What’s behind the recent announcement by federal Energy
Minister Jim Carr promoting an “energy
corridor” for the Atlantic provinces? How does it relate to this province? Are
there other issues at play that should worry NL? Is the financial “dead
carcass” of NL about to be picked over?*
The public should worry when weak governments run the
province. For a decade, successive administrations have given little focus to
tough public policy issues, worsening an already difficult fiscal situation. They don’t see that successful societies harm themselves looking inward when predators come calling.
conduct their affairs with a vision narrow enough to be thought ‘in the moment,’
the real business of politics — our business — is being managed in places where
strategic self-interest has long been defined.
rather interesting messaging.
effect that Ottawa is eager to pursue a “regional transmission line connecting
Quebec and the Atlantic provinces”. There was even the offer to “kick in some
cash” to make it happen.
relations” between Quebec and NL. “I am encouraged by what I have heard from
elected officials from both provinces,” Carr was quoted. Strangely, no one in
this province was ever alerted to a chinook having passed through.
exports, with such a regional network, to the northeastern United States.”
supply and demand in many regions of the world — including the northeastern
U.S. — or he is playing the “dumb” game, the same one Williams, Dunderdale and
Nalcor used on the NL public to get Muskrat sanction.
energy sold on the “spot” market, has fallen into the basement in line with the
commodity price of natural gas. In addition, emerging and anticipated cost declines
in wind, solar and energy storage pose significant threats to Hydro Quebec (HQ) — which is
dependent on high-cost, large-scale transmission infrastructure. This is a huge
new risk and it is occurring in markets that have served as HQ’s traditional
playground and on which their newest megaprojects depend.
such a transmission corridor — even after Muskrat — knowing as they must that
it will add to Canada’s lack of competitiveness, is indicative of the size of
HQ’s problem and its influence on national politics. Exhibiting the empire
building character of bureaucrats, HQ also failed to recognize market changes before
it damned the Romaine River.
|Federal Natural Resources Minister James Carr|
behalf, where previously it was uneconomic for them or where they were
still fresh. HQ sought changes to the deal to purchase NB Power assets, leaving
then Premier Graham to conclude that it “no longer” made the $3.2 billion deal
“worthwhile”. Vigorous protests from New Brunswickers also found their mark.
Lavalin to do a deal in 2005 to develop the Lower Churchill — which foundered.
Out of the effort, SNC could still be seen grasping the friendly hand of Danny
Williams, leading to the birth of the Muskrat Falls project.
take more power but ended up with a quite tepid agreement to trade surplus
power back and forth, in the end giving HQ none of the export gains it had
of La Presse having invoked the Churchill River’s third hydro prospect — Gull
Island — for potential development.
short-sighted, but the changing electricity market — one enjoying the fruits of
new technologies and increased competition — has reduced a large megaproject,
like Gull Island, to the status of “bait” for the exuberant and the uninformed.
that she is too busy talking to Quebec about mining to “have that conversation”
on the electricity corridor. Had she said, ‘what’s such a corridor got to do
with NL?’ we might have acknowledged that — for once — the Minister is on her
toes. “Too busy” only confirms that she lacks a capacity to walk and chew gum
at the same time.
confirmed what has long been suspected: the talks allowing the Feds and NL to ‘settle
up’ with Quebec were under way.
Quebec’s intergovernmental affairs minister saying that “his province never
received similar help from Ottawa for its hydroelectric development.” He added
that “Quebec is looking at its legal options to fight the deal.” As quickly as
Cloutier began his pout, someone told him to shut up.
deserves a veto over matters that even peripherally touch La Belle Province,
including the Federal Loan Guarantee for Muskrat Falls, Quebec MPs had passed a
reminder on to PM Harper and later PM Trudeau.
powerful positions. It has been a long time since a Minister from this province
weighed in on “big picture” issues. Admittedly, though, they are very good at ‘photo-ops’.
of Justice and Attorney General, Minister of National Defence and Minister of
Foreign Affairs, understood power — the political kind. He is the (real) unsung
architect of the FLG — having designed the Guarantee in a way that enabled a
veto over the project by Nova Scotia.
status is more than just tangential to that of an electricity corridor.
essential if Muskrat ever works — though Nalcor is still in denial that it was
orphaned by the Quebec Superior Court.
fail’. The sums piled up are simply ‘too big to be paid back’. It constitutes a
worrisome footnote to the Federal Loan Guarantee, raising the question: does NL
have some assets that an entity like Hydro Quebec might need to help reduce the
ass-covering required for both levels of government, the bureaucrats and the politicians,
too; all having played a role in effectively bankrupting a Canadian province
for the first time since Confederation.
