NALCOR Seeks to Re-Open Upper Churchill Power Contract

ST. JOHN'S, NL, Nov. 30 /CNW/ - Ed Martin, President of Churchill Falls (Labrador) Corporation (CF(L)Co) and President and CEO of Nalcor Energy, announced today that CF(L)Co has asked Hydro-Quebec to enter into negotiations on the Upper Churchill Power Contract pricing.

"Today I have sent a letter to Mr. Thierry Vandal, President of Hydro-Quebec, requesting that his company renegotiate the pricing terms for the remainder of the 1969 Power Contract between Churchill Falls (Labrador) Corporation and Hydro-Quebec to establish a fair and equitable return to both CF(L)Co and Hydro-Quebec for the future," said Martin.

The present purchase price under the contract is one-quarter of one cent per kw/hr and the renewal contract fixes the purchase price at one-fifth of one cent for the 25year period beginning in 2016. This will mean that, for the remaining 32 years of the power contract, Upper Churchill power will be sold to Hydro-Quebec for less than 5 per cent of its recent commercial value. This permits virtually no return to CF(L)Co and its shareholders for the next 32 years.

"After our internal review and assessment of all eminent legal and scholarly advice, we feel the grounds exist to require Hydro-Quebec to renegotiate the pricing terms of the Power Contract under certain provisions of the Quebec Civil Code," explained Martin.

"We believe this situation, as long as it is outstanding, to be unjust and to refuse to renegotiate the pricing terms is inconsistent with the obligation imposed by the law of Quebec to act in good faith in all legal relationships including, more specifically, the negotiation and on-going performance of contracts."

According to Martin, a legal opinion on this issue was received from the law firm of Irving Mitchell Kalichman of Montreal. That opinion was prepared with the assistance of the Honorable Jean-Louis Baudouin, formerly a judge of the Quebec Court of Appeal and now with the law firm of Fasken Martineau, who was also involved in drafting the Quebec Civil Code, and in consultation with Dr. Pierre-Gabriel Jobin of the McGill University Faculty of Law. As well, an independent legal opinion was received from the Montreal office of the law firm of Stikeman Elliott.

This legal advice indicates that, in the particular context of the Power Contract between CF(L)Co and Hydro Quebec, circumstances have changed in a way that could not have been reasonably foreseen at the time the contract was initiated.

The consequence of these unforeseen circumstances, coupled with the extraordinary length of the contract, has resulted in a gross inequity in the distribution of contractual benefits between Hydro-Quebec and CF(L)Co.

This unique situation regarding the Power Contract, combined with the obligation in the Quebec Civil Code to act in good faith throughout the full term of a contract, obliges Hydro-Quebec, upon request, to reopen the contract in order to re-establish the appropriate equilibrium.

CF(L)Co has asked Hydro-Quebec to reply to its request to commence negotiations by January 15, 2010.

Good-Bye to the Historic Atlantic Fishery

It may sound like a doomsday mentality but the truth is what it is.

The End is Near for the fishing industry in Atlantic Canada. She's gone bye's she's gone!

This week the Parliament of Canada was set to debate the proposed adoption of radical changes to the Northwest Atlantic Fisheries Organization (NAFO) regulations that would see Canada sign onto a plan allowing member nations of NAFO far more control of fisheries management in the Atlantic off our shores than ever before.

The changes have been attacked by fisheries experts throughout Atlantic Canada, including several former high ranking personnel at Canada’s own Federal Department of Fisheries and Oceans (DFO) who have said the proposed changes will erode Canada’s ability to manage stocks inside its own waters and impinge on Canada’s sovereignty in North Atlantic waters.

Instead of listening to the pleading of experts in the area, or even proceeding with the planned 3 hour debate in the House that would have allowed some of those concerns to be expressed and captured on the public record the Harper government introduced a motion to halt the debate just 40 minutes in and now have plans to dispense with the Parliamentary vote altogether and simply adopt the changes.

It seems the deal is done, or soon will be, and with that decision the final nail in the coffin if the Atlantic fishing industry will be hammered home.

While DFO has itself been a master mis-manager of fish stocks over the years at least it’s answerable, to some degree, to Canadian citizens. NAFO on the other hand is not answerable to anyone in Canada and is known for intentionally allowing over fishing and turning a blind eye to illegal fishing activities off our coast.

