In 1966, after two years of talks, Hydro-Quebec entered into agreements with British Newfoundland Corporation (Brinco) to begin a massive project at Churchill Falls of Newfoundland. The falls at Churchill were a tremendous untapped resource: at 245 feet (50 percent higher than Niagara Falls), Churchill was considered the western worlds largest single source of power. Work began at the site in 1967 and was completed in 1970. Hydro-Quebec co-sponsored the project, which diverted the river above the falls into a tunnel to an underground powerhouse. When finished, the project produced more power than all the U.S. and Canadian plants at Niagara Falls.

The James Bay Project and Great Whale: 197184

In 1971 the James Bay Development Corporation was created by an act of the Quebec National Assembly to develop natural resources. Increased demand for electricity inspired a plan known as the James Bay project to develop generating stations. The venture was controversial from its inception and throughout its development, with plans calling for the construction of over 200 structures that would alter the courses of 19 waterways in northwest Quebec.

The James Bay project consisted of three different complexes hundreds of miles apart. The La Grande Complex, commonly referred to as James Bay 1, consisted of a series of dams and dikes stretching a total of 41 miles, guiding regional rivers through three generating stations. Despite efforts to stop the project the undertaking was completed in 1985. James Bay 2, commonly known as the Great Whale project, began in 1987. The $13.5 billion plan called for the construction of a hydroelectric plant on the Great Whale River and the construction of facilities on the Nottaway, Broadback, and Rupert Rivers.

Company Perspectives:

Hydro-Quebecs mission is to supply power and to pursue endeavors in energy-related research and promotion, energy conversion and conservation, and any field connected with or related to power and energy.

The project drew opposition from Cree and Inuit Indians, and from international environmentalists, who cited the possibility of higher mercury levels in fish, destruction of caribou habitat, and the unpredictable geological impact of massive artificial reservoirs on the earths crust as reasons to stop the project.

Utility and government officials, on the other hand, pointed out that hydro power does not produce air pollution or wastes, and that if the equivalent of the annual production of the Great Whale complex was produced by thermal power stations, it would be necessary to burn at least 26 million barrels of oil per year. Furthermore, the James Bay Project created thousands of jobs and opened up more than 1,000 miles of roads in previously inaccessible areas. Hydro-Quebecs increased generating capabilities would also enable the company to sell surplus electricity to neighboring provinces and to the United States.

Hydro-Quebec took a number of steps to resolve the concerns that impeded the conclusion of the James Bay projects. In cooperation with the provincial government and native groups, the company participated in environmental impact studies and drafted agreements to hire Native Americans and to award contracts to their firms. Although Hydro-Quebecs own $400 million study suggested that the demand for electricity would justify the $13 billion project, it was canceled by Premier Jacques Parizeau in November 1994.

Reorganization: Early 1990s

Despite the negative publicity it received from Great Whale, Hydro-Quebec instituted several successful programs during the early 1990s that improved both customer and employee relations. In 1993 the company reorganized the administrative structure of its major activities in hopes of improving efficiency and lowering operating expensestwo of the primary goals behind its growing Defi performance or performance challenge program. This long-range project, with its 400 improvement teams involving more than 3,000 employees, played a large part in boosting customer approval ratings to 95 percent in 1994. A broad range of Energy Efficiency Projects helped customers save money without a reduction in comfort.

Hydro-Quebec also earned high marks during the 1990s for its commitment to research and technology. Devoting almost two percent of its revenues and more than 800 employees to developing new computer software, electronics equipment, and various other high-tech projects, the company was generally acknowledged to be one of the Canadian leaders in R & D. In May 1995 the company was named a finalist for the Edison Award in recognition for its many technological breakthroughs during the previous year, which ranged from the Language Expert System, a sophisticated diagnostic software program, to the Organic Electrosynthesis Program, a more efficient method of producing a wide array of chemicals and Pharmaceuticals. Once new technologies such as these were developed at its two research sites in Quebec, they were marketed by one of the companys subsidiaries, Nouveler, which negotiated licensing agreements representing some $14 million in revenue during 1994. Nouveler also launched several new companies, such as Scompitech, a firm engaged in the manufacture of a HydroQuebecs own newly developed robotic solder system.

