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Thursday, April 02, 2009

NB Premier Demands Profit from NL Hydro Resources

On March 31, 2009 – the 60th anniversary of Newfoundland and Labrador’s Confederation within Canada – New Brunswick Premier, Shawn Graham, fired a shot across Newfoundland and Labrador’s bow by saying that his Province might well do to Newfoundland and Labrador’s Lower Churchill hydro project what Quebec did to with its Upper Churchill project decades earlier.

In 1969 - twenty years after entering Confederation, and while development of the Upper Churchill project was well under way, the Province of Quebec refused to allow Newfoundland and Labrador the ability to wheel power across their jurisdiction.

This situation led to the Newfoundland and Labrador government of the day to sign a contract that continues until 2016 (44 years), a contract that has already seen Quebec Hydro reap Billions upon Billions in revenues by purchasing power from Newfoundland and Labrador at bargain basement prices while reselling it at market values.

At the end of the initial 44 year contract, in 2016, an automatic renewal phase kicks in. That contract phase, which extends until 2041 (a further 25 years), will see Quebec Hydro, purchase power at even lower prices than under the initial contract, prices that were considered an unheard of bargain even in the 1960’s.

During the life of the contract Newfoundland and Labrador, the owner of the resources involved and producer of the power generated, has and will continue to receive just enough revenue to keep the turbines turning, the power flowing and the revenues rolling into the Province of Quebec.

Based on his comments this week, New Brunswick Premier, Shawn Graham, appears to be hoping history will repeat itself.

Because of the terrible contract Newfoundland and Labrador signed onto in 1969 and has lived with ever since, NALCOR, Newfoundland and Labrador’s energy corporation, is currently in negotiations with several utilities throughout the Maritimes, with an eye to circumventing Quebec by wheeling power from the new Lower Churchill project through Atlantic Canada.

Now, on the 60th anniversary of Newfoundland and Labrador’s entry into Confederation the Premier of New Brunswick, which sits on the U.S. border, is saying Provinces should not expect to build energy projects and then ship the electrical power to the United States through his Province.

“Not so fast”, Graham said this week.

"The marker that we're putting in the ground is: we're not just going to (permit) the erection of lines for electricity transmission in New Brunswick that benefit other regions, but not (us)."

"We don't begrudge our sister provinces in the region for having taken full advantage of their resources and their geographic location," the Premier said in his speech to the Economic Club of Canada. "But in New Brunswick, we are going to leverage every advantage we have to the absolute fullest and since our geography is so advantageous to us we are not going to give it up for another jurisdiction to simply run wires through our province.”

It seems that, just like the Quebec situation 40 years ago, after 60 years of a continually rocky relationship with Canada, nothing has changed for Newfoundland and Labrador.

The Province was geographically and politically isolated from the rest of the Country in 1949 when it joined, in 1969 when Quebec walked over the people there and in 2009 New Brunswick is looking for its opportunity take full advantage of Newfoundland and Labrador’s resources.

Today however there are three key differences between the current situation and the one that took place in 1969.

In 1969 the citizens of Newfoundland and Labrador, by and large, were not as informed or educated as they are today.

In 1969 the North American Free Trade Agreement (NAFTA) was not even heard of.
Today the U.S., as a potential consumer of Lower Churchill power would likely have a great deal to say under NAFTA if such an attempt were made.

In 1969 Newfoundland and Labrador was led by the so called “Father of Confederation”, the proud federalist, Joey Smallwood.

In 2009 Newfoundland and Labrador is led by a Premier who has presented himself to be a proud and very outspoken Newfoundland and Labrador nationalist in Danny Williams.

Nobody in Newfoundland and Labrador expects any Province to provide electrical transmission infrastructure free of charge, but any attempt to force another one sided contract by placing the Province under duress is simply out of the question.

When Quebec threw its weight around and blocked Newfoundland and Labrador’s ability to reach energy markets 40 years ago Premier Joey Smallwood met with Prime Minister Lester Pearson to discuss the matter.

According to historians, Pearson looked Smallwood in the eye and said, “Please don’t ask me. If you ask me I’ll have to say yes.”

Pearson was of course referring to the fact that the Canadian Constitution clearly states that no Province can impede another from moving goods or services across their jurisdiction.

At the time Smallwood approached Pearson Newfoundland and Labrador had only been a part of Canada for 20 years. Quebec was in the throws of a separatist crisis, terrorism was on the rise there and Pearson did not want to go head to head with the Quebec leadership or people in an effort to protect the Constitutional rights of Newfoundland and Labrador. Smallwood let him walk away from his obligation to do so.

Smallwood never asked the question and Newfoundland and Labrador, for the “good of Canada”, has lived with the resulting blow to its troubled economy ever since.

