Has Harper sold Dunderdale down the Churchill River?

Did Kathy Dunderdale and the PC caucus of Newfoundland & Labrador shoot themselves in the collective foot during the last federal election campaign, or will Stephen Harper repay the favour given him by the Premier, if not the NL voters, and honour his committment to back the Lower Churchill project?

If the Dunderdale government plans to ride a federal loan guarantee for the Lower Churchill into the next election they’ll need to have it signed, sealed and delivered before voters go to the polls. That might prove difficult, if not impossible, to accomplish before the October ballot with news out of Ottawa today that the guarantee will not be included in next week’s federal budget.

During the federal campaign Kathy Dunderdale threw the entire weight of her caucus behind Conservative candidates, even going so far as to appear at a Harper rally in St. John’s where the PM announced his backing for a “loan guarantee or equivalent financing”. Now, with the federal budget slated to be delivered next week it’s been revealed that the guarantee won’t be included.

A source inside government has told the media that the PM is still behind the deal and will make an announcement once negotiations are completed, but is that good enough for voters? Will that statement alone carry Dunderdale through the next election or is the public in Newfoundland and Labrador far too suspect of Stephen Harper to accept his assurances?

If the recent federal election returns were any indication it would appear that the latter is true. That could be very bad news for the Dunderdale government.

With no loan guarantee in place she had better hope the legacy of the William’s government provides her with enough momentum to overcome what could prove to be a gaping hole in her election platform.

According to a government source, "It (the guarantee) will be provisioned for and accounted for going forward but (while it won't be in the budget) it doesn't have to wait until the next budget to go into effect."

Perhaps this is true and Harper simply wants to avoid the huge fuss with Quebec that would surely come from highlighting the agreement in the federal budget. If that’s true however, and the guarantee doesn't require parliamentary approval, why is it that during the election campaign he told voters that in order to ensure the loan guarantee (or equivalent financing) a majority Conservative government would have to be elected. Otherwise, he said, the opposition parties might side with Quebec and vote against it.

Liberal MP, Gerry Byrne, (no doubt as much to score political points as get at the facts) has raised the issue in recent days as well. According to Byrne, “They were the ones that said it needed parliamentary approval. Now they're suggesting it's an order in council done by cabinet that can approve the Lower Churchill loan guarantee. So they're either lying now or they lied during the election campaign. The bottom line is we were misled."

Hard to argue with that logic regardless of the source.

Whether political rhetoric or not, Byrne also said he believes the government has no standing authority to offer such a loan guarantee without parliamentary approval.

"I've got a formal question presented today to the parliamentary budget officer to confirm or refute that understanding." he went on.

I'm sure many newfoundlanders & Labradorians will be interested in the response provided to Mr. Byrne's question.

Although the provincial government has said in the past that a loan guarantee (or equivalent funding) is not essential to development of the Lower Churchill project, such a guarantee would save provincial taxpayers hundreds of millions in interest expenditures.

With initial work on the project now underway money is already flowing out the door. The provincial legislature is now on summer break until the October election and the Canadian Parliament, once the budget is passed, will also be taking its summer break. Under those circumstances the odds of finalizing any sort of agreement before the next provincial election is low at best.

It’s a difficult situation the Dunderdale government must surely be considering after hearing this news today.

As Gerry Byrne pointed out today, the absence of Muskrat Falls in the budget should raise alarms, especially as the federal government has signalled it will include other campaign spending promises in the budget

One of those expenditures is the more than $2 Billion dollars in compensation to Quebec for implementing the HST many years ago. A promise widely seen during the campaign as Harper's way of placating Quebec over his Lower Churchill promise, making it even more concerning that the promise to Newfoundland & Labrador will be excluded from the budget while the one to Quebec is there front and center.

Open Letter to Premier Dunderdale

Open Letter To: Premier Kathy Dunderdale
Premier of Newfoundland & Labrador

cc. Minister Shawn Skinner
Minister of Natural Resources

cc. Multiple media, MPs and concerned individuals

May 13, 2011

Premier Dunderdale:

In November of 2008 the provincial government, under then Premier Danny Williams, made a submission to the environmental joint review panel evaluating the Romaine Complex Hydroelectric project in Quebec.

At about that time I personally sent you an email, in your capacity as Minister of Natural Resources, asking about our province’s position on the project and on our government’s exclusion from the environmental assessment process. It was in response to my correspondence that you made me aware of the submission to the panel and, as I did at the time, I would like to take this opportunity to once again thank you for your direct and timely response.

I believe the submission, which encompassed many topics including environmental concerns, discrepancies in the maps provided to the panel among other issues was the appropriate direction to take at the time. I also believe the submission addressed many of the concerns a lot of Newfoundlanders and Labradorians have with the project.

2.5 years have passed since that submission and I’m sure many in the province are interested in what has happend since that time.

As I understand it, the environmental assessment process is now complete and work is advancing steadily on the Romaine project. I would like to know what the joint review panel’s responses were to the province’s 2008 submission.

Specifically I am interested in detailed information on the panel’s responses to all of the concerns expressed.

In addition I hope you can provide a clear picture of where we now stand with respect to retaining complete provincial control over the headwaters as outlined in the submission and copied here.

(Begin copy of pertinent section from original panel submission)

Finally, the Province wishes to take the opportunity to re-affirm its water rights in the portion of the Romaine River watershed on Newfoundland and Labrador lands. The Government of Newfoundland and Labrador and its Minister responsible for water resources, without compensation to the proponent, shall not be restricted to:

• use water of Romaine River watershed on, in, under, or flowing through or adjacent to the Newfoundland and Labrador – Québec boundary on Labrador lands for purposes related to management, research, protection and conservation of water resources, aquatic life and aquatic habitat;

• establish standards and measures for the protection of water resources on, in, under, or flowing through or adjacent to the Newfoundland and Labrador – Québec boundary on Labrador lands;

• use water or authorize the use of water on, in, under, or flowing through or adjacent to the Newfoundland and Labrador – Québec boundary on Labrador lands for the purpose of fighting fires;

• establish flood control measures, develop flood plain management strategies and designate flood risk zones with respect to water resources flowing on, in, through, under or adjacent to the Newfoundland and Labrador – Québec boundary on Labrador lands;

• carry out or authorize hydrologic data collection and hydrologic research with respect to water resources on, in, under, or flowing through or adjacent to the Newfoundland and Labrador – Québec boundary on Labrador lands; and

• use water or authorize the use of water on, in, under, or flowing through or adjacent to the Newfoundland and Labrador – Québec boundary on Labrador lands for any other beneficial purpose that is in the Government’s interest and the other residents of Labrador.
(End copy from original panel submission)

I trust that your office, or that of the Minister of Natural Resources, is able to provide copies of any documents issued by the review panel in reference to the province’s submission along with information on any actions the panel took on those concerns.

If no responses were forthcoming and no action was taken by the panel I would like to know what other steps the provincial government has taken or is now pursuing to ensure that our rights are protected in regard to this project and to our provincial border with Quebec.

I’m sure you will recall, though many Newfoundlanders and Labradorians may not, that in 1976 the government of Newfoundland and Labrador attempted to buy back 800,000 kilowatts of Churchill Falls power at a reasonable price for use (through sub-sea cable) on the island portion of the province.

In response to this request Hydro- Quebec demanded that we sell Quebec between 7,000 & 10,000 square miles of southern Labrador or, barring that, pay 10 times the amount the utility was paying our province for that same power. By all accounts, at the time, the provincial government refused both of these less than generous offers.

The reason Hydro-Quebec and the Quebec government so desperately wanted that territory is because headwaters are located in Labrador and without complete control of those waters development on the rivers could not move forward. It’s no doubt difficult to secure investment and financing, due to the uncontrollable risk, when you don’t control all the source of the water used to generate the power.

This has me wondering what might have changed since that time.

Why, in the opinion of your government, does Quebec have enough comfort with the future of those headwaters to proceed on downstream developments in 2011 when they did not do so in 1976? What guarantees must they believe they have, from Ottawa, the province or elsewhere, in order to invest billions if they cannot control the future of those waters?

I look forward to your timely response and once again I thank-you for your many past responses to my queries on several issues of importance to everyone in Newfoundland and Labrador.

Sincerely,

Myles Higgins

Better a Broken Promise than None at All

Mark Twain once said, “Better a broken promise than none at all.”

I wonder about his philosophy.

With a federal election again sullying the picturesque landscape of Newfoundland & Labrador those promises are flying around faster than a poorly discarded grocery bag in a force 5 hurricane.

