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POWER GENERATION: SELLING ENERGY INSTEAD OF PAPER


February 1, 2001
By Pulp & Paper Canada

MONTREAL, QC — If energy prices continue to spike, there is speculation that some paper companies might find it more profitable to sell energy instead of running machines producing paper products lik…

MONTREAL, QC — If energy prices continue to spike, there is speculation that some paper companies might find it more profitable to sell energy instead of running machines producing paper products like newsprint. With wholesale prices for day-ahead delivery hovering in the mid-$400s a megawatt hour in the Pacific Northwest region, some companies are examining their options. Companies that could benefit from such a scenario are those that have on-site hydro-electric installations – like Abitibi-Consolidated Inc. and Pacifica Papers Inc. One Toronto analyst said that paper companies that are now making, for example, a profit of between $150 and $200 a ton on newsprint, could double their profits by selling surplus energy. They could make a profit equal to $300 a ton of newsprint if they were to sell electricity at $250 a megawatt hour. There are some restrictions, though, when it comes to selling hydro-electric power: it is regulated in many parts of the United States and Canada. “Paper companies should get together with governments and find a way around this issue,” the analyst said.

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