Today not much has changed in Ottawa but times are certainly different in Newfoundland and Labrador.

The current Premier of the Province and the citizens that have lived with the ghost of the Upper Churchill might not only ask the Government of Canada to defend the Constitution of the Country but will likely demand it.

New Brunswick Premier, Shawn Graham, may simply be blowing steam for some unknown political reason. He may not truly intend to take a page from Quebec’s past by attempting to block energy exports from Newfoundland and Labrador but if he does he’ll find that his Eastern neighbour isn’t as easy to take advantage of as it once was.

If such an attempt is indeed made and if Ottawa refuses once again to perform its Constitutional duty, their lack of action will serve no purpose but to hasten the ultimate break up of the Canadian federation.

How can a Nation exist when neither it’s Provinces nor its Federal government respect, defend or live by the very Constitution that defines it?

As of publishing, the region’s senior Federal Cabinet Minister and Minister appointed by Stephen Harper to represent Newfoundland and Labrador interests, Peter MacKay, has not commented on Premier Graham’s position.

UPDATE April 3, 6:55 AM - Sorry Graham but it seems the odds are stacked against you on your "protectionist" approach.

Since this post was published Premier Williams has stated to the press: "There's no point in people getting territorial on us and saying we're going to close off our borders, we're going to generate our own power and then push it out through, because that's just not the way it works,"

"What (Graham) obviously needs to understand " (is that) we have a right to go through there if we're in the queue properly and we can get the access through, then we pay New Brunswick a fair tariff."

Meanwhile, New Brunswick Opposition leader David Alward said the situation is nothing more than a publicity stunt launched by Graham's handlers.

"They're tying to show the premier as a leader, when in reality he has been all over the map," said the Tory MLA for Woodstock. "It's propaganda gone wrong.

Peter Mackay has said: "...energy projects could simply "bypass" New Brunswick.

Premier Rodney MacDonald had some tough words for his New Brunswick counterpart over the route of an energy corridor from the Lower Churchill hydroelectric project.

Premier Rodney MacDonald of Nova Scotia: "If they don’t want to take part in what is happening for the region, they can always be bypassed," (Sounds like Rodney is parroting the Federal Minister again doesn’t it? Sorry, but when it’s that obvious…” Moving on.)

"We are more than willing to see that power flowing through Nova Scotia. If that would mean bypassing New Brunswick and going through a subsea cable… we are more than willing to do that…There are requirements in place with regards to open access to the U.S. market which are actually dealt with by the federal government in the United States"

This isn’t the first time New Brunswick has threatened to block a regional energy project. during regulatory hearings into the $2-billion Sable offshore gas project, New Brunswick demanded jobs and access to the natural gas off Nova Scotia in return for having a pipeline cut across the province.

It could be difficult for Mr. Graham to try and block the flow of electricity, said Mr. Lumley.

It looks like, when it comes to accessing NL resources the province has lots of support doesn't it. Hmmmmm...

Meanwhile, the Province of Newfoundland and Labrador has also been touting a "new deal" to wheel power through Quebec directly to outside markets. Web Talk will have more on this "deal" and what it really means, in the coming days. - Myles


Anonymous said...

Why do we need to sell this coveted Hydroelectric energy to anyone? Let us utilize it in our own province for manufacturing.

Keep the clean energy here and build industry out of it right here in Newfoundland and Labrador.

For God's sake it is going to cost Billions to build the system which will be needed to transport it off to the markets. And from what I can understand there is a certain amount of energy lost while transporting it over long distances, and then the other jurisdictions will probably demand their piece of the pie for going over their territory, so after all is said and done there will be very little revenue garnered from it anyway.

We should take the Billions that it would cost to build the transportation pipelines for the wheeling of the power and build Manufacturing structures out of it instead, and then convert every resources we have here into a finished product.

We should create here one of the GREATEST Manufacturing Centes, probably in the whole world. There will have to be a new economy forged after this Depression is over.

We can grow a Manufacturing Sector as well as any other place in the World.

The first thing though that we will have to build is our self-esteem, since we have completely lost that under the control of Ottawa. We have been brought down just like what they did to the First Nations people.

Why do we always think we cannot do anything? How did every other Manufacturing Center get started?

And unlike a lot of Manufacturing centers, where they have to import the raw ingredients, we, here,in Newfoundland and Labrador have all the ingredients needed to bake the Manufacturing pie.

We have Oil, Hydroelectric Energy Iron Ore, Minerals of all types for the Manufacturing center. AND WE HAVE THE RENEWABLE RESOURCE OF FISH.

Th coveted renewable resource which is craved by the whole world, FISH can be utilized as an eternal industry, if it is looked after probably and we should be able to do wonders with that resource.

We can harvest the fish, and process it in all the ways which are presently known to the world today.