Beginnings of Deregulation: 199597

By 1995, Quebec had more power than it knew what to do with. Hydro-Quebecs surplus inventory reached 4.2 million kilowatts and the company indicated the province would not need to add any new sources of electricity to its power grid until 2000. Hydro continued its research work on batteries: with its partners, 3M and Argonne National Laboratories, the company was developing prototypes of lithium-polymer storage batteries for electric vehicles, and in Japan, it announced construction of a plant to manufacture small, non-rechargeable batteries for radio frequency identification cards.

The privatization of Hydro remained an issue. In 1996, after a year of province-wide public discussion, industry and political leaders favored the move, but a report by a panel appointed by the government unanimously rejected the idea, pointing out that Quebecs utility rates were 30 to 40 percent cheaper than those of Ontario. The panel acknowledged that the Quebec government could privatize a portion of the company for financial reasons. These included a debt of $40 billion, the annual awarding of untendered contracts worth $380 million, and a top-heavy, well-paid management structure. The government agreed to create an energy board to regulate Hydro-Quebec, as recommended by the panel.

Meanwhile, deregulation of, and increased competition in, U.S. electricity markets was causing Canadas provincial utilities to make changes. In response to requirements of the U.S. Federal Energy Regulatory Commission (FERC), Hydro-Quebec had already restructured, separating its transmission, generation, and distribution services. In May 1997, the company created a new division, TransEnergy, to operate its transmission network completely separate from its energy services. With that step, along with opening its grid to all suppliers and allowing Quebec municipalities to choose their wholesale power suppliers, Hydro received permission from FERC to sell electricity in the United States at market-based rates, instead of just trading it.

The companys exports to the United States were already triple the amount sent south in 1990. In addition, Hydro was also aggressively diversifying into natural gas, as part of a strategy to provide both types of energy in Canada and the United States.

Key Dates:

1898:
Construction begins on Quebecs first large dam.
1901:
Montreal Light, Heat & Power Company is formed.
1930:
MLH&P has a monopoly on gas and electric light.
1944:
Quebec Hydro-Electric Commission (Hydro-Quebec) is created, taking over the assets of MLH&P.
1962:
Government nationalizes the electricity industry under Hydro-Quebec.
1967:
Construction begins on the Churchill Falls project.
1971:
James Bay Development Corporation is created to develop natural resources.
1994:
Great Whale project is canceled.
1997:
Hydro-Quebec wins approval to sell power in the United States at market rates.

Moving into New Areas: 1998

Increased exports, international investments, venture capital1998 was a year of new undertakings for Hydro-Quebec. It created H.Q. Energy Marketing, a holding company charged with conducting energy transactions in Canada and H.Q. Energy Services (U.S.), based in Pittsburgh, to market energy generated outside Quebec. The company indicated it planned to spend some $8 billion over the next ten years to increase its generation capacity by 25 percent, in order to increase its power exports. In line with those plans, it announced an agreement for a new 440 megawatt plant and river diversion plan. Hydro also opened a wind power test facility, exploring renewable energies.

Through its subsidiary, Hydro-Quebec International (HQI), the company developed new international markets for Hydro. These included building a gas turbine in Senegal, purchasing a third of that countrys privatized electric company and taking responsibility for providing power to many of its towns, and heading a consortium to build and operate a connection between Perus northern and southern power grids.

1999 to the Present

Hydro-Quebec was in a good position to take advantage of the changes occurring in the North American and global energy markets. While the provinces demand for electricity was predicted to increase moderately, there was little expectation that the retail market would be opened for competition because of Hydros competitive electricity rates. Not having to worry about retail competition at home, the company was able to concentrate on the deregulated wholesale market in the U.S. Furthermore, through its stake in the holding company Noverco, Hydro was involved in the transportation and distribution of gas. Finally, the company continued to make investments in international energy-related opportunities. With this three-pronged approach, Hydro hoped to become a major energy hub, as called for in the Quebec governments 1996 Energy Policy.

Principal Subsidiaries

Hydro-Quebec International; CapiTech; Societe denergie de la Baie James; H.Q. Energy Marketing Inc.; H.Q. Energy Services (US) Inc.; H.Q. TransEnergy Inc.; Churchill Falls Corporation (34.2%); Noverco Inc. (41%).