After decades of living under the thumb of Hydro Quebec (thanks to the now infamous Upper Churchill Power contract) and after being denied access on Quebec’s grid in an effort to market Lower Churchill power, Canada’s political Czars have finally seen fit to “promise” Newfoundland & Labrador a loan guarantee for development of a portion of the Lower Churchill river in partnership with Nova Scotia.

Or have they?

Let me start by apologizing for the length of the following but as much as the various political machines would like everyone to believe this is a simple matter, it most assuredly isn’t, thus the need to use far more than the 50 words or less the leaders of the parties are so expert at casting out.

To begin, just what have Mr. Ignatieff and Mr. Harper actually promised?

After piecing together various comments from both men, their statements differ depending on where they’re campaigning and in which official language being used, here’s the result.

Michael Ignatieff likes the idea of co-operation between provinces and regions but… since he hasn’t seen all the details he’s only willing to say he stands behind the project and would likely support a loan guarantee.

This may be seen by devout Liberals as a promise but it’s a little too ambiguous to truly pass the smell test.

Speaking of undesirable odors, Mr. Ignatieff also said he would like to see the entire Lower Churchill project developed in future, not just the currently planned Muskrat Falls section. His belief is that other provinces, he specifically identified Quebec, should play a part in developing the remaining, and much more valuable, Gull Island portion of the river.

On this point I smell something very fishy indeed and not at all in Newfoundland & Labrador’s favor.

The question then becomes: After the election, should he win, do Michael Ignatieff’s words indicate that he might try to tie a possible loan guarantee to some form of agreement with Quebec on development of the Gull Island generating station?

After living with the fallout of the existing Upper Churchill contract nearly my entire life (with thirty years to go if I live well into my seventies) I have to wonder about statements like that. Remember it was Ottawa’s refusal to defend the Constitutional right of provinces to access markets that played such a big part in the existence of that one sided contract in the first place.

I shudder consider a scenario where Newfoundland and Labrador is locked into an arrangement that only permits hydro development on terms agreeable to Hydro Quebec and the Quebec government.

As for Mr. Harper, he’s said he’ll provide a loan guarantee, or equivalent funding, as long as the development meets certain criteria.

If (and only if) the project meets a test for financial feasibility, regional development value and greenhouse gas reductions will a loan guarantee be put forward.

On the surface those criterion sound perfectly reasonable but what exactly are the measurements of each and what constitutes a pass or a fail?

These non-specific criteria, though mana from Heaven to Conservative followers, are in fact an off ramp a two year old could drive an eighteen wheeler down.

Repeatedly when speaking about his “promise” Mr. Harper has also crowed about how much the project will mean for regional co-operation and for reducing Canada’s greenhouse gas emissions. He’s even spoken of the virtues of power produced in Newfoundland and Labrador serving as a replacement for dirty power generated in Nova Scotia and New Brunswick. I don’t disagree with any of this but I’m quite struck and very concerned by something he has, almost intentionally it seems, not said.

Not once has Mr. Harper made any mention of Newfoundland & Labrador’s intention to sell excess power into the lucrative U.S. market.

The ability to reach those markets is what Quebec has denied to Newfoundland and Labrador for generations and it’s exactly what every politician in Quebec is railing against ever since Mr. Harper’s “promise” hit the news wires.

Could it be that the Harper Conservatives plan to use, as part of his mysterious approval criteria, the caveat that power generated by the Lower Churchill project, with federal assistance, can only be used to benefit Canada as a whole (read: only sold and used within Canada)?

Such a move would, of course, destroy Newfoundland and Labrador’s energy and financial aspirations and would guarantee that any power not purchased in the Atlantic region would inevitably flow to the end of the line, so to speak. Not into the U.S. at all, but into Quebec.

In such a scenario, any energy not required by the region and locked out of the U.S. market would be virtually worthless to everyone, with the exception of Quebec. A move like this would allow Hydro Quebec to scoop that power up at fire sale prices and re-sell it, inside Quebec boundaries of course, thus freeing up more of Hydro Quebec’s own power for sale elsewhere at a staggering profit.

There is no doubt any conditions of this sort would mean the law of supply and demand will benefit Quebec alone, certainly not Newfoundland & Labrador.

Do such scenarios sound a bit too dastardly for Michael Ignatieff or even for Stephen Harper to consider? Perhaps, but a similar approach isn’t without precedent.

A number of years back Ottawa pulled the same stunt when they sold the then bankrupt Come by Chance oil refinery, also situated in Newfoundland & Labrador. The people of the Province wanted the refinery back online and access to the jobs that would come with the sale. Ever the fair bunch that they are the feds agreed to a sale under the condition that beyond what oil would be produced for use in Newfoundland and Labrador, not one single solitary barrel would ever, ever, be sold inside Canada’s border. It never has and never can be.

At that time it was the Irving family screaming and being placated by Ottawa. What’s to stop Hydro Quebec from doing it this time around?

Adding to the mass confusion around these so called “promises” are statements made by characters other than the federal candidates themselves.

Bloc leader, Gilles Duceppe, has called these “promises” a slap in the face for Quebec and said Ottawa is using Quebec tax dollars to help Newfoundland and Labrador unfairly compete with Hydro Quebec.

Quebec Premier, Jean Charest, has said that it isn’t right for Ottawa to subsidize power rates in Newfoundland and Labrador since Ottawa never helped Quebec develop its power grid.

Ontario Premier, Dalton McGuinty, is screaming blue murder that Ontario tax dollars are being used to support Newfoundland and Labrador. As a result, he says, Ontario wants support from the feds for its projects, the price of which McGuinty will, “…determine later”.

As they say, never let the truth get in the way of a good lie.

Suppose for a moment that which ever party forms the next government actually keeps their promise to Newfoundland & Labrador, without locking the Province into a catastrophic agreement, what would that actually mean?

It means that regardless of what Mr. Duceppe, Charest or McGuinty say, a loan guarantee doesn’t actually require money from any federal taxpayers, no matter where they live. It's like a co-signature on a loan, nothing more.

Consider as well that while crying about subsidization more than 70% of the profits of Hydro Quebec (a provincial corporation) are a direct result of locked in 1960’s prices for energy Quebec resells at a monumental profit thanks to the afore mentioned Upper Churchill contract.

Even developed at the kind of lower interest rates a loan guarantee would bring Newfoundland and Labrador's Lower Churchill project could never come anywhere close to producing power as cheaply as Quebec is getting power from the Upper Churchill, so who is subsidizing whom?

Never mind as well that Quebec’s & Ontario’s grids are fully inside their respective Provinces while the proposed transmission system for the Lower Churchill would cross provincial boundaries and travel under the ocean, which is within federal jurisdiction. Ottawa should play a role.

Let’s also ignore the fact that with the borrowing power of both Ontario and Quebec, at least in the past, has been similar to that of the Federal government meaning loan guarantees of any kind would have had little if any benefit to either Province.


Add it all up and it’s one heck of a situation isn’t it?

So far Newfoundland and Labrador has received little more than weak election promises, no contract has been drafted and no passing or failing grades have been given to the project by Ottawa, yet look at the fuss.

If, even after all the concerns I’ve expressed so far, these promises are actually fulfilled in the end, Newfoundland and Labrador will only receive a loan guarantee which actually costs taxpayers nothing, zip, zero.

Well…

It’s here that I have to also admit to being guilty of not letting the truth get in the way of a good lie since I’m willing to wager my substantial penny collection that these “promises” will actually cost taxpayers a great deal, though they shouldn’t.

Just days after the “promises” were made, in order to placate the complainers, agreements have been made on the $2.2 billion dollars (of real taxpayer money) Quebec wants for introducing the HST decades ago.

It’s also been reported that Ottawa will help Quebec with building a new bridge. It’s not yet clear if this will be in the form of a loan guarantee or actual tax dollars but coincidentally the bridge project is valued at almost exactly the same $6 billion dollars or so the Lower Churchill project is expected to come in at.

I can’t wait to see what kind of goodies the Ontario government will milk the situation for over the coming weeks, especially after Mr. McGuinty’s statement that he’ll determine the value of what he wants later.

As I said at the start of this lengthy commentary, nothing is as simple as the political parties would have us believe.

In the end Newfoundland and Labrador may actually end up with nothing from the federal government, not even a simple signature, or perhaps worse, find itself locked into an agreement that destroys its financial future. Either way, you can hang your hat on the fact that Ontario and Quebec will surely benefit from the carrot now being dangled in front of voters in the Province.

As McGuinty, Charest and Duceppe have said in the past few days, this promise will cost a great deal of taxpayer dollars, but they failed to mention that Ontario and Quebec are the provinces that will receive those dollars, not Newfoundland and Labrador.