We can clean and package some of the fish in the raw state. The remainder can be further processed through cooking and selling it to the World, which is hungry for the coveted fish protein.

If we assert ourselves, the world will have no other choice but buy it from us. That is what the European Union is doing today asserting themselves and telling us that we have to ban the seal, they come to our waters and take our fish with the signatory of Canada. We have to take back our power and our rights.

If Ottawa and the other provinces insist on continually, year after year, cutting Newfoundlanders and Labradorians off from our natural resource base and thus cutting us off from gaining parity with the rest of Canada and the world, well then we have no other choice but to take back control over our rich natural rescoure base and fend for ourselves.

Ottawa to date has prevented our province from the use of its resources through one way or another, and the one Contract which we did build to protect us against losing all of the revenue from our Oil, the Atlantic Accord, Ottawa has gutted that Contract over the last 3 Federal Budgets it brought down, and today we are getting almost nothing out of it.

It is time that we go through a World Court, if there really is one existing at moment due to the Depression, and state our case.

What has happened to the province of Newfoundland and Labrador by Ottawa and its neighbouring provinces and those even further afield is unconsciousable. No other place in the world would have allowed it. I am wondering when is our Premier really going to take the bull by the horns and do something about it. We have already heard enough rhetoric. We must demand action.

Patriot said...

To Anon 10:14 AM,

I've been a long time proponent of using as much of that power here in NL as possible (especially in Labrador where it is generated). I'd love nothing more than to see major companies, manufacturers, etc. courted to use it but (and this is a big but)...

The reality is that the only way to get financing for such a major project is to have buyers already in place so those backing the necessary loans can be assured of recovering their money.

We simply do not have the buyers here in the province for that much power right now.

Government can't open up manufacturing plants or smelters or whatever and run them. It's up to the private sector to do that once power and other infrastructure is avaiable.

This is the reality.

The perfect deal would see the export of any power we cannot use now so financing can be managed but with the ability to recall and use domestically any or all of that power over time as new industry is attracted by knowing they can get the power they need here.

As much as all of us would like it to be otherwise it isn't and won't be. That's why exporting the power has to be possible or the project will never move forward.


Anonymous said...

Myles it appears to me that North America is crying out for the much greener energy which can be produced by the Lower Churchill Hydro project. There have been a couple of times over the past when the total North American energy grid shut down because of low energy supply. In the meantime I don't know how it has been impacted with the the serious downturn of the Manufacturing Sectors.

Of course there will have to be survey done to ascertain how much energy will be needed and if they would sign on to the energy which would be created in NL.

After doing the proper surveys and finding out that there will be customers for the energy, through a combination of industries, wanting to set up base in the province and a customer base from outside the province willing to buy into the project, maybe the Public Service Sector Pension Plan contributors might think that it is a better investment vehicle for their retirement plan contributions than some of the junk vehicles, which their contributions got invested in over the past number of years.

Myles my thinking might be way off base on this, but I want to throw the thought out to your reading public.

If all things jived, I think a clean energy project, with a ready and willing customer base, would be a wonderful place to have their monies invested.

For instance the Ontario Pension Plan bidded on BCE, but it fell through, now they are bidding on something else.

Ussr said...

this is what they are singing in Ontario, over 34 BILLION DOLLARS spent in Infastrcture,..........


If your livin in Ontario :)

Thanks for your 1.5 Billion Newfoundland and Labrador,.............cause ya Know B'ye !!!

They Beat poor danny Down FORTHIS !!!

Anonymous said...

"We don't begrudge our sister provinces in the region for having taken full advantage of their resources and their geographic location," the Premier said in his speech to the Economic Club of Canada. "But in New Brunswick, we are going to leverage every advantage we have to the absolute fullest and since our geography is so advantageous to us we are not going to give it up for another jurisdiction to simply run wires through our province.”

why cant we use our air space in the same manner.it seems we gave up alot when it came to confederation.

Ussr said...

Patriot did i hear that right.We are selling that electric for the same price,since 1969.

Well, I don't know why I should be so happy, it's only canada doing what it should. So its no big deal anyway.Lets do that with "The Lower ChurchHill"

" Forever Republic Of "

Ussr said...

Ha Ha, it was because of the Americans , ...........

Like I say ,"God Bless America "

WJM said...

I've been a long time proponent of using as much of that power here in NL as possible (especially in Labrador where it is generated).

When are you going to post something then criticising Danny Williams-Government for his plan to transmit power FROM Labrador, but not WITHIN Labrador?

Patriot said...


I don't like the idea of Labrador not getting full use of the power and though you don't want to admit it publicly you know that.

I also know you are trying to paint me as a "Danny kool-aid" drinker but why don't you try re-reading the following posts (I say re-read because In your federalist efforts to discredit this site you are stuck on this blog like Sh#t to a wool blanket)







Patriot said...