Further Reading

Armstrong, Christopher, and H.V. Nelles, Monopolys Moment: The Organization and Regulation of Canadian Utilities, 18301930, Philadelphia: Temple University Press, 1986.

Authier, Philip, Why Was Hydro-Quebec Buying Power? Gazette (Montreal), June 5, 1995, p. A1.

Bolduc, Andre, Clarence Hogue, and Daniel Larouche, Hydro-Quebec After 100 Years of Electricity, translated by Sheila Fischman, Libre Expression, 1989.

Coffee, Hoyt E., James Bay Power Project Hits a Dam, Site Selection, February 1992.

Debate Intensifies over Hydro-Quebec Privatization, Electricity Daily, April 12, 1996.

Gagnon, Lysiane, Great Whale Was Headed for the Beach Long Before Coon Gomes Speech, Globe and Mail, November 26, 1994, p. D3.

Gibbon, Ann, Druin Quitting Hydro-Quebec Early, Globe and Mail, May 4, 1995, p. B10.

, Hydro-Quebec Loses Court Fight, Globe and Mail, February 25, 1994, p. A1.

Gottschalk, Arthur, Hydro-Quebec Gets Nod to Sell Power in the U.S., Journal of Commerce, November 17, 1997, p. 3A.

Hydro-Quebec and 3M Receive $US27.4 Million Contract Through December 1997, Canada NewsWire, February 20, 1996.

Hydro-Quebec and Yuasa to Set up Japans First ACEP Battery Plant, Canada NewsWire, March 25, 1996.

Hydro-Quebec Forms New Transmission Unit to Provide Services to Deregulated U.S. Markets, Foster Electric Report, May 7, 1997, p. 15.

Linteau, Paul-Andre, et al, Quebec: A History, 18671929, Toronto:James Lorimer & Co., 1983.

McCabe, Aileen, Chretien, Hydro-Quebec Light up Senegal, Gazette (Montreal), November 9, 1999, p. A14.

McKenna, Barrie, Study Backs Great Whale Plan, Globe and Mail, September 1, 1993, p. B1.

McNish, Jacquie, Hydro-Quebec Facing Loss of Second Contract, Globe and Mail, March 30, 1994. p. A1.

People, Electrical World, February 1992.

Picard, Andre, Is Hydro-Quebec the Wal-Mart of Energy?, Globe and Mail, May 19, 1994, p. A29.

Ravensbergen, Jan, Hydro Digs Deeper into Gas, Gazette (Montreal), July 9, 1997, p. D1.

Riga, Andy, Hydro Exports Booming, Gazette (Montreal), July 15, 1999, p. F1.

Selby, Beth, Hydro-Quebecs Big Power Play. Institutional Investor, February 1992.

Strategic Plan 2000-2004, Montreal: Hydro-Quebec, 1999.

April S. Dougal and Jason Gallman

updated by Ellen Wernick

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Hydro-Québec

Hydro-Québec

75 Ouest Boulevard Rene Levesque
Montreal PQ H2Z 1A4
Canada
(514) 289-2211
Fax: (514) 289-3658

Wholly Owned Subsidiary of the Government of the Province of Quebec
Incorporated: 1944
Employees: 26,740
Sales: C$6.21 billion (US$5.2 billion)

Hydro-Québec and its subsidiaries constitute the third largest electric utility in North America, serving over 3 million customers in the Canadian province of Quebec through over 54 hydroelectric plants and 26 thermal plants. Hydro-Québec is also involved in energy-related research and testing through its high-voltage, high-power research center, IREQ, located southeast of Montreal. Hydro-Québec is one of the provinces largest employers, with over 25,000 temporary and permanent workers in 1991. The company was created in 1944 by an act of the provincial legislature.

The province of Quebec emerged as one of the worlds major producers of hydroelectricity in the late nineteenth century. Construction of the provinces first large dam began in 1898, just three years after completion of the worlds first hydroelectric plant at Niagara. Hydroelectricity was a powerful force behind the development of Quebecs economy, since many other industries, including aluminum and carbide production, relied on the cheap, abundant power produced on Quebecs raging rivers.