Based on the numbers being bandied about, by the time this election is over what should have been a free promise to provide a free loan guarantee for the Lower Churchill project will assuredly end up costing taxpayers far more than the entire Lower Churchill price tag itself, with not one penny going to the proponents of the project.

So, was Mark Twain correct when he said, “Better a broken promise than none at all.”?

I’m not convinced, but it’s pretty clear Mr. Twain didn’t spend much time in Canada.

How much does a Quebec stadium cost to build these days anway by the way? Hmmmmmm....

What Kind of Shell Game is Stephen Harper Playing?

What kind of shell game is Stephen Harper playing and why are the political elite in Newfoundland and Labrador willingly stepping up to be conned once again?

During the 2006 federal election Stephen Harper promised – in writing – that if elected his party would exclude revenues from non-renewable resources when calculating equalization payments to the Provinces of Canada. The logic being that since those revenues are finite they should be used to allow Provinces to diversify, pay down debt and grow their economies in preparation for the day when the resources run out. They should not be considered on the same footing as other types of revenue.

It was that commitment which paved the way for several Conservative MPs to be elected in Newfoundland and Labrador in 2006, including the now locally infamous Fabian Manning, who would later stand next to Stephen Harper in the House of Commons and laugh, clap and cheer (literally) as Mr. Harper ridiculed Newfoundland and Labrador over the issue claiming the Province wanted to “Have its cake and eat it to…”.

Even after signing a letter to the Provincial government of Newfoundland and Labrador to the effect, once elected, Mr. Harper walked away from his commitment.

So much for election promises, even ones in writing with a clear and distinct signature (sure looks like Stephen Harper’s to me).

Fast forward to the 2008 election and, thanks to the broken promise, the Province rallied behind Premier Danny Williams, leaving nothing but scorched earth at the feet of every Conservative MP who dared to stand with Stephen Harper. Not a single Conservative was sent to Ottawa, except that is for Fabian Manning who, after losing his election bid, was rewarded with a Senate Appointment (another broken promise by Harper who said he would not appoint senators). One can only surmise Mr. Manning’s appointment was Harper’s way of thanking Manning for his very public betrayal of constituents and his Province.

During that 2008 campaign every elected member of the Newfoundland and Labrador Legislature participated in the ABC (Anyone But Conservative) campaign that drove the Tories out, including all members of the local PC party. Some even campaigned along side Federal Liberal hopefuls, not the least of which was Newfoundland and Labrador’s new Premier, Kathy Dunderdale.

After the broken promises and public ridiculing that flowed directly from Mr. Harper’s commitment on non-renewable resource revenues, the 2010 election campaign has led to a resurgence in Newfoundland and Labrador, not of local politicians willing to stand up and fight, as was seen in 2008, but of the sort of pre-Danny Williams politicians the Province has been accustomed to for generations. The self serving spineless kind.

No worries about broken promises this time around, no siree. Now they all say "...this time is different".

This time Mr. Harper has said he’ll back a loan guarantee for the Lower Churchill hydro project. We don't have a signed agreement and never mind that a few hours before the big announcement on Thursday Mr. Harper told a crowd in Halifax that there was still a lot of details to be worked out and nothing was final, "...this time will be different".

Never the less, Danny Williams is barely out the door and suddenly we find Premier Dunderdale (remember her, she’s the one who walked the campaign trail at the side of a Liberal MP in 2008) is crowing about how great this deal will be for Newfoundland and Labrador.

Fabian Manning (yes, he’s back) has left the senate and is running in his old riding again. In fact former provincial politicians, former Williams' cabinet members no less, are tripping over each other in a scramble to get to the Harper trough in time for feeding.

They’re coming out of the woodwork, but for what?

Do they really believe that Stephen Harper will keep his promise, even after Quebec has publicly said, time and time again, that they do not want Ottawa to help with the development of the Lower Churchill Project?

Just this week Gilles Duceppe called it a slap in the face to Quebec.

I can picture what the next few months will bring, it won’t be only Fabian Manning standing in the House to cheer on Mr. Harper as he belittles NL over this latest commitment, it’ll be all the Conservative MPs the people of Newfoundland and Labrador might be foolish enough to send to Ottawa.

Here we are, barely a week into the 2010 election and, with Williams now out of the picture, the political hacks from Newfoundland and Labrador are once again showing their true colors, looking out for number one.

It’s too bad they can’t show a little intelligence and moral fibre. It might not serve their greed and avarice but it's something that might serve the Province far better.

At this point one can only hope the voters of Newfoundland and Labrador, if not the politicians, are willing to stand by their principles.

A Christmas Miracle Comes Early

It may not be Christmas quite yet but it seems a seasonal miracle has happened none the less thanks to a recent article in the National Post.

Who would have thought a national paper would actually side with Newfoundland and Labrador on any issue, let alone in its struggles with Quebec.

Enjoy the Post article, but don't expect to read too many like this one in the national papers. Remember, as far as most Canadians are concerned the Country's border ends at Halifax.

John Ivison: Quebec should be embarrassed by powerline protectionism

My office phone rang the other day and the conversation went something like this: “Hello, it’s Danny Williams here,” said a familiar voice.

“Er…hello, Premier.”

“I’m not very happy about today’s column, where you compared me to Robert Mugabe….”

“Er…no, Premier.”

I’d written about allegations of intimidation during the last election in the Newfoundland riding of Avalon, where it was suggested Mr. Williams’ Anyone But Conservative campaign had led to tactics more familiar to political campaigns in Zimbabwe than Canada .

According to Mr. Williams, the allegations are untrue “on my father’s grave”. I tried to substantiate the rumours during the campaign, with no success. So until someone comes forward with some proof, we must take the Premier at his word.

In any event, it proved an interesting, if tangential, aside to the real issue I’d been writing about – namely, Newfoundland and Labrador’s attempted purchase of the federal government’s stake in the Hibernia oil field and Ottawa’s potential investment in a sub-sea electricity transmission line from a putative Lower Churchill hydro-electric project to markets in the south and west.

The province’s electricity corporation, Nalcor, has applied for $375-million in federal funding to help pay for the multi-billion underwater transmission line.

The main lesson that readers should take away from this story is what a sorry admission of failure in Canadian federalism it represents. The obvious route to markets in Ontario and the U.S. for Lower Churchill’s power is overland through Quebec .

Hydro-Québec claims that upgrades of up to $3-billion would be required to transport power through the province. Quebec’s energy board, the Régie de l’énergie, has sided with its own power corporation against Nalcor, even though it was prepared to pay for “reasonable upgrades” and up to $200-million in annual tariffs. Needless to say, Mr. Williams unleashed a broadside when the decision was announced in May, protesting Quebec ’s “arrogance and discriminatory business practises”.

You won’t read this in this column very often, but Danny Williams has a point. The Régie decision is an insult to add to the considerable injury of the existing, long-term Churchill Falls contract, under which Newfoundland and Labrador is forced to sell power for a quarter of a cent per kilowatt hour and then watch Hydro-Québec resell it for up to 36 times that price.

Both situations are a disgrace but only one is within the federal government’s purview to change.

The National Energy Board, an independent regulatory body created by Ottawa , has jurisdiction over designated inter-provincial power lines by determination of the federal cabinet. No such lines have been designated, leaving the field to provincial regulators. But a government that genuinely believed in making the federation work more effectively, not to mention saving Canadian taxpayers billions of dollars, would demand that Quebec open up its transmission lines.

Contrast this mess to the situation in Europe where the much-maligned European Union has stepped in to remove barriers to cross-border exchanges in electricity. New regulations mean transmission system operators are obliged to take new generation and compensation is paid by the operators of the national transmission systems from which cross-border flows originate.

If 27 sovereign states can reach agreement on a system that forgoes protectionism and monopolistic market dominance, in exchange for more competition and lower consumer prices, why can’t Canada ? Quebecers should be embarrassed.

John Ivason - National Post

National Post: Williams slams Quebec hydro 'robbery'

Once again it's time to revisit the robbery Newfoundland and Labrador continues to suffer from at the hands of the Quebec government, Hydro-Quebec and, yes even the federal government (which played no small part in allowing the upper churchill fiasco to happen and continue to stand in the way of power export development in Labrador.)

The following appeared in the latest edition of the National Post and should be of interest to Web Talk readers:

Hypocritical, a bad neighbour, and guilty of "highway robbery": Newfoundland and Labrador Premier Danny Williams called Jean Charest's Quebec government a few names in a St. John's speech, escalating a feud over hydroelectric power rights that has simmered between the two provinces for decades.

