An Open Letter to Premier Dunderdale and NALCOR’s Ed Martin

An Open Letter to Premier Dunderdale and NALCOR’s Ed Martin

Let me begin by saying that I am completely non-partisan. In fact I would go as far as to say that I find any political party or candidate who would politicize something as important to the public as development of the Lower Churchill utterly reprehensible.

I write this letter as a concerned citizen of Newfoundland and Labrador and for no other reason.

I’ve noticed that since the release of the Lower Churchill environmental assessment the response from official circles have been rife with adjectives such as “Shocked”, “Surprised” and “Disappointed”. I’m confident that after all the hard work having been put into this project these words likely reflect the honest reaction of those involved. In reality however the concerns of the public are not with the feelings of those involved in the project nor are those concerns being addressed through such personal commentary.

What people want are unvarnished facts and details in response to the questions raised by the panel and by the public at large.

In many ways communication is an art form and while government and NALCOR have already expended a great deal of effort and energy in responding to countless questions it’s clear that the answers provided have not been enough to satisfy the population.

In the end it is the public who will pay the cost of development through a combination of their taxes and power rates. They are also on the hook for the social and historical costs if the project is ultimately unsuccessful.

The stakes are extremely high and everyone in the province realizes this, not just the proponents of the project. That’s why, when questions are asked, those posing the queries expect and deserve clear, detailed and comprehensive answers. Responding to the general “gist” of a question or supplying the “broad strokes” isn’t going to alleviate concerns and may in fact amplify them. On this particular project the sharing of as much information as possible must be the order of the day.

Regardless of whether or not it may seem fair to those working on the project, the Lower Churchill is by its very nature tainted by the legacy of the Upper Churchill. They are inextricably bound to one another in the psyche of the population.

The people of Newfoundland and Labrador were led into that particular project by a government bent on a chosen direction and all of us have borne the cultural scars ever since. Make no mistake, this time the people of the province are demanding, and will continue to demand, answers. If those answers are considered inadequate then the project simply will not go ahead, regardless of what anyone says to the contrary.

It may be difficult for those directly involved to understand the broad level of concern being expressed by so many, especially with the quantity of information that has no doubt been gathered, analyzed and modeled internally, but remember that the public is not directly connected to the nuts and bolts of the project and as such require clarity, and perhaps even a little comforting, when it comes to many of the issues.

Those involved should always remember that it isn’t the job of government or NALCOR to sell this project to the public. It was exactly that sort of misguided approach which led to the ouster of the Liberal government in New Brunswick when it tried to market NB Power to Hydro-Quebec. The job at hand is to ensure that the people of the province have all the information necessary to make an informed decision about their collective future.

As an example, when concerns are raised about the viability of the project if Gull Island does not proceed on schedule, or at all, it isn’t good enough to simply say that Gull Island will proceed or that Muskrat Falls can stand on its own.

A more complete answer should include an explanation of the financials and rate projections involved in both scenarios and must identify a plan B for Gull Island, if one exists, should Quebec remain unwilling to allow access to its grid.

It doesn’t cut it when someone like Mr. Martin responds to questions about wheeling Gull Island power through Quebec by saying, "Quebec is bound by the regulatory body in the United States to provide the same open access they enjoy there to others who wish to enjoy it”.

With all due respect, it may not have been the intention but based on our past history with Hydro-Quebec I personally find that sort of response either totally naive or summarily dismissive.

When the Upper Churchill was developed Newfoundland and Labrador was denied access to the Quebec grid. The end result was one of the most lopsided contracts in history. Regulations may exist today requiring Hydro-Quebec to allow access but that same access was recently blocked for this very project. What is the likelihood that Quebec will suddenly decide to open its borders on schedule for the start of the Gull Island development and what if they don’t?

What if we still can’t access the Quebec grid when and if Gull Island is ready to proceed? Is there a backup plan to ensure that the Gull Island project can still be completed? If so, what is plan B and what are the financial implications for the province, NALCOR and rate payers?

