Mactaquac Dam, built in the mid 1960s, is the largest of seven hydroelectric dams in New Brunswick. (Paul Darrow/Reuters)

NB Power ratepayers could eventually be left holding the bag if Hydro-Québec has to dismantle the Mactaquac Dam.

The hydroelectric dam, which is part of a controversial agreement that will see New Brunswick sell most of NB Power to Hydro-Québec, will need to be rebuilt or replaced within the next two decades, at a cost of $2 billion or more.

Under the proposed deal, Hydro-Québec will pay for any upgrade to the facility, about 20 km up the St. John River from Fredericton.

But if federal environmental regulations make it impossible to rebuild or replace the dam, the cost of dismantling it will be added to power rates in New Brunswick.

Hydro-Québec CEO Thierry Vandal doesn't see that happening because the 672-megawatt dam is a source of electricity that doesn't emit carbon dioxide.

'The expected scenario is we're going to be rebuilding that facility with the folks there and it'll be a great investment in New Brunswick.'—Thierry Vandal, CEO of Hydro-Québec

"We don't think that scenario is a scenario that's in front of us, but again — not knowing what type of regulations could come out of Ottawa — we just wanted to be very, very prudent on this issue," he said.

"The expected scenario is we're going to be rebuilding that facility with the folks there and it'll be a great investment in New Brunswick, and that facility is going to be operating for a very, very long time."

Dam affects salmon

Just last month, the World Wildlife Federation-Canada found hydroelectric dams along the St. John River, including Mactaquac, have "significantly altered" the river's flow and reduced its fish population, particularly Atlantic salmon.

"Currently, no plan exists to manage or restore environmental flows in the St. John," the report states. "Until one is established, the health of the river, its important fish habitats and its salmon populations are likely to continue to decline."

If Hydro-Québec chooses to dismantle the Mactaquac Dam without replacing it, it will absorb the cost, the agreement states.

Premier Shawn Graham says the fact Hydro-Québec would shoulder the $2-billion cost of replacing the dam is more proof the deal is a good one.

"If that decision to refurbish is going to proceed, that becomes the responsibility of Hydro-Québec and their balance sheet," he said.

Mactaquac Dam, New Brunswick's largest of seven hydroelectric dams, was built in the mid-1960s and was expected to operate for a century.

Sale price equals debt

Under the proposed deal, announced Oct. 29, Hydro-Québec would take over most of New Brunswick's generating stations for $4.8 billion, which represents the equivalent of NB Power's debt, Graham has said.

Hydro-Québec would also freeze residential power rates in New Brunswick for five years. During the same period, large industrial rates would be lowered to the power prices offered to the same customers in Quebec, but they would not be frozen.

That component of the deal is worth an estimated $5 billion to NB Power customers, according to Graham.

The proposed sale of NB Power needs legislative approval before it can go ahead. The Progressive Conservatives have demanded an election over the issue and have promised to stall the legislation if there is no immediate campaign.

The Liberal government has said if the deal is delayed past March 31, NB Power's planned three per cent rate hike will go forward, instead of the rate freeze promised in the Hydro-Québec agreement.