In a luncheon address to the St. John's Board of Trade on Wednesday, Mr. Williams denounced Quebec's opposition to Newfoundland's bid for federal funding to build a power transmission line from Labrador to Nova Scotia to potentially sell Labrador-generated power in the Maritimes and New England.

Calling Quebec's opposition to funding the project "shameful" and "abhorrent," Mr. Williams said Quebec "shafted us once" on the existing, 1960s-built hydro plant on the Churchill River and suggested it was trying to do so again with the proposed Lower Churchill project.

"[Quebec] wants it all, and that just doesn't go down well with me ... It needs to get out of the way of the progress of its neighbours," he said.

"The rest of the country and even Quebec itself is finally admitting that it has been getting away with highway robbery in Canada for decades."

The Quebec government has avoided the same kind of tough language so far. In a statement issued yesterday, Quebec Deputy Premier Nathalie Normandeau said the province does not oppose the construction of any undersea power transmission lines. What it opposes are federal subsidies for these on the grounds that they could distort the price and market for electricity. In a letter last month, Quebec asked Ottawa not to fund a joint Newfoundland-Nova Scotia hydro project on those grounds.

Mr. Williams characterized that move as "disgusting." His elaboration on that position on Wednesday was in keeping with his tendency to take aggresive stances against other Canadian politicians.

"Newfoundland and Quebec have been at loggerheads for a few decades now. The difference is, Danny Williams brings a very strong personal component to it. He has demonstrated
in relations with Ottawa and with other premiers that he [isn't] hesitant to butt in," said Nelson Wiseman, a University of Toronto political science professor, who noted public disagreements between premiers is rare.

That combative style plays well in Mr. Williams's home province, where his popularity ratings tend to stay above 80%.

"I guess his feeling is playing nice hasn't gotten them anywhere," said James Feehan, a professor of economics at Memorial University Newfoundland and the co-author, with Melvin Baker, of an article in the September issue of Policy Options magazine titled "The Churchill Falls contract and why Newfoundlanders can't get over it."

Driving Mr. Williams's anger is a desire to capitalize on Labrador's hydroelectric potential for the first time by piping power to the Maritimes, perhaps even finding a market for Labradorian electricty in New England.

The proposed Lower Churchill project could accomplish what the existing Churchill Falls project has failed to do for residents of Newfoundland and Labrador: namely, get hydro royalties flowing in the direction of St. John's.

For Newfoundlanders, Quebec's apparent blocking of attempts to develop the Lower Churchill project smacks of the Churchill Falls hydro deal signed in 1969, which has obliged their provincial power utility to sell electricity to Quebec for absurdly low prices. The deal angers Newfoundlanders still.

"There were events that took place that I think do not look all that clean in terms of business ethics. There were issues of conflict of interest, where Hydro-Quebec had an interest in [the Churchill Falls Labrador Corporation] at the same time," Mr. Feehan said.

Nalcor Energy, parent company of the Churchill Falls Labrador Corporation, launched a lawsuit against Hydro-Quebec in January. Several past attempts by St. John's to have the Churchill Falls deal changed or renegotiated have failed.

In the meantime, Mr. Williams reckons Newfoundland is selling Quebec more than $2-billion worth of electricity each year for around $50-million. The contract expires in 2041.

Williams to Charest: Butt out (again)!

UPDATE:

New numbers today. It appears that the "ask" by NL and NS for a federal contribution to the cost of the undersea cable between the two provinces is $375 million (the entire effort is expected to cost between $800 million and $1.2 billion). Both provinces have requested the funding from Canada's green innovation fund through the public/private partnership program.

This is not a lot when you consider taht the cable would rest in federal jurisdiction (under the ocean), would supply clean power to Atlantic Canada and beyond and the amount is only, as one individual noted today, about 1 third of the cost of security at the G8/G20 conference held in T.O. recently.

Continuing with the topic of Quebec Premier Jean Charest's latest attempt to gain a stranglehold on all electricity generated, transmitted and sold in Eastern Canada here is an opinion piece from the Times and Transcript out of New Brunswick. It speaks volumes about the predatory tactics that are the norm with our neighbour to the west.

Quebec's meddling in the affairs of its neighbours may profoundly annoy Atlantic Canadians, but it's hardly surprising. La belle province sports a long history of promoting its interests, at others' expense, through back channels.

The latest example is a letter Premier Jean Charest recently sent to the Prime Minister's Office objecting to Newfoundland and Labrador's and Nova Scotia's joint application for federal funding to construct an undersea power cable between their two provinces. Apparently, granting such a request would constitute an unfair subsidy to the two Atlantic provinces.

If that's a joke, it's a good one.

Over the years, successive federal governments have poured countless billions of dollars into Quebec's aerospace and defence industries. They have propped up its dairy and pork producers, and extended preferential treatment (read: extra-equalization formula) to many of its state-supported social programs.

Less amusing, perhaps, is Quebec's peculiar definition of equity in the delicate balance of provincial interests that proscribe Confederation. It has built its energy behemoth - arguably, the most successful in the nation - on the bones of a patently unfair, 65-year-old deal that permits it to resell power from Labrador's Upper Churchill facility and reap the profits with no consideration for Newfoundland. And, despite repeated injunctions, it refuses to renegotiate the arrangement.

It also refuses to entertain the Government of Newfoundland and Labrador's recent request to wheel hydro-electric power from the Lower Churchill River through its transmission lines, a move, it surmises correctly, that would introduce competition to its currently hegemonic lock on U.S. and Ontario energy markets.

No province is ever expected to act against its own interests. But Quebec's heavy-handed approach to inter-provincial relations leaves a bad taste in the mouths of even its most ardent admirers, one of whom, it's entirely correct to say, is not Newfoundland and Labrador's easily angered, eminently quotable premier.

After learning about Charest's attempted fiat, Williams was practically beside himself last week, spouting a string of trade mark "Dannyisms."

What gives Quebec the right, he thundered, to interfere? Specifically: "What gives Quebec, or the Government of Quebec, or the premier of Quebec, the right under any circumstances to object to an application for funding by other provinces that have nothing to do with Quebec?

They don't want us to go through Quebec, and now they don't want us to go anywhere. I think these are really very predatory practices and I don't like it, and I'm not going to put up with it."

Nova Scotia Energy Minister Bill Estabrooks echoed these sentiments in a CBC interview: "In my opinion, the premier of Quebec should mind his own business. He's dismissing a very valid idea which comes from two provinces that have worked very carefully in terms of giving a reliable energy service to our provinces."

And not just "their" provinces. An undersea power cable would be the first step towards a true Atlantic energy grid - supplied with clean, renewable hydro-electricity - that could reduce costs for all classes of consumers in all parts of the region. It would also vastly improve the East Coast's position as an international energy exporter, stimulating robust economic development in all partner provinces.

Quebec's purpose, of course, is to savagely curtail these opportunities any way it can. Its aborted bid last year to buy the major assets of NB Power has left it in a bitter, petulant mood. If Charest can't secure access to the U.S. northeast through New Brunswick, then nobody can - certainly not dear, old King Danny for whom he holds no special regard.

In all of this, the federal government appears to be playing its cards exactly as it should.

Prime Minister Stephen Harper reportedly told Nova Scotia Premier Darrell Dexter that Quebec has no "veto" on matters that quite properly fall within the framework of national decision-making. Which may be another way of saying the feds will consider the joint funding application on its own merits.

If so, then Charest's meddling is moot, if no less annoying for the squalling, squawking selfishness it represents.

By: Alec Bruce, a Moncton-based journalist. He can be reached via www.thebrucereport.com

One American Appears to Understand NL better than Most Canadians

I came across an interesting blurb today in the Rutland Herald - out of Vermont. It seems that Vermont is the next state on Hydro-Quebec's radar for negotiating a long term power sales contract. It's interesting to see that some individual south of the border is aware of the situation existing between Quebec and NL, even it most Canadians, including those living in Quebec, are not.

Here's the piece, it can be found online at:
http://www.rutlandherald.com/article/20100810/OPINION02/708109991/1037/OPINION02

While negotiating hydropower contracts, New Englanders and New Yorkers should understand Hydro-Québec’s power from the north.

Québec is slightly larger than Alaska, adjoining Newfoundland and Labrador are slightly smaller than California. Precipitation is plentiful, and so is hydropower, much of it still undeveloped.

Americans are accustomed to electricity freely generated and sold via shared power grids. Government-owned Hydro-Québec does not share its grid, requiring ownership of electricity that it transmits. Buying the output of Newfoundland and Labrador’s huge Churchill Falls hydropower plant at a declining rate of about 0.2 of a cent per kilowatt-hour, then reselling it at market rates, Hydro-Québec’s gross profit, at Newfoundland and Labrador citizens’ expense, is approximately $1.7 billion annually on electricity for which it paid about $63 million.