If there isn’t a plan B what happens? Could we find ourselves with another Upper Churchill on our hands? Is it possible we might end up with Gull Island nearing completion and still waiting on a commitment from Quebec? If so might the outcome be the same as it was decades ago: bankruptcy or another lopsided agreement.

On the subject of whether or not this truly is the lowest cost solution for our province’s energy needs, again the panel raises some good questions the public deserves to have answered.

Why isn’t lower cost power from Gull Island being developed up front? If it was, would that result in lower rates for rate payers? If not, why not?

Why did the information provided to the review panel suggest that NALCOR simply looked at one side of the equation when it comes to future demand - finding new sources of energy - instead of also considering ways to reduce that demand?

If a cost effective means can be found to stabilize current demand or slow its growth through energy efficiency programs would that allow one of the other power options previously dismissed by NALCOR to satisfy our needs at a lower cost than Muskrat Falls?

Perhaps the analysis has already been done internally on these issues but that information was never put before the panel. If so then it should be made public now. If not then the analysis should be completed as the panel recommended.

One of the power source options noted by the panel is the Upper Churchill itself. NALCOR’s projections go out well past 2060 but appear to completely ignore power from the Upper Churchill. Some of that energy may be available now through recall and all of it is expected to be available in 2041, just over 20 years after the Lower Churchill’s planned completion. Yes there would be costs involved in linking the power to the island portion of the province but why was this, essentially free power, not identified as a potential source to meet future demand?

Perhaps consideration was indeed given to the Upper Churchill but dismissed for some reason. If so what was the reason and if it wasn’t considered why wasn’t it and shouldn’t it be?

Is there some reason we will not be able to access that power in 2041? If so, that’s something everybody absolutely, without question, deserves to know.

As you can see questions abound and with our history of power development in this province, no matter how outlandish any particular question may seem, it deserves a complete answer.

There may be legitimate responses to all of these questions and the many others being asked. I’m sure everyone hopes there are, but it simply isn’t good enough for government or NALCOR to provide cursory or limited responses and say that the project is proceeding regardless of what the panel or public has to say.

As Naive as Mr. Martin’s comments on Quebec registered with me I can’t help sensing a tone of arrogance in the Premier’s position that the project is going forward regardless. That may not have been the intended spirit of the words chosen but it is surely the impression left behind for me.

The public doesn’t simply have a right to ask questions but the historic obligation to demand clear and complete answers.

If additional reviews, beyond those already underway, are necessary then they should happen. Whatever it takes to give the public a comfort level with this development must be done before any project is given final approval.

This is not to say, as the opposition parties have suggested, that all efforts should immediately halt pending those answers.

Politics needs to be removed from the equation completely and I firmly believe any party that plays politics with this issue during the upcoming campaign will pay the ultimate price for taking such a callous approach.

I’m sure the public understands that there are likely hundreds of resources working full speed to gather information, analyze findings, develop project plans and answer thousands of questions. Stopping such a monumental effort isn’t like flipping a switch. Once it’s halted it may be very difficult if not impossible to get it moving forward again. I don’t believe that is what the public wants. As previously stated, I believe what we want are clear, detailed, comprehensive answers.

They say that those who forget the past are doomed to repeat it. It’s an adage Newfoundlanders and Labradorians take very seriously and with good reason. Thankfully, in this respect at least, the legacy of the Upper Churchill is still there to ensure that we remember all too clearly.

While the public as a whole should not condemn the Lower Churchill project out of hand we also shouldn’t let anyone ram the project through unless and until the taxpayers, rate payers and voters of the province - each and every one of us - are comfortable that it is indeed the right thing to do.

I truly believe that all of our elected officials and the head of our Crown Corporation, NALCOR, should expect no less from each of us and that they owe it to the people of Newfoundland and Labrador to show their respect for our concerns by responding fully to each and every one of them.