One doesn’t have to look far to see where NAFO stands on fish stock protection. They have proven time and time again that they are either incapable of or unwilling to protect fish stocks wherever they wield their power. This was proven once again a couple of weeks ago when NAFO made the decision to allow a continuation of a shrimp fishery on the Flemish Cap just outside Canada’s 200 mile economic zone, contrary to the best scientific advice.

In a special meeting in London the organization decided against closing the Flemish Cap shrimp fishery in NAFO area 3M in spite of the fact that the NAFO Scientific Council had advised them that the stock has collapsed and that the fishery should be closed.

During a NAFO vote on the closure six member states supported a European Union proposal to simply reduce the allocated fishing days, a move that will accomplish nothing since the number of fishing days allocated in recent years have not been anywhere close fully utilized. The net result will see no real reduction in the amount of shrimp that will be taken from an already collapsed stock.

With the collusion of the federal government the new NAFO regulations will soon be adopted by Canada, giving the organization even more control over fisheries in the area and permitting them with an opportunity to someday dictate regulations inside Canadian waters as well. It seems that the time to wave a sad good-bye to the Atlantic Fishery and the serene outport way of life in many parts of the region is upon us.

It’s indeed a black day for all of us.

Should Newfoundland and Labrador Buy NB Power?

Should NALCOR – Newfoundland and Labrador’s Energy Corporation – make an offer to purchase New Brunswick Power?

Thought it may sound odd just stop and think about it for a minute and you might find the idea has some merit.

Many people of New Brunswick are torn over the proposed sale for one or more of 3 primary reasons.

First, they are rightfully concerned about giving up their sovereignty over provincial resources and power lines.

Second, while the deal contains benefits for big business many are not convinced the it would be a good one for the average consumer.

Third, there is the stigma that comes with selling the farm to a province that has been on the brink of separation more than once and may well be again in future.

From the Newfoundland and Labrador perspective the sale is worrisome because it will give Quebec a stranglehold on power transmission into the U.S. for the planned Lower Churchill project. Not to mention total control of power distribution from the Upper Churchill when that resource is finally returned to Newfoundland and Labrador’s control in 2041.

Other stakeholders, including Nova Scotia and some Eastern U.S. States are worried about a single entity controlling all power imports & exports in the region as they have every right to be.

If, on the other hand, Newfoundland and Labrador were to make an offer for the utility the dynamic would change dramatically.

Not much would change with the public concern over giving up sovereignty of their resources but those concerns might be eased a little knowing that control was being ceded to another Atlantic Province rather than the control of a jurisdiction that might suddenly decide to separate from Canada altogether.

Anyone who has paid the least bit of attention to this entire issue knows full well the only ones who will truly benefit from this agreement are Hydro Quebec and the larger corporate entities in New Brunswick. Not the average rate payer.

It is those large industries, including J.D. Irving, that are driving the deal so, one way or another, the sale will likely be made. In New Brunswick when the Irving’s speak the halls of government shake and things get done.

But what if a competing bid were available that included all of the benefits offered to New Brunswick corporations in addition to improvements on what rate payers could expect?

What if that offer also eased the minds of other stakeholders by ensuring that Hydro Quebec didn’t gain a monopoly over transmission in the region?

What if that offer would also provided Newfoundland and Labrador with its own route from the Maritimes into the Eastern U.S, potentially saving the Province countless millions in transmission fees down the road?

Most assuredly the cost of such an offer would be high, but wouldn’t it be worth it in the long run?

With such an offer the debt load of NALCOR (or by virtue of ownership, the people of Newfoundland and Labrador) would rise by about 4-5 billion dollars. That’s a lot of money but over the past 5 years or so the Province has paid down that amount of debt or more meaning it can likely afford to make such a move. It might inhibit their ability to finance the Lower Churchill project, perhaps even postponing it 5 or 10 years but in the end Newfoundland and Labrador would not only be able to build the project but would own the means to distribute the power from it.

In return NALCOR would forever rid the Province of the albatross its carried around its neck since the 1960’s by no longer being forced to deal with Quebec every time it wants to wheel power to other jurisdictions.

Purchasing New Brunswick Power would not just position Newfoundland and Labrador for future project revenues. Make no mistake about it. Hydro Quebec did not venture down this road without knowing full well there’s money to be made. In fact they’ve admitted they expect a 10% return on investment right away.

Since the money to paid for the purchase will be used to get rid if the NB Power’s debt, the buyer will be getting a company that’s debt free. Even with the financial woes currently plaguing New Brunswick Power the company still pulls in revenues of more than 1.2 billion a year. That alone is many times more than Newfoundland and Labrador sees from the massive Upper Churchill power plant.