Montreal Light, Heat & Power Company (MLH&P) was formed in 1901 under the leadership of two powerful Montreal financiers, Louis-Joseph Forget and Herbert S. Holt. Holt was an Irish Protestant immigrant who began his engineering career as a contractor for the Canadian Pacific Railway. He made his fortune in Montreal as president of the Royal Bank and held directorships in 26 companies by 1912, including MLH&P. Forget and his nephew and partner Rodolphe Forget were securities brokers who made substantial fortunes and became shareholders in many companies by engineering corporate reorganizations and mergers.

Holt served as director of the Royal Electric Company and was elected president of the Montreal Gas Company in 1894. He began building the conglomerate that would become MLH&P with the acquisition of Consumers Gas Company, a competitor for the citys gas streetlighting contract. While Royal Electric concentrated on commercial and industrial service, its rivals vied for the domestic suburban market.

The most threatening new force was the Lachine Rapids Hydraulic and Land Company. Lachine was able to produce power at much lower rates than Royal Electric, and in 1899 Royal was forced to cut its rates by 33 percent to remain competitive. Holt and other investors tried to build their own hydroplant on the Richelieu River, but their Chambly plant suffered from low water and defective construction. As Lachine continued to undercut Royal, a group of Royal Electric shareholders led by the Forgets took over the company in 1898. They began to build their hydroelectric empire by consolidating interests in the Chambly plant, the Montreal Street Railway, and the Royal Electric Company during the late 1890s. As financiers, the Forgets knew that centralizing ownership of the various electric concerns would enable them to generate more capital through the combined collateral of the subsidiaries.

Forget and Holt created the MLH&P system in 1901 from three electric companies (Royal Electric Company, Montreal & St. Lawrence Light & Power Company, and Imperial Electric Light Company) and one gas company (Montreal Gas Company) that soon monopolized power distribution in and around the city of Montreal. The industries complemented each other: after Chambly was upgraded, it provided cheap power to Royal, which distributed that power to the Montreal Street Railway and other industrial and commercial customers. The gas company brought profits in its own markets.

Competition among the many utilities around Montreal remained fierce, and the appearance of the Shawinigan Water and Power Company threatened to put MLH&P out of the running. The Shawinigan plant on the Saint-Maurice River Valley was the largest system in the area. The company offered to sell power to MLH&P, but Holt and Forget thought the asking price was too high, so they built another small plant at St. Therese. Then in 1902 a flood wiped out the St. Therese station and shut down the Chambly plant. Holt and Forget were forced to buy power from the rival Lachine plant and soon realized that the only way to put an end to the competition and come out ahead was to buy out their competitors.

In 1903 they raised C$4.5 million and purchased the Lachine Rapids Hydraulic and Land Company, including its generating station, distribution system, and the contract for virtually all the power that Shawinigan Water and Power could sell. After winning a monopoly over the Montreal power market, Holt and Forget did their best to buy out competition and control waterpower in the region.

In 1916 the Civic Investment & Industrial Company, a holding company, was created to acquire the capital stock of MLH&P and the Cedars Rapids Manufacturing & Power Company. The company name was changed to Montreal Light, Heat & Power Consolidated in 1918 to reflect the incorporation of practically all the gas, electric light, and power business in Montreal as one enterprise.

Consolidation was the key word for the 1920s: by 1930 MLH&P owned or controlled six of its former competitors, an electric railway, and a coal and coke plant. The monopoly allowed MLH&P to set prices and reap big profits. From 1910 to 1930, domestic electric rates dropped from 9¢ to 3¢ per kilowatt hour, and costs fell even faster. Holt held Que-becers domestic rates at twice those offered in the province of Ontario.

Opposition to the electricity trust focused on these big profits and came primarily from local businessmen. Others were outraged at the perpetual land leases granted to the MLH&P along with rights to use the streets in suburbs within 100 miles of Montreal.

The Great Depression undermined the finances of many hydroelectric companies around Montreal during the 1930s. MLH&P gained control of Beauharnois Power Company, a large producer of energy on the St. Lawrence River, in 1933. It also took advantage of the economic opportunity to acquire municipal utility companies in Pointe Claire, Baie dUrfe, and St. Anne de Bellevue. By 1941 MLH&P owned three hydroelectric plants and operated a fourth in cooperation with Shawinigan Water and Power.