Muskrat Falls - Perception Can Become It's Own Reality

The Muskrat Falls development has its share of supporters and detractors across Newfoundland and Labrador. At the moment the majority appears to fall into the first category but that could quickly change if the players involved aren’t more forthcoming soon.

I personally believe the project is a good one but that doesn’t mean I don’t have nagging doubts, thanks in large part to the limited amount of information publicly available. My knowledge deficet isn’t because of a lack interest either, not by a long shot. Since the initial announcement late last year I’ve been looking into this as much as humanly possible, but answers are hard to find. I can just imagine what the general public (those less inclined to dig for answers) are going through.

It could be, as the naysayers suggest, that the provincial government and NALCOR are hiding something. On the other hand it could simply be a case of extremely poor public relations on their part. Either way, the people of the province, who also happen to own the resources in question, remain at the mercy of political spin and partisan posturing and that’s never a good thing.

I sincerely hope poor communication is the cause of the current state of affairs, because that’s something that can be easily resolved. The longer things go without clearer answers being put forward the perception will grow that everything is not as rosy as some might say.

Government has said information is already out there and in fairness some is. Projections have been released showing that without Muskrat Fall our power rates will increase faster than with it. Last week it was also announced that the PUB would study the project to determine if it’s truly the lowest cost solution, but how reliable will that review be?

Will the review be based on NALCOR’s assumption that an expected increase in demand warrants development of some kind or will the review be free to challenge that basic premise?

There are documents available on the NALCOR web site showing a large increase in power demand in upcoming years. This, according to NALCOR, means either Muskrat Falls must move ahead or the refurbishment to Holyrood, in addition to development of smaller generation projects, will have to be undertaken. That’s all well and good, but where are the details behind the pretty charts?

Why is demand expected to rise by such a large amount in the next decade and beyond? NALCOR’s historical charts show demand has remained relatively stable for the past 30 years yet the projections show a sudden skyrocket in demand around 2015 and a continued upward trajectory for years afterward. Why is demand expected rise so dramatically? Beyond the Long Harbour project what could account for it? What is the basis of the projections and will the PUB’s terms of reference extend to validating them?

Questions about future demand were posed in a recent correspondence to Newfoundland & Labrador Hydro. Answers have yet to cross my desk but I’ve been informed by a contact person at the corporation that they will be getting back to me this week. It goes without saying I’ll keep readers posted on any new information put forward.

With the checkered past this province has had on major projects like Come By Chance, Sprung Greenhouse and of course the Upper Churchill, it’s not surprising the public wants to be fully assured of complete success this time out of the gate.

There’s no doubt our past is coloring our outlook but Newfoundlanders and Labradorians aren’t the only ones with questions. Concerns over the limited amount of public information are also being expressed in Nova Scotia.

On June 8th a panel discussion on the Lower Churchill project was held in Halifax. That panel, organized by the “National Roundtable on the Environment and Economy” included executives from Emera and NALCOR, Nova Scotia’s deputy minister of energy and academics from Dalhousie University. The public and media were not permitted to attend the closed door session or listen in on the discussion.

Brennan Vogel of the Halifax-based Ecology Action Centre was a participant on the panel and later said, “It’s really hard to accept at face value that this is the best option on the table. We need to see more clarity provided by government.”

Vogel said he believes the Nova Scotia government and Emera are set on the Lower Churchill option even though it will not be the lowest cost solution for rate payers in his province. The motive, he believes, is because it will be a more profitable solution for Emera itself.

“We know Nova Scotia has a monopoly electrical utility so, in the absence of competition to result in fairer prices for Nova Scotia ratepayers, we’re perhaps being left in the dark…as to what the best options on the table are for providing stable, secure, renewable electricity,” Vogel said.

When you take the concerns of some people in Newfoundland and Labrador in conjunction with those comments out of Nova Scotia it’s fair to say that public relations on this project are sorely lacking.

Back here in Newfoundland and Labrador, the lack of solid numbers in the public domain leaves a great deal of room for speculation and our collective past ensures that much of that speculation will be for the worse.