The existing MOU between New Brunswick and Quebec Hydro allows either party to opt out at any time between now and the end of March. This means there is an open window of opportunity for Newfoundland and Labrador to walk through.

If the political will is there, this might be a chance to make a “new and improved” offer to the people of a neighboring Atlantic Province that would also force the hand of the government of New Brunswick. It’s one thing to face a political backlash for ignoring the will of the people by signing a questionable deal with Hydro Quebec. It’s quite another to sign such a deal when a better and far more palatable one is there for the taking.

Where Have all the Fishes Gone?

“…In 1992, Ottawa imposed a moratorium on the Northern cod fishery. It resulted in the largest layoff in Canadian history: 30,000 jobs. The latest science says that stock has barely recovered.” – Jeffry Simpson, Globe and Mail, November 13, 2009.

The Globe & Mail article in which Mr. Simpson made that statement was dedicated to discussion of the Canadian government’s recently announced plans to hold a judicial inquiry into declining salmon stocks on the Fraser River in B.C.

Perhaps a judicial inquiry on the BC situation is a good idea but the announcement of one, not to mention the Globe’s comparison of the West Coast issue to the collapse of the East Coast cod fishery, brings to mind a very simple question: Why has an inquiry never been held into the Atlantic fisheries collapse?

Sure, studies have been conducted, scientists have debated the problem for years and the Department of Fisheries and Oceans continues to count all the little fishies in the sea, but where has any of that gotten us?

The fish are still on the missing list.

Eighteen years after the fishery was first closed the ground fish stocks haven’t recovered. Doesn’t that reality alone warrant an inquiry to help uncover not only what led to the collapse but what has been done, or hasn’t been, in the nearly 2 decades since.

The North Atlantic fishery collapse led to 10’s of thousands of people being thrown out of work overnight. In the years that followed entire towns and villages disappeared as the people who lived there were forced to give up their way of life. Ultimately the fisheries collapse led to the largest mass out-migration from any province in Canadian history.

To this day no inquiry has ever been conducted.

Admittedly some steps were taken. Fisheries task forces, committees and the like have come and gone and while those are all well and good they have their limits.

A judicial inquiry, with the power to access official records and question witnesses under oath, whether they like it or not, might be our only hope of ever shedding even a glimmer of light on one of the most devastating economic, commercial, cultural and environmental catastrophes of our collective history.

Did the Federal Department of Fisheries and Oceans really mismanage the fish stocks as they’ve so often been accused of doing? Are they mismanaging those stocks even today?

Are politicians, both Provincial and Federal, past and present, at fault for promoting unsustainable levels of fishing with no other goal in mind but to pander to voters?

Did Ottawa secretly barter away fishing rights as a means to improve trade relations with foreign nations and prop up the economy in other parts of Canada?

The questions that might be asked are almost limitless but sadly, to date, the answers have been non-existent.

Why, nearly 20 years into a fishing moratorium, has no official inquiry ever been called?

There are those who believe the time for an inquiry has passed, that perhaps one should have been conducted back in the mid-nineties when the moratorium was put in place. I disagree.

At the time the moratorium was introduced the public was led to believe that a couple of years down the road the stocks would rebound and all would be well again. That didn’t happen and I strongly believe an inquiry now would have the benefit of hindsight when looking for the reasons why.

Nearly 20 years after the fact many of the politicians, bureaucrats, government scientists and DFO staffers who were involved at the time but who might have been hesitant to answer the tough questions are likely to be retired from public life or close to being so today. This fact alone would help loosen stiffened tongues that might not have been as willing to be loosened back in 1992.

The timing is ripe for an inquiry of this nature unfortunately the collective spirit in Ottawa is, as usual, very weak.

The near collapse of salmon stocks on the West Coast is indeed a worthy reason to hold a judicial inquiry and I applaud the federal Conservative government for taking this action so quickly. That said, I can’t help but wonder why Mr. Harper and his recent predecessors (no matter the political stripe) have all been so comfortable in ignoring the devastation of the East Coast fishery.

.........Lest We Forget / Forget Me Not.........

This November 11th please take a few moments to remember our veterans and pay your respects to those who gave so much.

Thank-you.

Selling NB Power would be short-sighted

The following appeared today in the New Brunswick newspaper, "The Telegraphjournal".

