New Brunswick Premier Shawn Graham, centre, Energy Minister Jack Keir, left, and Business New Brunswick Minister Victor Boudreau announce the revised deal to sell parts of NB Power to Hydro-Québec. (CBC)

The New Brunswick and Quebec governments have unveiled a $3.2-billion, slimmed-down deal to sell most of NB Power's generation assets.

The agreement, announced in Fredericton on Wednesday, is a significant shift from a $4.8-billion sale proposed last October, which would have also bundled the province’s electrical transmission and distribution companies in a deal with Hydro-Québec.

New Brunswick Premier Shawn Graham said at a news conference the revisions were a result of listening to the public after the original memorandum of understanding was announced.

Graham said the revised proposal addresses the concerns of people about keeping the Crown corporation in the province's hands, as well as maintaining control of the transmission system.

But the premier said it also meets the desires of the province to reduce electricity rates, lower NB Power's debt and get access to clean power.

"This is an agreement that removes $3.2 billion of debt from the shoulders of our children and our grandchildren," Graham said.

When the deal is closed around March 31, Hydro-Québec will pay $1.8 billion to the New Brunswick government, which will cover the debts associated with NB Power's generating facilities.

Quebec Premier Jean Charest said on Wednesday that his province is still meeting its goal of getting access to new markets for its power.

"From our perspective we continue to meet our objectives and it is a simpler agreement," Charest said.

Even though the deal is scaled back from the original, Charest said Hydro-Québec will receive a 10 per cent return on investment.

Quebec acquires nuclear plant

Hydro-Québec will take control of the Point Lepreau Nuclear Generating Station when its refurbishment is complete next year. (CBC)Hydro-Québec will purchase the Point Lepreau Nuclear Generating Station when its refurbishment is complete. The Quebec utility will also take control of all of Point Lepreau's nuclear waste under this agreement.

It also takes ownership of the province’s hydro dams and two diesel units.

NB Power will continue to operate the Coleson Cove and Belledune generating stations and sell the electricity back to Quebec, consistent with the original deal.

Thierry Vandal, the president and chief executive officer of Hydro-Québec, said Coleson Cove will be used to produce power during the winter peak periods. He said Belledune will be operated until the future rules regulating greenhouse gas emissions become more clear.

New Brunswick’s residential ratepayers will still get a five-year rate freeze. Medium-sized industries will see a roughly 15 per cent cut in power rates and will have those rates locked in for five years.

Large industrial customers will see their power prices fall by roughly 23 per cent. Under the previous deal, those customers would have seen their rates fall by close to 30 per cent.

After five years, rates will increase with inflation. The Energy and Utilities Board will regulate future rate increases.

Peter Gordon, chief executive officer of Fraser Papers, said the restructured agreement will preserve many of the benefits that the original transaction offered but should address the concerns of the deal's critics.

Gordon said the deal will save his company $6 million a year in energy costs. He said that is $2 million less than Fraser Papers would have saved under the previous agreement.

"But it is still a significant improvement and will go a long way to assisting us restructure our company and exit bankruptcy protection," Gordon said.

Final agreement

The deal announced Wednesday is described as a final agreement and the closing date is intended to be March 31.

Graham said the transmission company is estimated to be worth $425 million and the distribution company $600 million. Neither one will be sold.

Losing the ownership of the transmission system isn't a setback for Quebec's ambitions to export power throughout the region, according to Hydro-Québec's president.

Vandal said the new deal still advances Quebec's agenda of moving the province's renewable power to new markets.

"Those transmission rights, which you don't need to own the transmission network to do that, those transmission rights will be transferred over to Hydro-Québec and that is very positive," Vandal said.

Under the new agreement, the New Brunswick System Operator will remain in the province, independent from NB Power. This change will mean any company looking to wheel power through New Brunswick must apply to the system operator and bid in an open process.

There had been a concern, voiced most strongly by Newfoundland and Labrador Premier Danny Williams, that Hydro-Québec could use control over the system operator to block his province's access to New England markets.

New Brunswick will buy a 14-terawatt-hour "heritage pool" of electricity from Quebec for 7.35 cents per kilowatt hour, which it will then supply to power users.

The two provinces said they will sign a long-term power purchase agreement that requires Quebec to supply the entire heritage pool in perpetuity. But New Brunswick has the right to opt out of 30 per cent of the heritage pool around 2040 when the Point Lepreau nuclear reactor nears the end of its lifespan.

Critics remain

Yves Gagnon, the K.C. Irving chair in sustainable development at the University of Moncton, was a critic of the original deal.

In October there was a text of the memorandum of understanding but without the text of the finalized agreement the energy expert said it will be difficult to properly assess the new deal.

"It's going to be impossible for independent parties to analyze the value and the merits of this second deal with Hydro-Québec," Gagnon said.

Gagnon said the first agreement also sounded good on the day it was announced but that changed as details emerged.

Progressive Conservative Leader David Alward asked the Liberal government to send the new deal to a legislative committee for further examination.

"The reality is with Plan B we already know there are shortcomings. Many of the same problems that existed with the first deal exist in the second deal," Alward said.