In 2009, Hydro-Québec electricity exports were 10 percent of net sales and 22 percent of net income at an average cost of 2 cents and price of 6.8 cents per kilowatt-hour. Hydro-Québec compels Newfoundland and Labrador to subsidize electricity sales to us at lucratively competitive rates. Unsold hydropower is worthless. Buying it from Hydro-Québec, New Englanders and New Yorkers should ensure that Newfoundlanders and Labradorians are repaid fairly for their power.

Working together, we can drive a hard bargain with a hard bargainer that is fair to all.

Now isn't that something. Cheers to the writer from Web Talk.

UPDATED: Williams accuses Quebec of trying to scuttle power cable from Labrador

From VOCM News:

N.L. premier accuses Quebec of trying to scuttle power cable from Labrador
August 12, 2010

ST. JOHN'S, N.L. - Premier Danny Williams of Newfoundland and Labrador is accusing Quebec of trying to scuttle a plan to get surplus power from the province to Nova Scotia.

His government and Nova Scotia are trying to get funding for a subsea cable from Labrador across the Gulf of St. Lawrence to Cape Breton.

He says both provinces have applied to the federal infrastructure program for help as a public-private partnership project.

Williams says he's been told that Quebec has sent a letter to Ottawa objecting to the application.
He says Quebec has no place sticking its nose in the affairs of Atlantic Canada.

UPDATE:

The Globe and Mail is reporting today that:

Nova Scotia Energy Minister Bill Estabrooks said he learned of the objection from his staff.

“It disappoints me that Premier Charest would stoop to this level. He's out of line,” Mr. Estabrooks said.

“Mr. Charest, stick to your own business. Advocate positively on behalf of your province or region and don't put down another province or region for a purely political reason.”

Neither Mr. Charest or Natural Resources Minister Nathalie Normandeau were available to comment on Thursday.

But Quebec Justice Minister Jean-Marc Fournier, speaking on behalf of the government, said sending the letter to Ottawa is simply a matter of Quebec sticking up for itself.

“It's not putting our nose in any other province's matters,” Mr. Fournier said in a telephone interview.

“The fact that when a province asks the federal government to pay for transmission lines when Quebec or others paid by themselves, it's an unequal treatment of one province over the other.”

Mr. Fournier said sending the letter to Ottawa was necessary and his province's position is reasonable.

Web Talk has a question for Mr. Fournier: Why would Quebec consider transmission lines within a province to be the same as an undersea cable between provinces? Clearly they are not.

Since Ottawa controls the oceans inside the 200 mile limit (note how they control the fish stocks, oil, etc.) then it is natural that the provinces would expect any development outside provincial jursidiction (in other words under the ocean) to involve Ottawa. Perhaps when Quebec decides to run an undersea cable someplace (if they ever do) they should also contact Ottawa about having them pay a portion of the cost, until then perhaps he would be better advised to stick to his own business and butt out of the business of others.

Speaking of "subsidies" for power, hell Quebec residents have had their power subsidised by Ottawa and the Canadian taxpayers for decades.

They have the lowest power rates in Canada, why? Well, partly because of the cheap power they suck out of the Upper Churchill but also because they don't want to raise them and don't have to.

Hydro-Quebec is a Crown corporation owned by the government of Quebec. If they raised power rates to what most of us would consider to be "normal" levels it would increase the profits of Hydro-Quebec and in turn show up on the balance sheet of the Quebec provincial government. Those additional revenues would be deducted from Quebec's federal equalization payments. So they keep the rates low and still provide top notch government services by using equalization.

How's that for a power subsidy?

Clearly Mr. Fournier and his cabal of idiots are doing what everyone in Newfoundland and Labrador has come to expect from the Quebec government - Meddling for their own benefit at the expense of other provinces in Canada. Certainly nothing new in that.

The Israel and Palestine of the North

An opinion piece by L. Ian Macdonald in the June 13th edtion of the Montreal Gazette caught my eye today, as I'm sure it did every other Newfoundlander or Labradorian who read the headline, "Let it go Newfoundland".

The article, at least for me, was quite perplexing and, if it weren’t so clearly oxymoronic, might even have spurred some anger on my part.

In his column Macdonald offered up some less than sage advice to Newfoundland and Labrador about moving forward, not looking back, when it comes to dealing with Hydro Quebec and the Quebec government on the Lower Churchill development.

Apparently Mr. Macdonald has taken offense with Premier Williams’ latest words of war against, what Williams referred to as Quebec’s “…sense of greed, arrogance and entitlement…” and decided to use the pages of the Montreal Gazette to air his feelings.

After reading (and re-reading) the article I decided to remain calm, I mean how can anyone be angry with a writer who somehow managed, in a mere 800 words, to prove Newfoundland and Labrador’s case while supposedly claiming that the province (and its leader Danny Williams) are wrong?

In the article Macdonald essentially told Newfoundland to forget the past and move on with a deal on the Lower Churchill project. He claimed that the anger surrounding past transgressions by Quebec is what’s standing in the way of a deal.

Let’s look at his arguments then shall we.

Macdonald began by noting that the Upper Churchill contract, which sees Quebec reap outrageous profits from Newfoundland and Labrador’s resources, happened in the 1960’s and that the lopsided contract was really Joey Smallwood’s fault, not Quebec’s, because as Ian put it, “…the deal on the Upper Churchill was approved by Joey Smallwood, the first premier of Newfoundland” and “Newfoundland did get screwed on the Upper Churchill -screwed by its own premier.”

Well at least he admitted that Newfoundland and Labrador got screwed, that’s something.

Indeed a contract was signed and I agree that Joey Smallwood signed it, but when you put it into context, something Macdonald seems determined not to do, a far different story appears.

In reality Hydro Quebec and the Quebec government refused to allow Newfoundland and Labrador the ability to wheel power across their province to markets elsewhere, leaving Newfoundland and Labrador no option but to negotiate a contract with Quebec on their terms. As anyone knows, when you have nowhere else to turn, it’s usually a pretty one sided negotiation.

As for Joey signing the contract, indeed he did, and many Newfoundlanders and Labradorians still despise him for doing it. In reality however it was Hydro Quebec that stretched out the negotiations for years, nearly forcing the project’s development company into bankruptcy, before using inside information on the company’s impending insolvency as the catalyst to present a final “take it or leave it” contract.

The options at that point were limited. Sign the contract and live with the consequences for the next 60 years, period.

There are still decades left on that contract so as much as Mr. Macdonald may see it as a thing of the past to be put aside, in Newfoundland and Labrador it is not. It isn’t a thing of the past in Quebec either where billions in revenue continue to roll in as a result of it.

In his next attempt to convince Newfoundland and Labrador to “move on” Macdonald noted that Premier Williams even mentioned the border between Labrador and Quebec in a recent speech, saying, “…he is so bitter and twisted about the past that he can't get on with the future. Not content to rant about the injustice of the Upper Churchill, he even thought to mention the British Privy Council decision of 1927, awarding Labrador to Newfoundland, and ripping Quebec for still including Labrador on its map on the government web-site. Get over it.”

Once again the point was missed completely.

Get over it, really?

Yes, the border between the two provinces was decided in 1927 but the act of trying to encroach on that border is continuing to happen every day in Quebec.

Maps are drawn up all the time by Quebec government agencies, including Hydro Quebec, the Tourism Departments, even by Quebec agencies that regulate mineral and oil exploration, depicting portions of Labrador as being inside Quebec or noting that the 1927 border is not officially accepted by Quebec.

How is the ongoing act of border modification a thing of the past to “get over” when that border is directly tied to the head waters and rivers from which Upper Churchill power is, and hopefully Lower Churchill power will, flow?

In his efforts to put Premier Williams (and the province of Newfoundland and Labrador) in its place, Macdonald claims Newfoundlanders are like “Palestinians” because we will never reach a deal due to past grievances. Premier Williams he claimed is over the top in referring to Quebec’s “greed, arrogance and sense of entitlement.

In the next breath, and throughout the article he then goes on to say that Williams is right when he says that Newfoundland and Labrador is getting screwed on the Upper Churchill, that Quebec uses revenues from the Upper Churchill and from buying cheap off peak power from Ontario, then selling it back to them during peak periods, to fund better day care than anyone else in Canada, to offer the lowest university tuitions in the Country and to artificially freeze Quebec power rates, instead of capturing those revenues and lowering the level of equalization payments Quebec receives (more than any other province in the Country).

Call me crazy but whose point is Macdonald actually proving here? The examples presented sound about as close to a strong sense of “greed, arrogance and entitlement” as you can get.

