Guest Post by Ron Penney

The recent Speech from the Throne contained the following commitment: “(a plan) that will connect surplus clean power to regions transitioning away from coal.”

We know, because the Premier told us that this was the first he had heard of it. But this idea, now named the Atlantic Loop, has been furiously spun as the solution to our Muskrat Falls woes and the key to developing Gull Island.

Our regional Minister confirmed that we were out of the “loop” on the Atlantic Loop. “We’ve been working with Quebec and with Maritimes energy ministers on this.” No mention of Newfoundland and Labrador.

So much for the vaunted relationship between the new Premier and the powers that be in Ottawa.

As I will explain, this is all nonsense.

The term “Atlantic Loop” is a misnomer.

We already have access to the Nova Scotia electricity market through the Maritime Link. Nova Scotia has the right to 20% of the power from Muskrat Falls, based on paying 20% of the cost of Muskrat Falls. They have largely insulated themselves from the increased costs of Muskrat Falls so they are now getting 20% of the power for free, based on their paying less than 13% of the costs.

In addition, because Nova Scotia’s participation in the project was subject to the approval of their regulator, their privately owned utility, Emera, also has the right to surplus power from Muskrat Falls at market prices. If they take advantage of that, the majority of the power produced at Muskrat Falls will flow to Nova Scotia at a price far less than the cost of production. We are still stuck with the paying almost the full time cost of the project.

This proposal is all about opening up the Maritime electricity market to Quebec Hydro. It has nothing to do with Muskrat Falls, Gull Island, or the sale of the uncommitted recall power from the Upper Churchill.

Quebec is nearing the completion of its Romaine River Project, 1550 megawatts, at a cost of less than half of our 824 megawatt Muskrat Falls project. The Romaine project is on time and on budget. It is our competitor. They have been trying for years, without success, to access the New England market. This initiative will provide a market for that energy.

What this is all about is replacing coal fired plants in Nova Scotia which provide 55% of the power generated in Nova Scotia. Over 2000 megawatts of power is required to accomplish this. The projected upgrades will allow for this to happen and the source will be Hydro Quebec, not Muskrat Falls or Gull Island.

Moreover it will likely displace one of our potential markets for surplus power from Muskrat Falls, since Quebec can offer firm power at low prices and still make money. While the profits from the sale of Muskrat Falls surplus power will be small, every little bit helps as we try to mitigate the potential doubling of power rates starting next year.

So what sentence should the Throne Speech have contained instead?

“Pursuant to the authority granted under section 92(10) of the Constitution of Canada we will be introducing a resolution declaring the transmission of electricity to be for “the general Advantage of Canada or for the advantage of two or more provinces.”

What would such a declaration accomplish?

It would place the jurisdiction of transmission lines under federal jurisdiction, the same jurisdiction it now exercises over pipelines.

Quebec has a stranglehold over us and this is what lies behind the Upper Churchill contact and Muskrat Falls.

The real motivation behind Muskrat Falls was to demonstrate that we could bypass Quebec. We have proven that it is technically possible but financially ruinous.

Until the federal government exercises their authority under the constitution, Gull Island can never be economic. Even with the right to transmit Gull Island through Quebec it is still likely uneconomic as the project costs will be in excess of $20 billion. Transmitting Gull Island through Newfoundland would add further billions in costs. It can never be economic to use that method of transmission.

We can be sure that if the geography was reversed and we were between Quebec and their markets for electricity, federal authority over the transmission of electricity would have long been exercised.

We should be very angry about this continuing failure of national public policy which has led to the Muskrat Falls boondoggle and likely to our second failure in one hundred years to manage our own affairs.

What we need is true leadership by the Government of Canada to create a national power grid regulated by the national government so the export market is opened up to all competitors. What we have gotten instead is another thumb on the scale in favor of Quebec at the same time as taxpayers from Newfoundland and Labrador are contributing to the 12 billion dollars in equalization they get while we are a so-called “have” Province.

And no mention of improving the fiscal stabilization program so we and the other resource rich provinces get much needed funds as our resource revenues drop like a stone.

How is this fair and when are we going to stop putting up with it?


Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.


This is the most important set of negotiations we have engaged in since the Atlantic Accord and Hibernia. Despite being a small jurisdiction we proved to be smart and nimble enough to negotiate good deals on both. They have stood the test of time and have resulted in billions of dollars in royalties and created an industry which represents over a quarter of our economy. Will we prove to be smart and nimble enough to do the same with the Upper Churchill?