The Lapointe Commission, formed in 1934, recommended the creation of an Electrical Commission in 1935. The Electrical Commission (later named the Provincial Electricity Board), regulated electric distribution, focusing on rates and services. In 1937 the provincial government adopted a bill that favored municipal control of electricity service.

The Québec Hydro-Electric Commission, better known as Hydro-Québec, was created on April 14, 1944, and took over the assets of Montreal Light, Heat & Power Consolidated the next day. The new commission compensated MLH&P shareholders in 1947, but did not settle contracts with minority shareholders in MLH&P subsidiaries Beauharnois Light, Heat & Power and Montreal Island Power until 1953. By 1948 the government had gone a long way toward achieving its goals of reducing rates and standardizing service: residential rates were cut by 20 percent and commercial power prices went down 26 percent.

In 1948 Hydro-Québec gave new impetus to its exports to the United States when it contracted with the Cedar Rapids Company, a subsidiary of Aluminum Company of America in Massena, New York. In the 1940s and 1950s, Hydro-Québec concentrated on developing the hydroelectric potential in the province. In 1957 the company sold its gas system to concentrate on hydro power. After that year, virtually all of Hydro-Québecs generating capacity came from hydroelectric generators.

Demand for cheap power was driven by the defense industry. Aluminum, copper and nickel refining were in high demand during World War II and on into the military buildup during the Cold War. As a result, many major hydro projects were undertaken in the 1950s. By the end of the decade, the province of Quebec produced 48.9 percent of Canadas hydroelectricity and was the greatest producer of power per capita in the country. Hydro kept costs low, too: the price per kilowatt hour in Quebec was 33 percent less than that of the United States.

Hydro-Québecs first bond offering to American markets was used to finance the Bersimis River project. Twenty-five-year bonds were sold for a total of US$50 million to finance the generating station, which was completed in 1958. In 1953 Hydro-Québec undertook a project to widen the Beauharnois canal, which diverted water from the St. Lawrence River to drive hydroelectric plants. The project kept Quebec in the forefront of hydroelectric development in Canada. The next year, the company installed the worlds largest submarine power cable, connecting the Bersimis generating facility with the Gaspe Peninsula. The discovery of rich copper mines in this previously undeveloped region raised demand for inexpensive power. The area had been electrified by diesel generators, which cost two to three times as much as hydropower. The cables provided for the complete electrification of the area, 20 percent of which had been without power up to that time.

The 1960s were characterized by the purchase by Hydro-Québec of the private electricity distribution companies. The Shawinigan Water & Power Company, Quebecs largest nongovernment hydroelectric company, was bought out in 1963 in an effort to standardize rates and services throughout the province. Between 1963 and 1965, 45 rural electrical cooperatives and 19 municipal systems came under government control. They had constituted about one-third of Quebecs power sources. The 1960s also brought technological strides for Hydro-Québec. In 1963, the company cosponsored extra-high voltage experiments with Pittsfield Massachusettss General Electric Company. The 700-kilovolt tests surpassed U.S. voltage limits by 200 kilovolts.

During the 1950s an unfavorable balance of trade with the United States led the Canadian Exporters Association to discourage electric exports because of U.S. quotas and tariffs on many Canadian products. But in 1963 the Canadian government began to encourage the export of hydroelectricity to U.S. markets. In 1966, after two years of talks, Hydro-Québec entered into agreements with British Newfoundland Corporation (Brinco) to begin a massive project at Churchill Falls of Newfoundland, Canada. The falls at Churchill were a tremendous untapped resource: at 245 feet (50 percent higher than Niagara Falls), Churchill was considered the Western worlds largest single source of power. Work began at the site in 1967 and was completed in 1970. Hydro-Québec co-sponsored the project, which diverted the river above the falls into a tunnel to an underground powerhouse. When finished, the project produced more power than all the American and Canadian plants at Niagara Falls.

In 1971 the James Bay Development Corporation was created by an act of the Quebec National Assembly to develop natural resources. Increased demand for electricity inspired a planknown as the James Bay projectto develop generating stations on La Grande River. The venture has been controversial since its inception and throughout its development, with plans calling for the construction of over 200 structures that would alter the courses of 19 waterways in northwest Quebec near the James and Hudson bays.