For some reason Ian Macdonald seems to feel that Premier Williams was out of line when, he denounced, “Quebec's "agenda to deny competitive power to the rest of North America," and when he called the decision of the Quebec energy regulator "the most biased decision that I have ever seen in 40 years as a lawyer ...”. Saying “The decision was so absurd and wrong as to be embarrassing to Quebec."

Clearly Mr. Macdonald has been spending far too much time listening to his inner voices rather than doing some valuable research.

It’s clear from examining the Regie (Quebec regulator) decision on transmitting power from the Lower Churchill through Quebec, and on the appeal documents now filed by Newfoundland and Labrador, that the board and its findings are, or should be, a complete and utter embarrassment to Quebec, ripe with incorrect assertions and outright falsehoods.

Among many, many other “mistakes”, the Regie somehow came to the conclusion that the existing Upper Churchill power plant, built in Labrador and run by a division of Newfoundland Hydro, falls under the jurisdiction and control of Quebec, also claiming that the power lines on the Labrador side of the border (remember the border) are regulated and controlled by Quebec.

In the most insulting and idiotic statement of all the Regie noted that the Quebec transmission wing of Hydro Quebec was not aware of the 1969 Churchill Falls agreement. I ask you, if that ludicrous assertion isn’t an embarrassment to the Quebec regulator what in heaven’s name would be?

So, it seems that Danny Williams is no longer Canada’s Hugo Chavez, a name that was born and quickly died out after his dispute with the oil elite finally garnered the province a respectable energy agreement and proved that his tactics wouldn’t drive companies away from the region.

Williams is now, according to Macdonald at least, Canada’s answer to the leader of the PLO with Newfoundlanders the Palestinians. I guess that makes Quebec the much maligned and altruistic Israel of Canada, at least in Macdonald’s twisted and oxymoronic mind.

Quebec, a place where everyone simply wants to live in peace and harmony but where they must forever be vigilant to defend themselves against their neighbors in foreign lands like Ontario and the Canadian Palestine of Newfoundland and Labrador.

Ian must feel so bad for Quebec. If only Newfoundland and Labrador would stop picking on God’s chosen people.

NL Appeals Lower Churchill Transmission Ruling

This week NALCOR, Newfoundland and Labrador's energy corporation, on behalf of the Province, filed an appeal with the Regie in Quebec. Earlier this year the Regie, which regulates the power industry in Quebec, ruled that Quebec did not have to permit Newfoundland and Labrador to wheel Lower Churchill power across its grid to markets in Canada and the U.S.

The filing, which can be viewed here (or in our Links section under NL Development Links)clearly outlines the Province's position and details a number of factual problems with the earlier ruling. Everything from the board's conclusion that the Churchill Falls generating plant in Labrador is a fully controlled part of the Quebec authority and going so far as to boldly claim that Quebec Hydro's Transmission company was not aware of the 1969 existance of Churchill Falls power contract.

Reading the detailed issues and misrepresentations found in the original ruling, which are identified by NALCOR in its appeal document, it should be bewildering to anyone with even half a brain how the Quebec regulatators can function, let alone make sound decisions.

In this writer's opinion, and based on the content of the appeal document, either the decision making body of the Quebec Regie is totally ignorant of reality or they are even more blatently corrupt than anyone could possibly be without self destructing as a result of wallowing in their own crapulance.

Celebrating New Brunswick's Place in History

On behalf of Web Talk - Newfoundland and Labrador I would like to take a moment to congratulate the people of New Brunswick on the successful struggle they have just waged, and won, to protect their future and their right to a democratic voice.

It isn’t often in Canada that such a monumental battle is waged over such an extended period of time. It is even less often that a people are willing to put aside their differences, be they religious, political, ethnic or social, in order to band together, as one, for the common good.

As is often the case in situations such as this, it will likely be years, perhaps even generations, before anyone can fully comprehend what this day means, not only for the people of New Brunswick, but for all Atlantic Canadians and perhaps for all of Canada.

The economic and political implications of Quebec dominance over the power markets of Atlantic Canada and the Eastern U.S. may well have been a tipping point, had it come to pass, in the very future of the entire Nation.

Those implications aside, on the New Brunswick home front, the political shock waves this struggle has sent through the provincial government will surely be felt by every future leader in that province.

From this day forward, whenever a government decides to force its will on the people of New Brunswick they cannot help but have at the back of their minds the political implications of such a massive, sustained, dedicated, focused, well organized and surperbly executed public opposition.

Here in Newfoundland and Labrador our people know all too well the implications of rushing into any sort of agreement with Hydro-Quebec. Thankfully the citizens of New Brunswick have learned from our history and the milstone we must carry.

They have overcome, as we hope we shall also overcome one day.

The first page of text from the story of Brinco and Churchill Falls contains a quote which reads:

“All those who have studied the past from the standpoint of economics, and especially those who have studied economic geography, are aware that, from the material point of view, history is primarily the story of the increasing ability of man to reach and control energy.”

Those words were written by the American historian and author, Allan Nivens, and how true they are.

Energy is the backbone and lifeblood of all civilizations and, as the old adage goes, history is written by the victors.

Today, in New Brunswick, it is the people, every man, woman and child who are the victors and it is they who have written a new future for themselves. They have also, in time, written a great historical legacy, not only for themselves, but for all of Atlantic Canada and the entire Nation of Canada.

I am a Witness

The following video link speaks to the undemocratic actions currently being taken by the Graham government in New Brunswick but with a Newfoundland and Labrador angle.

If the Graham government has its way, in selling most of its power assets to Hydro Quebec, Newfoundland and Labrador won't be the only province getting royally Scr#%ed by the Quebec government. The difference being that while our contract with Hydro Quebec ends in 2041, New Brunswick's will last forever.

Have a look: I am a witness

***Shady Shawn's Discount Emporium***

Nalcor battle Underway Over Transmission Access in Quebec

Excerpts from the Montreal Gazette.

Régie studies spat between Quebec, N.L.: Question is whether Nalcor is getting fair access to transmission lines operated by Hydro-Québec

By LYNN MOORE, The GazetteFebruary 10, 2010

The countdown has begun for the province's energy board, which yesterday began hearing final arguments in a high-stakes energy dispute between Quebec and the province of Newfoundland and Labrador.

By Friday, it will be left to three Régie de l'énergie commissioners to decide a landmark case that pits Hydro-Québec against Nalcor Energy Corp., Newfoundland's public energy company, in a dispute that has multibillion-dollar consequences for both provinces and could affect their ability to access export markets.

Theirs will be a closely read ruling in the U.S. as well as Canada, energy industry experts said yesterday.

"We are talking about an area of business and enterprise (that) is highly political everywhere, in Newfoundland, in Quebec and in the U.S. and is also high-stakes in terms of economic issues, whether they be investment dollars or the price of electricity or development and jobs," said University of Alberta professor Joseph Doucet, an energy policy expert who has testified before the Régie in other cases.

Stripped of its many technical complications, the current case revolves around whether Hydro-Québec is providing - as required - fair and open access to available space on its transmission lines so Nalcor can transport power from its $6.5-million Lower Churchill project through Quebec to markets in Ontario, the U.S. and elsewhere.

Quebec's public utility - which incidentally has its own mega hydroelectric projects lined up - claims it has no available capacity. A system upgrade of about $3 billion would be required to handle Lower Churchill's 2,800 megawatts, it says.

Most chillingly, Nalcor alleges that Hydro-Québec is defying the concept of open access to transmission lines required by the Régie and by the U.S. Federal Energy Regulatory Commission (FERC).

During three weeks of hearings, a U.S.-based energy expert testifying on behalf of Nalcor, told the Régie that Hydro-Québec's "actions go beyond the natural inertia of a monopolist and instead reflect a pro-active effort to inhibit (Nalcor's) access to the grid."

Another U.S.-based energy expert, called by Hydro-Québec, disputed the findings of Nalcor's expert and insisted that Quebec's utility had correctly portrayed its network capacity to Nalcor.

Hydro-Québec has a lot riding on its position and it is playing by the book, Université Laval economist Jean-Thomas Bernard said.

"Hydro-Québec does not want to get into trouble with FERC because they don't want to have their licence to operate in the U.S. market revoked. That would be a tremendous blow," Bernard said.

Although the ruling of the board will not be binding in other jurisdictions, it will be closely followed, especially by those who may already believe that Quebec is trying go get a stranglehold on transmission capacity in eastern Canada, said John Todd, president of Elenchus Research Associates, a Toronto-based company that provides strategic advice and technical support to the energy industry.

