Da Legal Stuff...

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Thursday, November 05, 2009

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-Qu├ębec 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.


Anonymous said...

Major corporations, unlike smaller companies, don't plan 5 or 10 years out, they plan 25 or 30 years in advance. We've seen it in NL with companies like Exon-Mobil and offshore development.

The Upper Churchill contract will expire in 31 years meaning negotiations will happen between Quebec Hydro and Newfoundland & Labrador 5 or 6 years before that.

Some believe this is an attempt to block Lower Churchill development. While that may play a part in this that development may or may never go ahead. I believe instead, along with other benefits, it is actually pre-planning for the Upper Churchill that is on the minds of the executive of Quebec Hydro and Shawn Graham is helping them in their efforts to once again rape our resources.

Patriot said...

From a U.S. paper in Maine today:

New England energy prices are set at the level of the most expensive supply needed to meet total consumer demand. A single, major supplier may be able to manipulate the market. Hydro Quebec could get such market power from its New Brunswick purchase.

That is the reality of the deregulated generation market. The belief that Hydro Quebec will sell cheap power to Maine is outmoded. If Canadian provinces have lower rates than Maine, they may result from their governments' subsidies not offered to Americans.

The outcome of the Hydro Quebec march across the Maritimes could be determined in Washington. The Federal Energy Regulatory Commission is likely to be asked to look at Hydro Quebec's market power. If the regulator finds that is has too much market clout, it can deny it the right to set its own market price.

One solution that might give some comfort to the locked-in Canadian provinces and New England customers would be to give Newfoundland-Labrador and Nova Scotia the right to dedicated transmission corridors at decent rates. That could solve their problems while reducing Hydro Quebec's transmission monopoly.