It's certainly worth a read. Hopefully the people of New Brunswick take these words to heart.

Selling NB Power would be short-sighted
Thursday November 5, 2009
By Kurt Beers

The memorandum of understanding signed last week between the government of New Brunswick and the government of Quebec for the proposed sale of NB Power bears a striking resemblance to Quebec's 1966 acquisition of the Churchill Falls hydro-electricity plant in Newfoundland. If history is doomed to repeat itself, the lessons learned from the Newfoundland-Quebec agreement should be strongly considered before New Brunswick enters into a reactionary and short-sighted agreement that involves losing one of its Crown corporations at the behest of another province's long-term gain.

Throughout his service as premier of Newfoundland from 1949-1971, Joey Smallwood was renowned for making political blunders. In his memoirs he writes that he was "guilty of more failures and policy mistakes than any premier or prime minister in [Canadian] history." In the fall of 1966, Smallwood was responsible for the Churchill Falls deal that granted Hydro-Québec unrestricted access to Newfoundland's electricity. This permitted Quebec to sell vast amounts of Newfoundland's domestic power to American markets at a healthy mark-up. The 65-year-deal, which was particularly one-sided, witnessed the growth of Quebec's revenue at the expense of Newfoundland. While Quebec continues to reap a multibillion-dollar windfall from this arrangement, Newfoundland has been left with dwindling profits.

The current memorandum of understanding proposed by the government of New Brunswick presents an equally short-sighted plan - one that recalls to the Churchill Falls agreement. Although at a glance the immediate benefits of this deal appear attractive (with a $5-billion buyout), there are currently no laws to prevent Quebec from repeating its previous practice once again with NB Power, forcing New Brunswick into a long-term disadvantage - in this regard, much like Newfoundland - as energy prices will inevitably soar once the initial five-year freeze expires. If this acquisition is ratified, over time New Brunswick would be deprived of billions of dollars of possible revenue.

Conventionally, provinces transported their electricity across provincial borders in what is called a "wheeling agreement," which allows the letting province to maintain its electricity at a fair market price. Although inter-provincial cooperation has always been (and should remain) a hallmark of our federation, it does not justify the capitulation of one province to the manipulative tactics of another, particularly in a scenario that would result in a weaker and far less competitive energy market for the entire Maritime region.

The New Brunswick government has a fiduciary duty to consult its citizens before selling (in part or whole) NB Power, just as they have a responsibility to become engaged in this debate. One needs to look no further than the lessons learned by former Premier Joey Smallwood and the Churchill Falls agreement to see that if this deal is passed, the albatross that continues to weigh down Newfoundland and Labrador will soon be the burden of New Brunswick as well.

Kurt Beers is from Rexton, New Brunswick. He is a former Executive Assistant to former Prime Minister Joe Clark. He holds a Masters in Political Communication and a Bachelor in Political Science and History. He currently lives and works in London, England.

Say NO to sale of NB Power

New Brunswick citizens have been promised that they will save $1,400 over 5 yrs/household - that amounts to $1400/60 months = $23/month. NB industries (ie: Irving / McCain) on the other hand will get an immediate 30 percent reduction in power rates, but new industries will have pay market rates, reducing their ability to compete against existing industries and those in Quebec.

The Conservation Council of New Brunswick is which is reponsible for the enactment of the the Clean Water Act to guarantee safe drinking water, legal requirement for NB Power to supply 10% of its electricity from renewable sources, and creation of New Brunswick's energy efficiency agency agrees NB Power should not be sold.

This is one public corporation buying out another, so why doesnt the agreement allow New Brunswickers to pay the same rate, for the same electricity, as Quebec clients will. Instead New Brunswick rates will be frozen at 60 per cent higher for the next 5 years and then continue to increase.

The 2006 New Brunswick Liberal platform stated that NB Power will remain in public hands, but the Liberals are arguing they must break their promise because they couldn't foresee the debt situation at NB Power. They should admit they didn't perform due diligence before releasing the Charter for Change. NB Power's debt was known to be a problem in 2006.

Hydro Quebec has signed only a memorandum of understanding with NB Power. It is necessary that it passed by the House and the contract must be signed before March 31, 2010.

New Brunswickers need to contact their local MLA and everyone who is against this terrible situation needs to voice their opinion to their Federal Member of Parliament as soon as possible.

Contact informtion for Members of Parliament can be found in the links section at the left side of this web page.