The James Bay project consisted of three different complexes hundreds of miles apart. The La Grande Complex, commonly referred to as James Bay 1, consisted of a series of dams and dikes stretching a total of 41 miles, guiding regional rivers through three generating stations. Despite efforts to stop the project the undertaking was completed in 1985. James Bay 2, commonly known as the Great Whale project, began in 1987. The C$13.5 billion plans called for the construction of a hydroelectric plant on the Great Whale River and the construction of facilities on the Nottaway, Broadback, and Rupert Rivers.

The project drew opposition from Cree and Inuit Indians, and from international environmentalists, who cited the possibility of higher mercury levels in fish, destruction of caribou habitat, and the unpredictable geological impact of massive man-made reservoirs on the earths crust as reasons to stop the project.

Utility and government officials, on the other hand, pointed out that hydropower does not produce air pollution or wastes, and that if the equivalent of the annual production of the Great Whale complex was produced by thermal power stations, it would be necessary to burn at least 26 million barrels of oil per year. Furthermore, the James Bay Project has created thousands of jobs and opened up more than 1,000 miles of roads in previously inaccessible areas. Utility officials also dispute the impact of the project on the environment. Hydro-Québecs increased generating capabilities have also enabled the company to sell surplus electricity to neighboring provinces and to export power to utilities in Connecticut, Maine, New Hampshire, Massachusetts, Rhode Island, Vermont, and New York.

Hydro-Québec took a variety of steps to resolve the problems that impede the conclusion of the James Bay projects. In cooperation with the provincial government and native groups, the company has participated in environmental impact studies and drafted agreements to hire Native Americans and to award contracts to Native American firms. Negotiations may continue during the early 1990sthe target startup date for the Great Whale plant is 2001.

Another issue faced by Hydro-Québec in the early 1990s was the prospect that the province of Quebec would secede from the Canadian confederacy. Although the company could become a major exporter in the event the Quebec becomes a sovereign nation, secession would also damage the companys credit ratings, which are based largely on those of the province.

Over the years Hydro-Québec has formed a number of subsidiaries. Hydro-Québec International was created in 1978 to export technological and engineering expertise. Nouveler, a management consulting firm created in 1974, became a wholly owned subsidiary in 1987. It was brought on to market technologies developed by the company.

Hydro-Québec has maintained an impressive record of performance since its inception. Between 1944 and 1979 the company doubled its electric production capacity every ten years. In 1990 Hydro-Québec implemented a five-year total quality management project that the company calls Deft-performance. The programs goal, total customer satisfaction, focuses on customer service, reliability, and cost effectiveness. Hydro-Québec has also introduced programs that seek to promote energy efficiency and open up dialogue on major issues like energy conservation, the environment, economic advantages of hydroelectricity, and exports.

Principal Subsidiaries

Hydro-Québec International; Nouveler; Societe 2312-0843 Quebec; Societe denergie de la Baie James; Cedars Rapids Transmission Company; HydrogenAL (50%); HydrogenAL II (50%); ArgonAL (50%); ACEP (50%); Churchill Falls Corporation (34.2%).

Further Reading

Linteau, Paul-Andre, et al, Quebec: A History, 1867-1929, Toronto, James Lorimer & Co., 1983; Armstrong, Christopher, and H.V. Nelles, Monopolys Moment: The Organization and Regulation of Canadian Utilities, 1830-1930, Philadelphia, Temple University Press, 1986; Bolduc, Andre, Clarence Hogue, and Daniel Larouche, Hydro-Québec After 100 Years of Electricity, translated by Sheila Fischman, Libre Expression, 1989; Selby, Beth, Hydro-Québecs Big Power Play, Institutional Investor, February 1992; Coffee, Hoyt E., James Bay Power Project Hits a Dam, Site Selection, February 1992; People, Electrical World, February 1992.

April S. Dougal

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"Hydro-Québec." International Directory of Company Histories. . Encyclopedia.com. 22 Aug. 2017 <http://www.encyclopedia.com>.

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"Hydro-Québec." International Directory of Company Histories. . Retrieved August 22, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/hydro-quebec