"As we evolve a more competitive energy system (in North America), you can not produce and sell power without transmission (capacity) to get from where you are producing it to market, so anything that affects the true degree of openness ... of transmission tariffs is going to be of interest," Todd said.

In an interview yesterday, Nalcor president Ed Martin again pointed to the economic benefits of the deal Nalcor desires with Quebec. Annual tariffs to Hydro-Québec could range between $75 million and $200 million, depending on how much power Newfoundland decided it will ship through Quebec and Nalcor is willing to pay for "reasonable upgrades" to the province's existing grid.

Final arguments before the Régie panel, presided over by Jean-Paul Théorêt, continue today and are expected to conclude tomorrow.


Read more: http://www.montrealgazette.com/technology/Hearings+open+into+power+dispute/2543191/story.html#ixzz0f8d2DMKy

Hydro Quebec / NB Power Sale – Debunking the Myths

Shades of Churchill Falls

Much like the Upper Churchill Contract, it appears New Brunswick is about to enter into a one sided deal with the devil, Hydro-Quebec. Unlike the Churchill this deal is forever and again unlike the Churchill, this one is being signed in spite of mass protests and opposition.

In October New Brunswick Premier, Shawn Graham, announced his intention to sell NB Power to Hydro Quebec after being elected on a platform that promised the corporation would not be sold. Opposition to this unexpected move was swift and has grown with each passing day. Currently 10’s of thousands of people have joined a group opposing the deal and, according to NB Power sources, even the CEO of utility has encouraged employees to write their MLA demanding the sale be stopped.

Since the surprise announcement much has been said on both sides of the debate, often making it difficult for the average person to know what the truth really is. This problem was only exacerbated when the Graham government hired an international Public Relations firm, at taxpayer expense, to “sell” the deal to voters.

Coincidentally, this is the same firm the former Bush administration hired to sell the Iraq war to the people there. Enough said.

It isn't just the people of New Brunswick who stand to suffer from their government's short sighted actions. Newfoundland and Labrador will also come out on the losing end of yet another Hydro-Quebec contract by losing any hope of accessing markets for Lower Churchill power through New Brunswick. The deal may also kill any chance Newfoundland and labrador has of dealing with anyone but Quebec when the Upper Churchill contract finally expires in 2041.

The problems this agreement bring with it are far too many in number to present in a single commentary but to uncover the truth about the "deal", at least from the perspective of New Brunswickers, all one really has to do is look to that provincial government’s literature on the subject. No, not to find the answers but to understand some of the Myths and spin the government is attempting to “sell” to the New Brunswick public.

With that approach in mind, I’d like to offer up the same 10 key points the Graham government recently sent out in brochures to the voters of New Brunswick as well as an analysis of those points, without the political spin.

Point 1: The $4.75 billion dollars received from HQ (for the purchase) would reduce the provincial debt by 40%!

Not true.

New Brunswick’s Auditor General, Mike Ferguson, clearly stated “…there will be no impact on the provinces net debt…”

In fact NB Power’s debt is held, maintained and paid separately from the provincial debt. NB Power has a debt to assets ratio similar to other utilities in Canada, including Hydro Quebec, and is quite capable of paying down those debts through customer revenues.

Not only would removal of that debt not impact the province’s overall exposure it has been clearly stated that the payment it (or not) has no impact on the province’s credit rating and in fact selling the corporation would decrease government revenues (from the utility’s profits, taxes and fees) by hundreds of millions of dollars that could be used to pay down the province’s actual debt.Instead those profits will accrue to the government of Quebec.

As an aside, Hydro Quebec plans to borrow the 4.75 billion dollar purchase price, in effect simply transferring NB Power’s dept to Hydro Quebec. Either way the rate payers of New Brunswick will end up paying those costs off through their power bills. It’s like buying a house vs. renting. It’s just a matter of whether you prefer to pay off your own home or someone else’s.

Point 2: The average household heating with electricity would save nearly $1,400 over the next five years.

Not True.

Government’s numbers are based on households using far more power than the average homeowner might expect to use. While a 5 year rate freeze may seem attractive the real savings, even accepting government’s highly inflated numbers, are close to .35 cents per day during the 5 year period, but that’s not the end of the story.

After the 5 year “grace” period rates will begin to rise with the rate of inflation and any power used beyond the so called “heritage pool” during the 5 year holiday (barely enough power to meet provincial needs today) will be calculated and those overruns plus all interest charges will be tacked onto the bills of every rate payer going forward. In addition, those increases don’t take into account additional charges for such things as system upgrades, new power sources, new transmission costs and the like which will also be added to bills.

The Auditor General noted “ordinary rate payers have been told that their rates will be frozen for five years and will only increase by the Consumer Price Index after that.” He continued to say, “The province needs to be clear about whether NB Power customers might face higher bills through other charges.”

As one individual recently put it, are a few pennies a day worth our future and the future of untold generations to come? This deal is forever.

Point 3: Don’t worry, after five years your rate increases are tied to inflation. Independent expert forecasts inflation should remain under two percent over the next 20 years.

The question here is just how accurate those forecasts really are. Most economists can’t predict when we’ll come out of the current recession let alone what the CPI will be in 20 years! Looking back through history is of little help (though it shows that using strictly CPI as a guideline rates would now be far higher they currently are) and no educated guess on the rate of inflation will be of any help going forward if oil reaches $140.00 a barrel driving up the cost of all the goods and services and taking inflation to entirely new levels.

Point 4: Hydro Quebec will not have control over our future rates. These will be controlled by the New Brunswick Energy and Utilities Board.

This appears to say that selling NB Power will not mean relinquishing regulatory control. Under normal circumstances one might expect this to be true, however in this case it may not be.

The MOU clearly states (section 3.1) that “the Government of New Brunswick will change the regulatory framework governing the generation, transmission and distribution in New Brunswick to conform to the framework currently in effect in Quebec.

In other words New Brunswick’s regulator must conform to Quebec’s regulations regardless of what those might be, in effect putting Quebec in control of regulations in New Brunswick, not the local regulators who will serve as little more than a rubber stamp.

Point 5: New generation needs won’t mean larger rate increases because these will be controlled by the EUB.

The MOU limits the amount of power available in the so called heritage pool to 14 TWh for both residential and industrial customers. According to NB Power’s 2007-2008 financial report the province used 14.25 TWh during that period, exceeding the heritage pool allowance being put in place for the next 5 years and almost guaranteeing that the pool is too small to meet existing needs, let alone any future growth. This will mean any new industries hoping to move into the province will not be able to compete on an even playing field with existing industry, impeding all future growth.

As for the pool being too small to start with, according to the MOU section 2.2(b)ii the incremental cost of any power used over the allotted heritage pool will be deferred or set aside until the 5th anniversary when all costs plus interest will be recovered by Hydro Quebec through rate adjustments. This is over and above the annual rate increase based on the Consumer Price Index or other costs to be passed along to consumers.

Point 6: It’s OK to rely on another province for our energy needs because we have a long history of co-operation with the Province of Quebec.

In truth Quebec has no reason to look out for the interests of New Brunswick citizens and this is clear in the MOU. Creation of an artificially low heritage pool will prohibit new industries from accessing favourable power rates and seriously impede new growth.

There is also much reason for concern among exiting companies in New Brunswick that have supplied equipment, tools, vehicles and other necessities to NB Power for decades. Hydro Quebec already has relationships with suppliers outside of New Brunswick and will likely continue to leverage those suppliers that they are comfortable with going forward. In this regard the future for those local companies looks bleak.

Point 7: Don’t worry, New Brunswick would continue to have absolute control over energy policies and the agreement identifies New Brunswick as an energy hub.

In reality “New Brunswick’s” energy hub will be owned by Quebec, not New Brunswick, as will the 20,030 km of transmission lines and the crown lands they sit on.

While Hydro Quebec will indeed have to face the New Brunswick EUB when seeking rate increases several increases are built into the MOU (see previous points) and according to the MOU the New Brunswick regulator, far from being independent, will be obligated to conform to Quebec’s regulations.

So much any guarantees of total control over energy policies.

Point 8: This agreement is beneficial because Hydro Quebec is responsible for such costs as upgrading and maintaining aging NB Power facilities.

Not true.

Section 2.5 of the MOU ensures a fair return (fair being open to interpretation) through a contractual or a legislative guarantee to the owner of the assets (Hydro Quebec) through transmission and distribution rates! This is over and above the CPI rate increase and heritage pool overruns.

In addition, within 12 months of Hydro Quebec issuing the demand, New Brunswick is obligated to shut down and pay all decommissioning costs for Belldune, Coleson Cove and possibly Mactquac and the Lepreau generating stations, none of which Hydro Quebec is financially responsible for and all of which will be paid for by New Brunswick taxpayers, adding to the provincial debt. The bill is for this effort is potentially several billions of dollars which will have to be borrowed and paid back.