By the way WJM, the preceding links are only a portion of what I've written on this subject. I didn't list them all.Unfortunately some of the articles also contain less than glowing remarks about Todd Russell so I figured it was no good leaving those for your review. I didn't want to upset you too much.

Starrigan said...

WJM still skulking around, just couldn't help sticking his nose in.

I fully agree that Labrador should be getting first crack at the hydro. I also believe that the smelter should have been built there.

I don't think we should be worrying about power blackouts and shortages in other parts of North America. That's more of a reason to attract companies to NL. We can offer cheap reliable power and lots of it. THAT alone should be a selling point. Not to mention a ready work force. Of course there's our geographical location, that is also a great advantage. Shipping is still the cheapest way to move goods.
Building a viable manufacturing base doesn't happen over night but if you don't start going after companies to set up here, then it will never happen. We don't need to start with huge manufacturers, we need to use the gradient scale. Start off small, do things right, learn, and build from there. It can be done it takes a well laid out plan and a whole lot of political will.

Anonymous said...

I, too, don't like the idea of Labrador not getting the full use of its power and I think that every accomodation should be made by our Newfoundland and Labrador Government to see that every part of Labrador is serviced by the energy that is generated there.

I also think that firstly our energy should be used only to build indutry right here in Labrador and Newfoundland.

I don't know why they will pay half the revenues generated to wheel it across any province, and to boot build Billions of dollars worth of infrastructure.

First things first - Build a vibrant and economic Labrador and Newfoundland first and foremost, and then any excess power after that is accomplished can go on the grid to be sold to whomever.

Patriot said...

To Anon 12:15,

As I've also said, I'd love to see as much power as possible, if not all of it used inside Labrador or the province as a whole, but it comes back to financing. The industry or market is not here for it now and without a market to sell the power too (locally) nobody and I mean nobody is goig to back the financing of the project.

Yes, this is a time when our provincial government should be working its A$$ off to attract industry, improve power lines in Labrador and do all the things that will allow the Lower Churchill, when it comes onstream, to benefit the economy of Labrador and the entire province. That doesn't change the fact that we are talking about millions of watts of power and nobody is going to simply provide loans in the hope somebody will move in to use it all. There is no way to avoid export of power but again, only the excess should be exported with strong contractual understanding that if the Province needs that power for growth then it can be recalled.

Ussr said...

Starrigan said...

I fully agree that Labrador should be getting first crack at the hydro. I also believe that the smelter should have been built there.

I don't think we should be worrying about power blackouts and shortages in other parts of North America. That's more of a reason to attract companies to NL. We can offer cheap reliable power and lots of it. THAT alone should be a selling point. Not to mention a ready work force. Of course there's our geographical location, that is also a great advantage. Shipping is still the cheapest way to move goods.


“Hermannn Scheer, called "Europe's Al Gore," a parliamentarian who is leading the way to increase Germany's reliance on renewable energy sources such as wind power and solar power. To date, 15% of Germany's energy comes from renewable sources. Scheer estimates that if Germany continues on this course, by 2030 that will be 100%. So, if one of the world major industrialized nations can achieve this, why can't a country like Canada? The answer may lie in the fifth estate's investigation of the influence, in this country, of conventional energy industry on politicians.”

Starrigan, I would have to say that I agree with your post 100%. The answer to our provinces economic woes does not lie in creating an industrial base from what the world can give us ,but rather what we can give them. Germany has turned its old eastern communist block region into one of the greatest economic developments in the world. How, by allowing foreign companies that speclize in renewable energy technology to come into eastern Germany and turn its unemployed citizens into productive workers that create ways of supplying the countries need for energy. Instead of going half way around the world to buy over priced Oil it decided to invest in its citizens and use its tax dollars to create what the world wants most. Clean energy.

The Europeans are against the seal hunt so bad; why not ask for a trade off. Instead of constantly fighting the rest of the world on the matter why not ask for a bit of help getting a renewable energy policy in place fro Newfoundland, and Labrador. This way we can give jobs to rural Newfoundland and Labrador, and have a product to sell what is in great demand.

Patriot, you say that there is no way that we are going to get the Lower ChurchHill developed without the economic demand for it. I would just like to say that the biggest industry that the Americans are looking to create today is a new energy industry. They are looking to invest Billions upon billions of dollars into this new industry. The city of Toronto is now looking to be the first city on the North American cotenant to be ready for the new electric car. Soon and I mean very soon, the time is coming when Canada will have to come to us because demand will be so high the north American cotenant will not be able to go without this natural resource.

If Newfoundland and Labrador were to follow the example of Europe, we could easily become the new economic superpower we have always meant to be. We have the people, the drive, and most importantly the need to be. What else do we have left?

" Republic Of "