It’s a sure bet that most Newfoundlanders and Labradorians would love nothing more than to see the Lower Churchill become a wildly successful project. It’s also a good bet that a large majority are happy the project will not be dependent on Quebec, but the removal of Quebec from the equation is not enough to sell it to the people. An alternate route has been a dream of a lot of people for a very long time but it’s doubtful anyone would be satisfied with doing so if it means the entire project becomes a boondoggle.

As time goes by less and less people are willing to simply accept the official line that it’s the best option without clear evidence to back that statement up. For NALCOR and the provincial government to expect otherwise would require them to live in a fantasy world. If that is indeed the case let’s hope their fantasy doesn’t extend to the project itself.

Muskrat Falls - Cutting Through the Political Rhetoric

There’s been a lot of political rhetoric around development and distribution of power from Muskrat Falls since the project was announced late in 2010. No doubt that rhetoric, on all sides of the political aisle, will ratchet up as the October provincial election draws closer.

It’s unfortunate that the public, as voters, taxpayers and power consumers don’t yet have a clear picture of whether or not the project is the best approach for Newfoundland and Labrador.

The reason for that lack of clarity falls first and foremost on the shoulders of the communications personnel at NALCOR and within government, but there is plenty of blame for others to share as well.

The various political parties have been using this project as a wedge issue for their own political benefit rather than ensuring that it benefits the province’s people.

Meanwhile, the media has gleefully reported their rhetoric rather than doing the research needed to inform the people of the province, so much for investigative journalism.

It’s also unfortunate that most people are not engaged enough to dig into this on their own. By not doing some basic searches on the web, asking questions of NALCOR and Hydro management and demanding clear answers we also share in the blame for our own ignorance of the situation.

Of course most people simply don’t have the time or inclination to do that sort of leg work and in reality they shouldn’t have to do it. If communication was better at the source they wouldn’t have the need.

As a result we are left to sift through talking points from the most unreliable sources of information out there, politicians.

Like most of you I have a pretty full personal life and a job that keeps me quite busy. Time is precious but I’ve managed to do some limited digging regardless. After all it’s our future that’s at stake and the stakes are high.

A certain level of information is available publicly but it takes a bit of effort to find it and to separate the facts from the myths.

One source of data is the initial backgrounders and announcements issued when the Lower Churchill agreement was first announced. These are available on the provincial web site and at NALCOR online.

Other information is can be gleaned by reading through various regulatory and government submissions and documents, not necessarily related directly to the project, available on the NALCOR and Hydro web sites. Some of those documents predate the project announcement but provide a level of clarification for the reasons why Lower Churchill is on the agenda.

There is also some information on power rates, though understanding most of the numbers requires a Masters degree in accounting.

Regardless, I’ve determined a few things for myself that I’m more than willing to share.

First of all, based on official submissions by Hydro – pre Lower Churchill – it’s clear that the island portion of the province is approaching a wall when it comes to available power. By 2015 we will essentially reach our limit and by 2019 have a shortage of power to meet demand.

This is the reality that manifested itself in NALCOR examining various options for ensuring a stable energy supply, both to meet requirements in the near term and allow for future growth.

The two primary avenues examined in recent years were the interconnectivity of the Lower Churchill at Muskrat Falls and the ongoing use of Holyrood, in conjunction with development of a number of smaller island projects.

According to the documents, the latter alternative brings with it several concerns, which is likely why Muskrat Falls eventually became the preferred option.

On its own Holyrood will not have the capacity necessary to meet the needs of the island in a few short years and having been commissioned in the 1970’s it’s now nearing the end of its lifecycle.

If the Holyrood option were chosen NALCOR/Hydro would be required to install scrubbers to reduce toxic emissions, undertake major upgrades to the installation and to develop several smaller generation facilities (a combination of multiple hydro, thermal and wind stations) simply to meet user needs. Each of these requirements would take several years to complete.