Point 9: We are told not to worry our power supply is secure and our NB Power employee’s jobs are secure.

This is difficult to believe since Union leaders have raised concerns that the MOU hasn’t convinced them that existing job or labour agreements are safe at all.

As for power security, when New Brunswick’s thermal power plants (see previous point) are shut down, power will need to be imported from Quebec’s James Bay or Newfoundland and Labradors Churchill Falls plants. Those plants are more than 1250 km from Fredericton. One doesn’t have to go too far into the past to see that greater distances mean greater risk of supply or that putting all dependence on a single supplier, one the province has no control over, is far from what most thinking people would consider energy security.

Liberal Point 10: Will New Brunswicker’s be consulted? Yes your government is listening and urges you to join the conversation on the government’s website www.lowerratesnb.ca

This is doubtful. To date an overwhelming number of complaints, questions and concerns have been raised with government and the result (as is clear to see from the preceding points issued by government) is little more than lip service and spin being offered up.

Citizen’s are demanding a delay of the sale until after the September election so they can decide for themselves but the Graham government is refusing this and has gone so far as to say publicly that the citizens of New Brunswick are not capable of making a decision of this magnitude.

Apparently the New Brunswick government believes the electorate is not intelligent enough to understand what’s going on. One can only assume they arrived at that conclusion after this same electorate supported their platform which included a promise NOT TO SELL NB Power.

Feds urged to probe N.B. - Quebec power deal

The following appeared today in the Halifax Chronicle Herald.

Power play worries Tory senator
By STEPHEN MAHER Ottawa Bureau
Tue. Dec 15 - 4:45 AM

Sen. Lowell Murray is calling for the federal government to get involved in the proposed sale of NB Power to Hydro-Quebec.

Speaking in the Senate chamber Monday, the Progressive Conservative said Ottawa cannot afford to stay out of the discussion on the proposed sale of NB Power because of the implications for interprovincial and international trade, and also because New Brunswick would be, in effect, ceding legislative power to Quebec, a "broad constitutional issue."

Mr. Murray, who was born in New Waterford and was minister of federal-provincial relations under former prime minister Brian Mulroney, warned that neighbouring provinces have reason to worry if Hydro-Quebec takes over NB Power’s transmission lines.

"The disappearance of the New Brunswick system operator sends an ominous signal," he said. "I will say as objectively as I can that Nova Scotia and Newfoundland and Labrador have every reason to be concerned."

The federal government has stayed out of debate on the proposed deal, under which New Brunswick, in exchange for $4.8 billion, would hand over its power generation facilities and transmission lines to Hydro-Quebec and alter its regulatory legislation to comply with Quebec’s.

Premiers Darrell Dexter of Nova Scotia and Danny Williams of Newfoundland and Labrador have asked New Brunswick to sign a letter promising they will have the right to build their own transmission lines through New Brunswick.

New Brunswick Premier Shawn Graham has refused, pointing out that American regulators would guarantee that other provinces have the right to export power through New Brunswick.

The federal government should not allow that American intrusion into interprovincial trade, Mr. Murray argued.

"A policy of continued silence would be an implicit delegation of the federal government’s jurisdiction in this area of interprovincial and international trade to the USA Federal Energy Regulatory Commission and the Government of Quebec," he said.

"Nova Scotia and Newfoundland and Labrador would then be in the odd position of depending on the U.S. to protect their interests in Canadian interprovincial trade. If these interests are imperilled, it is surely the role of the federal government to protect them."

Newfoundland says Hydro-Quebec has already made it difficult to export electricity from Labrador to markets in New England, and it would be even harder if the Quebec utility controlled New Brunswick’s transmission lines.

Peter MacKay, Nova Scotia’s representative in cabinet, expressed concern last month in an interview with the Telegraph-Journal in Saint John, N.B.

The deal "hasn’t given fair evaluation to what other alternatives may be out there — which would include Nova Scotia, Newfoundland and Labrador and Prince Edward Island," he said.

"What are the alternatives to what has been presented by Hydro-Quebec? We don’t want to see any Atlantic Canadian provinces left out or left behind."

NL Should Simply Accept Upper Churchill Contract

Having been born, raised and now living in the province of Newfoundland and Labrador I make this suggestion only after careful consideration of what it might mean for my continued physical well being, especially if taken out of context. I also make it with the best of intentions and the best interests of the province in mind.

Earlier this week the government of Newfoundland and Labrador through CFLco, the operator of the Churchill Falls generating station, issued a request to Hydro Quebec asking them to consider renegotiation of the lopsided Churchill Falls contract. That request came after receiving a number of legal opinions, from what Premier Danny Williams referred to as, “some of the best legal minds in Quebec”. Fair enough, but I wonder if the people of the province should just learn to accept the existing contract as a part of the past and instead focus on the future. I wonder as well if the time, money and resources now used to fight the original 1969 contract might also be better spent looking forward instead of back.

Quebec’s quick and clear response to the province’s request was not an unexpected one by anybody in Newfoundland and Labrador, or at least it shouldn’t have been. Not in light of a study undertaken by the Economic Council of Montreal that shows 75%of Hydro Quebec’s profits are directly due to cheap power from Churchill Falls Labrador. The response was a simple and unequivocal no.

The question now becomes, “What should Newfoundland and Labrador do about that denial?”

This isn’t the first time the province has tried to re-open the original contract. In fact they’ve tried several times over the years through political avenues and with legal challenges in the Supreme Court of Canada. All attempts have been unsuccessful so far. That isn’t to say this latest effort, should it ever actually proceed to the Quebec courts, might not end differently. It may have merit or it may not, that remains to be seen. Regardless of any of that, I wonder if renegotiation of the original contract should even be the target of this or any future attempts at seeing justice done.

There is one aspect of the Churchill Falls dynamic that has never been tested in any court, either provincially or federally, yet it begs for just such a challenge. I’m not referring to the original contract itself, which is set to expire in 2016, about the same time any legal case would likely take to wind its way though the court system. I’m speaking instead of the automatic 25 year renewal clause that will kick in when that original contract expires.

Perhaps it’s truly time to accept the original Upper Churchill contract for what it is and focus on the 6 years it is still in force to challenge the upcoming contract renewal before that agreement is actually implemented.

Based on the legal opinions presented this week by CFLco, a challenge to the renewal contract might stand a far better chance of success and the salient aspects of Quebec civil law now being spoken of are only the tip of the iceberg.

There are those who question whether the Quebec civil law touted by Newfoundland and Labrador as the basis of its latest attempts would even apply retroactively to a 1960’s contract since that law itself was only implemented in the mid-nineties. The renewal on the other hand is set to come into effect years after that law was first put on the books providing Newfoundland and Labrador with additional support for action on that front.

The renewal is considered to be automatic however in essence it is still a new contract, one that includes an even lower power purchase price for Hydro Quebec than existed under the original contract. Challenging that renewal, before it is implemented, would allow the province to follow an entirely new avenue of action, one where Quebec civil code references to “good faith” and “equity”, might still be valuable as supporting arguments but need not form the main thrust of the province’s case.

In 2005 Professor James Feehan and Historian Melvin Baker, of Memorial University, presented a research paper entitled, “The Origins of a Coming Crisis – Renewal of the Churchill Falls Contract”. Their investigation into the events surrounding the renewal aspect of the agreement was later published in the Dalhousie Law Journal.

Feehan and Baker’s effort uncovered evidence of conflict of interest and the use of inside information by Hydro Quebec during the negotiation process. They supported those findings with newly uncovered documents and meeting minutes from the period that were not previously known to exist.

In the end the researchers came to the conclusion that this was a situation where Hydro Quebec used information about the financial position of CFLco it should never have been privy to in a bid to force the last minute inclusion of the renewal clause into the original contract. According to the researchers Hydro Quebec used this information to demand CFLco either “take it or leave it” eventually leading the company “take it”, a decision that made no sense in a business context except, as Feehan and Baker put it, they were acting under “duress”.

In the words of the researchers, the events raise questions of “…conflict of interest, economic duress…business ethics” and “law”.

Personally I’d love nothing more than to the true owners of Churchill Falls gain some kind of redress after decades of living with the one sided Churchill Falls contract but in reality that contract will effectively end in just 6 years and after decades what’s a few more years. Any legal challenge would likely take at least that long. Wouldn’t the time be better spent challenging the 25 year renewal contract which, as my dear Father has been known to say, “…is an entirely different kettle of fish”.

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.

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.