Hydro-Québec is planning to purchase the majority of NB Power's generating and transmission assets for almost $5 billion. (CBC)

Hydro-Québec will pay an estimated $5 billion to purchase NB Power's nuclear and hydro generating stations, the transmission system and other assets in a massive deal set to be announced on Thursday.

The combined value of the agreement is estimated at $10 billion, with the remaining $5 billion being attributed to rate relief that will be provided by the deal.

New Brunswick Premier Shawn Graham and Quebec Premier Jean Charest will formally announce the energy pact on Thursday morning in Fredericton, ending more than a week of intense speculation over the future of NB Power.

New Brunswick residential ratepayers will have their power prices frozen for the next five years, and then the rates will be indexed to the cost of living.

Meanwhile, electricity rates for large industry will be cut by 20 per cent to match Quebec's lowest industrial rates for five years. Those rates will also be indexed to the cost of living after five years as part of the agreement.

Many of New Brunswick's largest power users, which are also some of the largest employers, have long complained that NB Power's rates were too high and resulted in job losses.

The Point Lepreau nuclear generating station will be transferred over to Hydro-Québec after its $1.4-billion refurbishment project is completed in February 2011.

New Brunswick has seven hydroelectric dams, the largest being the 672-megawatt Mactaquac dam.

N.B. to keep 3 power plants

Hydro-Québec is not taking control of three NB Power stations that burn fossil fuels: Dalhousie, Belledune and Coleson Cove.

Some, but not all, of the three will be run by the New Brunswick government at least for now. It is not clear when the fate of those plants will become known.

The 300-megawatt Dalhousie station's oil supply from Venezuela ends next June, and it would need an expensive retrofit to burn a different fuel, leaving its fate uncertain.

The Coleson Cove Generating Station recently underwent a $747-million refurbishment so it could burn Orimulsion fuel.

However, after the deal with Venezuela's state-owned oil company fell through for Orimulsion, NB Power has been experimenting with burning a mix of heavy fuel oil and petroleum coke at the 978-megawatt power plant in southern New Brunswick.

NB Power remains in name

Despite the takeover by Hydro-Québec, New Brunswick customers will still see the NB Power brand, as the utility will continue to exist as a subsidiary of the Quebec utility.

The deal will require the New Brunswick legislature to amend the Electricity Act.

The Graham government aims to have the deal signed and put in place by the end of March.

Progressive Conservative Leader David Alward outlined on Monday his list of three minimum standards for his support for any sale of NB Power.

One condition was that all ratepayers receive the same degree of rate relief, something the deal does not include.

N.L. opposes deal

N.L. Premier Danny Williams wrote to N.B. Premier Shawn Graham expressing his frustration with the proposed NB Power sale. (CBC)

Newfoundland and Labrador Premier Danny Williams also weighed in on the issue Wednesday, writing a public letter to Graham that he copied to Nova Scotia Premier Darrell Dexter and P.E.I. Premier Robert Ghiz.

"I caution you, based on our experience with Hydro-Québec, that a short-term opportunity can turn into a long-term loss of significant magnitude as they will most definitely find ways to recoup their investment and more from New Brunswickers who no longer control their energy destiny," Williams wrote.

He also said he is disappointed that his province had been unaware of the "depth" of New Brunswick's negotiations with Hydro-Québec.