Even with those steps taken the corporation would be leaving itself open to the whims of fluctuating fuel prices. The Holyrood plant currently burns approximately 18,000 barrels of oil per day during peak generation.

The corporation might also be subjected to additional costs if carbon emission limits are put in place by Ottawa.

Even thought the installation of new scrubbers would remove many toxins from the air they do not stop CO2 from being emitted. Holyrood emits more than 600,000 tons of CO2 each year, making it less than environmentally friendly.

If Ottawa were to setup a cap and trade system, as has been widely talked about (essentially putting a price on carbon emissions), the cost of purchasing carbon offsets for Holyrood would lead to additional expenses well beyond the refurbishment and the rising cost of oil. All of which would be a factor in future power rates for consumers.

These additional costs, which would be subject to the whims of the market are in addition to the cost of development for the other smaller projects necessary to meet island demand. With all of that taken into account, the documents I’ve read indicate that the “status quo” approach would only meet demand until about 2029, leave little room for growth and require even further development projects going forward.

These and other issues are likely a big part of the reason why the Muskrat Falls option was the direction decided upon.

The current government has publicly stated that the project will stabilize power rates and that it’s the lowest cost option available. Meanwhile the province’s opposition parties say it will more than double consumer rates and that other options should be examined, though they don’t specify what those other options might be.

As I’ve said before, it’s difficult to separate the facts from the fiction when it comes to this project.

I don’t have the answers but I hope what I’ve provided will at least spur others into digging a little deeper themselves, perhaps even finding information that supports or refutes what I’ve gathered myself.

If nothing else hopefully the information put forward, beyond the rhetoric, will convince the public not to place too much stock in the political positions being staked out by any of the parties heading to the polls in October.

In an effort to provide as much information as I can, below are some diagrams I’ve found on the NALCOR and Hydro sites identifying the current power rates in the province, projections for the cost to consumers under both the Muskrat and Holyrood options and a graph showing the rising cost of fuel at Holyrood over the past few years.

I hope it helps.

The first chart identifies the current island interconnected rate per kilowatt hour - 9.584 cents.

The second chart identifies NALCOR's comparative analysis of revenue requirements for Muskrat Falls vs. the Holyrood option. Note that this chart is depicted in Megawatts rather than Kilowatts but what it shows, according to NALCOR, is that in the 2016 - 2019 time frame both options will cost about the same but in the following years Muskrat Falls (the blue line) is a much less expensive option. Precisely what the rate per kilowatt hour will be to consumers is not identified but it's clear that this would also be affected going forward.

This final chart idenfies the cost per barrel of oil used at Holyrood over the past 10 years. This indicates a doubling in those costs over the period. No projections of oil costs going forward were available, nor were any assumptions about the cost of carbon emissions should regulations be put in place.

Deal Inked on Lower Churchill Development

After decades of waiting and wondering the people of Newfoundland and Labrador learned today that the Provincial government has inked an agreement with Nova Scotia for development of a portion of the Lower Churchill Falls hydro project.

The agreement was announced at a press conference today attended by representatives of NALCOR (Newfoundland and Labrador’s energy company), Emera (owner of Nova Scotia Power) and the Premiers of Newfoundland & Labrador and Nova Scotia, Danny Williams and Darrell Dexter.

At this point all that is publicly known is that both NALCOR and Emera will partner in the development which will see 800 megawatts of power produced from the Muskrat Falls section of the Lower Churchill. The Larger Gull Island generating station which had been a part of the original development plan for the river will not be developed at this time and no timetable for its development was given.

NALCOR will build a generating facilities at Muskrat Falls (Cost 2.9 Billion). This facility will be fully financed and owned by Newfoundland and Labrador.

Emera, a publicly traded company, and NALCOR will jointly develop the transmission route to wheel the power from Labrador, through Newfoundland and on to Nova Scotia.

The subsea link between Labrador and Newfoundland will be built as a joint venture 71 per cent owned by NALCOR (cost 2.1 Billion) and 29 per cent owned by Emera (Cost = 600 million). Emera has agreed to finance 20% of the ongoing maintenance costs for the life of the agreement.

