By John McCrank

TORONTO (Reuters) - Hydro-Quebec said on Thursday it will buy most of the assets of debt-laden New Brunswick Power in a C$4.75 billion ($4.4 billion) deal that will give it better access to power-hungry markets in the U.S. Northeast.

Under the tentative agreement between the provincially owned utilities, Hydro-Quebec will own NB Power's transmission system, which runs into the state of Maine.

"We have an American neighbor that needs energy, needs clean and renewable energy, and needs to obtain this energy from a reliable source, and that source is here," Quebec Premier Jean Charest said after the agreement was announced.

Currently, Hydro-Quebec has to negotiate access to the transmission system and pay regulated tariffs to NB Power, said Allan McLean, an energy analyst at Moody's Investors Service in Toronto.

The proposed deal has drawn the ire of Newfoundland and Labrador Premier Danny Williams who has warned that he might raise anti-competitive concerns if the deal meant Hydro-Quebec can use its expanded market position to limit his province's power exports.

He said on Thursday he was alarmed by reports that Hydro-Quebec was looking for similar deals with the nearby provinces of Prince Edward Island and Nova Scotia along Canada's Atlantic Coast.

The province of Newfoundland and Labrador has accused Quebec for years of unfairly profiting from a deal to export power from the Upper Churchill hydroelectric facility in Labrador.

Williams said that New Brunswick would be "selling its future" if it went ahead with the deal. He pointed to the Upper Churchill facility, which he said netted Hydro-Quebec C$1.7 billion last year, compared to C$63 million that flowed to Newfoundland & Labrador.

McLean said other utilities would still have access to NB Power's transmission lines if the deal goes through.

Hydro-Quebec has "to provide open access to that transmission system and so there will have to be a tariff that will be paid by anybody utilizing it, so it's not like it gives them a monopoly on access to that system," he said.

The deal would also eliminate New Brunswick Power's C$4.75 billion debt, and the utility would operate as a separate entity, headquartered in Fredericton, New Brunswick's capital.

As part of the agreement, NB Power promised to freeze its rates for five years, a move that New Brunswick estimates would save ratepayers about C$5 billion. The deal would have no impact on Hydro-Quebec's rates in Quebec.

Moody's McLean said that, given Hydro-Quebec's size, the deal would be "a relatively small and manageable transaction."

As of December 31, 2008, Hydro-Quebec's assets totaled C$66.8 billion while its total debt came to C$36.4 billion.

Hydro-Quebec will profit from the deal from the first year, with an expected return on equity of more than 10 percent, Quebec and New Brunswick said in a joint release.

NB Power's nuclear generating facility at Point Lepreau, its hydro facilities, peak-demand power plants, and transmission and distribution assets are part of the proposed transaction.

The closing date for most of the assets is expected to be around March 31, 2010. The closing date for the Point Lepreau nuclear plant, will follow on or about January 1, 2011, when a current refurbishment project is complete.

($1=$1.07 Canadian)

(Reporting by John McCrank; editing by Frank McGurty)