Central Vermont Public Service (CVPS) and Green Mountain Power (GMP) have signed a memorandum of understanding (MOU) with Hydro-Québec.

Québec will continue to provide clean renewable electricity to Vermont according to the MOU, which extends the existing Vermont-Hydro-Québec contract that was to expire in 2016.

The agreement includes a price-smoothing mechanism that will shield customers from volatile market spikes over this period.

CVPS and GMP seek similar volumes to what they already receive from Hydro-Québec and anticipate purchases of up to 225MW between November 2012 through to 2038.

As per the agreement, Vermont General Assembly would also need to enact legislation to designate large hydro including Hydro-Québec power as renewable.

The legislation will renewable energy credit revenue for HQ power that would benefit the Vermont firms as well.

The contract will keep Vermont’s purchases near the middle of the market, protecting its consumers from the highest price swings and Hydro-Québec from the lowest price swings.

The utilities will negotiate final terms of the 26-year agreement by June 2010.