such issues, affording our elected suitable political cover?
corridor’ a one-dimensional interest of HQ. They would be foolish. Even Emera
had better not get too big for its britches.
in purchasing the assets of NB Power, it had no interest in Atlantic Canada —
Link is instructive. Questioned is Rick Janega, President of Emera Newfoundland
and Labrador, who is speaking about a meeting held with Hydro Quebec in 2009 to
determine if HQ would sell them a quantity of firm power. (“Firm”
energy is a source that is always available.) Stated Janega:
far more attractive Muskrat idea.
infrastructure was sub-standard.
categorical on the point. The UARB
comments are based upon analysis conducted by Morrison Park, its consultants for
the ML Application:
generation, some of that via MF.
when electricity neophyte Ed Martin came calling. Not just Nova Scotia’s point
man, Peter McKay, could see a sucker all the way from Ottawa, Emera CEO Chris
Huskilson wasn’t exactly blind.
TWh is expected to lower that province’s thermal footprint, as will power
committed under the “Energy Access Agreement” and the “Supplemental Agreement”
— which together, at least for the first five years after first power, represents 50% of MF generation (and 12% of MF
costs, according to David Vardy).
agreements, there is little price difference between the “sold” power and the
“free” stuff, Nalcor having netted just 1 cent per kWh from Upper Churchill
“recall” power last year. (HQ profited more than did Nalcor just from
the “wheeling” fees to transport the energy.)
of Canada — is that it backed Muskrat, having given the project scant analysis.
Scotia to wonder if they have bargained for a ‘pig in a poke’. (Though Emera’s
recent application to run an undersea cable to the Eastern Seaboard assumes that
the cheap energy it negotiated will be available — presumably to be mixed with
wind/solar from other sources.)
federal seats — all of them Liberal. You can well imagine that this issue plays
into Jim Carr’s mission, too.
northeastern U.S. having become so oversupplied that prices are at historic lows.
To make matters worse, local State politicians want at least some of the
sought-after “green” power produced locally.
left by the rejected 2010 New Brunswick deal and permit HQ to return to that
province the “value… unacceptably taken away”, as NB’s Premier discreetly described
the failed negotiation over the purchase of NB Power.
and is getting short on its useful life. But of more immediate interest is that
25% of NB’s power needs are generated with fossil fuels, and it therefore remains
a juicy market for HQ.
it offers them a new value proposition. There is less competition and wholesale
electricity prices are higher than in the New England states. If the Feds “kick
in” a subsidy for transmission line construction and upgrades, all the better. Besides,
it will square Quebec’s demand for commercial parity with the value given
Muskrat via the Federal Loan Guarantee.
NS nor NB having extended the welcome mat to HQ, one could assume that the idea
of an “Atlantic corridor” has been skilfully misnamed. Is it not a “Quebec
corridor” that the Feds actually seek?
Montreal area mayors, including Denis Coderre, put political pressure on the
Quebec Government to oppose the “Energy East” proposal? Did the Quebec
government tell them to be quiet? I don’t think so.
Quebec, the province was denied by that province, then derided by Ottawa because,
ostensibly, we were putting at risk the fabric of the nation — interfering with
Quebec nationalist sensibilities — by merely raising the subject. But a
corridor for Quebec? The ‘fabric’ is not nearly as brittle when it is someone
in order to screw Quebec — even if that wasn’t Williams’ sole motivation for
the project. But the suggestion of an electricity corridor — with federal
backing — is justifiably a sore point.
part of the smallest economic region of the country — can get national
attention when Quebec demands it!
national politics and in the business of influencing its own economic
interests. Newfoundland and Labrador is not.
back-channel those negotiations — should not proceed when the province is on
its economic knees. And they should never be undertaken by two of the parties who
were complicit in the Muskrat Falls debacle: the Feds and Nalcor.
even at the table, as Minister Coady has confirmed.
power monopoly in Eastern Canada, and about the Feds insulating themselves from
the uncertainties of a big mess in the context of Muskrat.
“Atlantic Energy Corridor” is about.
carcass that is a bankrupt Newfoundland and Labrador.
in CFLco that Hydro Quebec does not own, will be eyed greedily by them.
financial problem. Other assets will have to be stripped from the province too.
picture” politics, our Ministers and MPs send us “selfies” oblivious to the
issues and their implications.
We are destined to make a
virtue of stupid.
Editor’s Note: This piece was written with research contributions from David Vardy and PlanetNL. The opinions expressed are mine.