Province of Newfoundland and Labrador Practices Discrimination Against Quebec Business

With open discussion just beginning across Newfoundland and Labrador on the potential development of the Lower Churchill river in Labrador, now seems to be as good a time as any to re-open the debate on the status of the Upper Churchill generating plant.

The Combined Councils of Labrador recently released an updated position paper on the proposal for this new development. Along with many valid points relating directly to the Lower Churchill, they also make note of a request to Provincial authorities to examine the value of section 92A of the Canadian Constitution in enabling the Province to capture increased benefit from Upper Churchill power generation.

As every Newfoundlander and Labradorean knows, the current contract between the Province and Hydro Quebec, which was signed in the late 1960's, is slated to remain in place until the year 2041. This contract sees the Province supply Hydro Quebec with electricity at 1960's rates, which they in turn sell into the marketplace at current prices. The result is a situation that sees NL barely cover the cost of production while Hydro Quebec pulls in hundreds of millions each year.

In addition to the one sided financial arrangement, people in many parts of Labrador must rely on diesel generated power and there is little electricity available for industrial growth in many areas. A recently released Provincial discussion paper also identified the fact that the island portion of the Province itself will exceed its baseline requirements for electricity within the next 5 years.

Over the years a number of attempts have been made to have the current Upper Churchill contract disposed with and a more equitable arrangement put in place. None have been successful however. Now the Combined Councils of Labrador seem to feel that the Canadian Constitution iteself may hold the answer.

Here is what the specific section of the Constitution says, in part, with regard to the separation of powers between the Federal Government and the Provincial Legislatures. I have highlighted some of the key wording in bold for our reader’s benefit:

92A. NON-RENEWABLE NATURAL RESOURCES,FORESTRY RESOURCES AND ELECTRICAL ENERGY

(1) In each province, the legislature may exclusively make laws in relation to

(a) exploration for non-renewable natural resources in the province;

(b) development, conservation and management of non-renewable natural resources and forestry resources in the province, including laws in relation to the rate of primary production there from; and

(c) development, conservation and management of sites and facilities in the province for the generation and production of electrical energy.

(2) In each province, the legislature may make laws in relation to the export from the province to another part of Canada of the primary production from non-renewable natural resources and forestry resources in the province and the production from facilities in the province for the generation of electrical energy, but such laws may not authorize or provide for discrimination in prices or in supplies exported to another part of Canada.

Very interesting stuff, but how can this be interpreted to mean that Newfoundland and Labrador might be able to claim better benefits within the Upper Churchill contract?

The three most interesting parts of this section of the Constitution for me are the statements that the Provinces have the right to make laws in relation to, “management of sites and facilities in the province for the generation and production of electrical energy”, that they can “…make laws in relation to the export from the province to another part of Canada…” and that “…such laws may not authorize or provide for discrimination in prices or in supplies exported to another part of Canada”

Consider for a moment the definition of the word “discrimination”. Webster’s defines it as:

1 a : the act of discriminating b : the process by which two stimuli differing in some aspect are responded to differently

2 : the quality or power of finely distinguishing

3 a : the act, practice, or an instance of discriminating categorically rather than individually b :
prejudiced or prejudicial outlook, action, or treatment

Nowhere in this definition do we find reference to the commonly perceived meaning whereby the person or entity being discriminated upon is treated in some way that may be detrimental to them. In other words, the definition does not state that the “discriminatory” treatment must hurt the recipient, only that the treatment be different in some way.

Perhaps this is where the opportunity lies. Section 92A clearly states that a Provincial Legislature may make laws as long as such laws may not authorize or provide for discrimination in prices or supplies exported to another part of Canada. This, according to the definition of “discrimination” is exactly what is happening on the Upper Churchill.

Hydro Quebec has been and continues to be the target of discrimination by the Province in the sense that they are being treated differently with respect to purchasing and utilizing power than the people of Newfoundland and Labrador are.

The contract currently in place sees power exported and sold to Hydro Quebec for 0.25 cents per kilowatt hour and this will decline to 0.2 cents in 2016. Within the Province itself, consumer rates and perhaps more applicably, industrial rates are much higher.

In addition, there could be a case made for discrimination in the area of supply in light of the huge power supply going to Hydro Quebec while parts of Labrador don’t even have a stable supply to utilize themselves.

Both of these situations would appear to be in direct contravention to article 92A. The current contract could be interpreted as the Province having entered into a situation where they:

“…provide for discrimination in prices or in supplies exported to another part of Canada.”

Naturally Quebec Hydro will never do anything about these particular cases of discrimination but perhaps the Province should. After all, if the Province of Newfoundland and Labrador is truly acting in direct disobedience of the Canadian Constitution, they really ought to act quickly to correct the situation.