November 15, 2007 - Newfoundland and Labrador Hydro (NL Hydro), Hydro-Québec and the Iron Ore Company of Canada (IOC) announced an agreement today to supply electricity to the communities of Schefferville, Kawawachikamach and Matimekosh-lac-John, Québec.
IOC built and installed the Menihek/Schefferville interprovincial electrical system in 1954 to support its mining operations and supply electricity to the Town of Schefferville. Through this agreement, NL Hydro and Hydro-Québec have assumed ownership of the Labrador and Québec assets and infrastructure respectively from IOC. Hydro-Québec has also purchased the distribution system assets for the Town of Kawawachikamach from the Naskapi Nation of Kawawachikamach.
NL Hydro and Hydro-Québec have entered into a 40-year power purchase agreement to supply electricity to Hydro-Québec for its customers in Schefferville, Kawawachikamach and Matimekosh-lac-John. Hydro-Québec will purchase a guaranteed minimum of 40-million kilowatt hours annually from NL Hydro. Hydro-Québec will also reimburse NL Hydro for all operation, maintenance and refurbishment costs for the Labrador assets of the Menihek/Schefferville electrical system.
“We have negotiated a good agreement for the sale of energy to Hydro-Québec,” said Jim Keating, NL Hydro’s Vice President of Business Development. “We retain control over a provincial asset and resource and are adequately managing our financial and operating risks. The agreement also includes an annual escalation of price with the Consumer Price Index and the right to recall the power if required.”
Both NL Hydro and Hydro-Québec will enter into a contract with the current operator, Kawawachikamach Energy Services Inc. (KESI), a First Nations company, to operate and maintain the Menihek/Schefferville electrical system. The contracts will allow staff currently familiar with operations to continue, and will ensure continued involvement of the communities that are served by the Menihek system.
Terence F. Bowles, President and CEO of IOC said, “We are very pleased to have concluded this agreement which assures the continued operation of this long-life asset that was originally constructed by IOC’s pioneers. It can now continue to serve the needs of the Schefferville area for many years to come. This is an excellent example of sustainable development at work, supporting our Northern Communities.”
The power generated from the Menihek Generating Station is the only source of electricity for this isolated area. The continued operation of the Menihek Generating Station will supply Hydro-Québec’s customers in Schefferville, Kawawachikamach and Matimekosh-lac-John, Québec with a safe, reliable and economic source of electricity.
Dawn Dalley, Manager, Corporate Communication & Shareholder Relations, NL Hydro
Tel (709) 737-1315, Cell (709) 727-7715
Michel Filion, Iron Ore Company of Canada, Tel (514) 285-8416, Cell (514) 217-6253