The subsea link, also known as the Maritime route, between Newfoundland and Nova Scotia will be built and wholly owned by Emera. (Cost 1.2 Billion)

It would seem there are still details to be determined relating to the Maritime link itself as officials with Emera have said that they are still negotiating agreements with NALCOR to build the subsea transmission link between the two provinces in return for access to 20 per cent of the energy from Muskrat Falls for a period of 35 years.

At the end of the 35 year contract the undersea transmission line will revert to Newfoundland and Labrador ownership for the sum of 1 dollar.

Investments by all parties into the project total an estimated $6.2 billion.

Click here to view Fact Sheets (NALCOR and NL Govt.)

Although both Provinces have asked the federal government for a loan guarantee and funding assistance to develop the sub sea link they announced today that they will move forward even if funding itself is not provided.

The entire development is still subject to regulatory approval in both provinces as well as to the approval of the boards of directors of NALCOR and Emera. In addition a native land claims treaty in Labrador must be ratified by Ottawa before the project can proceed.

Based on past history and the political implications of any Churchill Falls power contract, one might also expect that the voters of Newfoundland and Labrador will also have their say in the future of this deal.

Construction is expected to begin in 2013 with first power transmission by 2017

Based on what is known so far there are still many outstanding questions the people of Newfoundland and Labrador will be asking in the coming days.

The answers or lack of them is likely to have serious implications, either positive or negative, for the current Provincial government in the next election, scheduled for less than a year from now. Far more importantly they will have a far reaching impact on every individual in the Province for generations into the future.

Some of those questions include:

1) What are the remaining issues to be addressed in the reported “agreements” to be reached between EMERA and NALCOR for building the Maritime Link?

2) What is the overall capacity of the Labrador to Newfoundland link and the Maritime Link to Nova Scotia? Will one or both have the capacity to wheel at least a portion of the undeveloped portion of Lower Churchill Power if Gull Island is developed?

3) How will the proponents (NL and EMERA) finance their shares of the project? Is this financing in place or is the project contingent on finding financial backing?

4) Putting aside the employment created by this development, what is the actual return on investment for Newfoundland and Labrador in the short and longer term? In other words, will this project provide the Province with increased revenues in its coffers?

I’m sure as the next few days and weeks go by and we begin to learn more about this agreement a longer list of questions will begin to form. Hopefully answers will be given when those questions are asked. As they say, the devil is often in the details and while an agreement has been announced one has to wonder exactly what those details include.

At any rate, today is a time to have a quick (and well deserved) celebration before digging into the details in earnest (as we all should) to ensure that our future is as bright as it appears today.

Each and everyone in Newfoundland and Labrador needs to take some time to look at this with their eyes fully open and unfiltered by political bias or spin from any direction.

It does nobody any good to simply attack the deal for the sake of attacking. It also does no good to approve of it simply because it’s being presented by a popular government. Remember, nothing is written in stone until the people of Newfoundland and Labrador say it is. The strong people of New Brunswick proved that point not so long ago when the Provincial government there tried to ink a deal with Hydro-Quebec.

On the surface the agreement seems reasonable, and I hope it is, but until all the questions are answered nothing should be allowed to proceed. Nobody should ever forget the Upper Churchill. NEVER. If more questions were asked back then perhaps things would be far different in the Province than they are today.

Ask informed, unbiased and non-politically motivated questions. Probe the situation fully and rationally to determine where this deal ranks among past options.

the Province can’t run away from this or any deal because it has been burned in the past but neither can it simply accept the deal on blind faith.

Once bitten, twice shy. The outcome of this, for good or for bad, rests squarely on the shoulders of the public. If Newfoundlanders and Labradorians have learned anything from the Upper Churchill it’s that once a final agreement is in place there’s no going back.

This time around can be no excuses and nobody else to blame for not ensuring a better outcome.

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