MONTPELIER — A.J. Goulding, part owner of a small hydroelectric facility in the town of Lunenburg, knows renewable energy when he sees it.

Power from Hydro-Quebec, he said, doesn't fit that definition.

"Vermont is assuming that this power will all come from renewable sources," said Goulding, a managing member of Ampersand Energy Partners LLC, which owns a 4.9 megawatt dam. "But Hydro-Quebec's portfolio includes a nuclear power plant and a gas-fired cogeneration facility."

Vermont's two largest utilities – Green Mountain Power and Central Vermont Public Service – have lobbied the Legislature to deem energy from the Canadian power source as "renewable" – a designation that supporters of the move say could result in better electricity prices for Vermonters.

But many environmentalists worry that the renewable designation could crowd out the market for in-state renewable energy while benefiting an out-of-country power company. CVPS and GMP are just months away from completing work on a 20-year energy contract with Hydro-Quebec.

A renewable energy bill – which includes a provision designating power from Hydro-Quebec as such – has passed the House and is now in the hands of the Senate Natural Resources and Energy Committee. With less than two weeks to go in the legislative session, many expect it to land before the full Senate soon.

The Vermont Natural Resources Council and the Conservation Law Foundation have both worried about the effects of the renewable designation. Jon Groveman, the general counsel for VNRC, said the Legislature is proceeding on the issue "as if there is no choice but to do it."

By contracting with what he calls "mega hydro," the state runs the risk of spurning development of its own renewables, Groveman said. He said there are misconceptions in political circles that all the power from Hydro-Quebec is green and the designation – the first in the country for a hydro facility of that size – is necessary for the new power contracts.

"They need to be very careful about what they do here," he said. "The plan shouldn't be 'let's do this now and figure out the consequences later.'"

Dorothy Schnure, spokeswoman for GMP, said the utilities are still working on the details of the new contract with Hydro-Quebec, for up to 225 megawatts between the years 2012 and 2038. One megawatt of electricity can power up to 800 Vermont homes.

Schnure said the renewable designation is not a requirement for the utilities to strike a deal with Hydro-Quebec. But it would be a "sweetener" for both sides, she explained, and would result in some economic benefits for Vermonters.

She said she has heard the concerns about the plan, but doesn't see much relevance in them. She said that more than 90 percent of Hydro-Quebec's electricity comes from hydro and under the bill considered by the Legislature, only that portion of the power would be considered renewable.

"I don't believe that this will stifle development of renewable energy in Vermont, especially considering that the contract is for less energy than we get now," Schnure said. "We are seeing tremendous growth in renewables right now, including the large solar and wind projects that we have."

Hydro-Quebec officials said Tuesday - about 96 percent of its 35,000 megawatts of power comes from dams.

daniel.barlow@timesargus.com