NL Premier Danny Williams (R) says NB Premier Shawn Graham is disrupting the regional energy planning process. Photo: REUTERS/Paul Darrow (Canada - 2007).
(Disclosure: the Province of Quebec and Hydro-Quebec were either unwilling or unavailable to comment for this story.)
Beyond this, both Williams and former Nova Scotia Premier Rodney MacDonald have fought pitched battles with the federal government over offshore rights. And, again, the scars earned at the cost of billions of dollars have not yet healed. Meanwhile, Ottawa has constantly yakked about “energy gateways” and “transmission points” into the increasingly power-hungry United States and has worked, futilely, to secure these. Throughout, only Quebec and New Brunswick have possessed the transmission infrastructure to paint the big picture for the rest.
All of which has transformed New Brunswick, if only for the time being, into a nexus where all things seem simultaneously possible and impossible: A battleground for the strong of arm; a chess board for the nimble of mind; a tableau on which to redraft the traditional conventions of Atlantic Canadian energy cooperation and development; a political theatre in which to workshop the very principles, if not the facts, of the constitutional understanding that is the core of the Canadian Confederation. As is sometimes the case in the fragile world of inter-provincial relations, where even the most innocuous move can be seen, not illegitimately as the gravest miscalculation, it all began with a first-term premier’s desire to save his electorate a few bucks.
Shawn Graham sits in his Fredericton office, pondering the rollercoaster ride of the past few weeks. It’s been two days since he unveiled the details of his “new, improved” agreement with Hydro-Quebec, and the wringing of hands and gnashing of teeth in his home province and elsewhere has hardly abated. “Look, it’s simple,” he says almost mirthfully. “When we made the first formalized framework public in late October of last year, I specifically announced that I was determined to engage New Brunswickers in the discussion. At that time, I didn’t think I’d also have to engage my fellow premiers.”
Now, his tone turns and he becomes deadly serious. “Danny Williams became involved in a debate that was primarily designed to drive the New Brunswick agenda,” he says. “So, I’ve worked to try to alleviate some of [his] concerns. He wants to see more of the details, and I can respect that. He will see more details, as will all New Brunswickers, when the finalized document is completed by the end of March. But, this week, we’ve dealt with the objections by retaining ownership of NB Power and of the New Brunswick System Operator, which controls the transmission system.”
His demeanour suggests a certain, rising impatience. Why, he seems to wonder, don’t more people appreciate the impending economic peril in New Brunswick which motivated both the first and second rounds of negotiations with Quebec? Why aren’t more better informed about international energy politics, the province’s crushing debt load, and the consequences of continued reliance on fossil fuels for power generation? “We are taking a giant leap forward in reaching our key objectives,” he says. “And these are to lock in power rates for homeowners, to reduce the rates for large and medium-sized businesses, to create a more competitive economy that’s going to create jobs, and to lower our debt load. What’s more, we’re going to reduce our greenhouse gases.”
Ironically, the original deal might have done a better job of achieving all of these objectives than the revised version. According to the memorandum of understanding signed in October, Hydro-Quebec stood to gain virtually all of NB Power’s assets, which included seven hydroelectric generating stations, the Point Lepreau nuclear power plant outside Saint John, and the utility’s 6,700-kilometres of transmission lines connected to systems in the Maritimes and New England. As well, under the agreement, three of five fossil-fuel-fired plants in New Brunswick would be shut down. The remaining two would wheel power into the Quebec grid, under contract, making CO2 emissions that Province’s problem if and when a carbon cap-and-trade regime descends on the nation.
The purchase price of $4.8-billion would have, theoretically, eradicated NB Power’s accumulated debt load (in the process, eliminating 40 per cent of the province’s systemic $13-billion shortfall). Even more attractive to Graham, perhaps, was the stipulation that Hydro-Quebec would provide New Brunswick with cheap, green energy in the form of a14-terrawatt heritage pool of power – a pool, valued at $5-billion, which would have permanently cut industrial customer rates by 30 per cent, frozen levies on residential consumers to current levels over five years, and fixed annual increases after 2015 to the province’s typical 1.8 per cent consumer price index, compared with NB Power’s historical 3.2 per cent yearly hikes.
As an economist (and ex-pat New Brunswicker) who’s read several analyses that support the NB Power sale, I understand the reasoning behind them. However, I am still concerned over the long-term implications which NO ONE can come close to predicting.
I respect the views of sages like Donald Savoie who has been calling the alarm over New Brunswick’s escalating fiscal imbalance and the probable need to begin selling off crown asstes. But when it comes to selling NB Power to Quebec Hydro, along with guaranteed access to the purchase of its transmission capacity should that decision be made in the future,I begin to think that this may be the contemporary equivalent to Newfoundlanmd Premier Joey Smallwood’s disastrous decision some five decades ago.
Our grand kids may very well shake their heads and wonder what Premier Shawn Graham was thinking in 2010.
Jim Taggart
Ottawa
It is a bad deal for NB.
I find it amazing that yet another generation of Maritimes / Atlantic-Canadian readers of the mainstream periodical business press are to be brought up once again on utter pap of the kind on offer in Alec Bruce’s article. Absent anywhere in the piece is even a breath of a hint of a clue, a hemidemisemiquaver, of the reality of the private corporate control/diktat that has been driving the entire NB Power/Hydro-Quebec deal “from the get.”
Cupidity, thy name is IRVING.
In the 1970s it began to be pointed out occasionally [in forgotten publications like The Mysterious East and the even more thoroughly forgotten federal Royal Commission on Corporate Concentration] that the so-called “interests of New Brunswick” happened — by just an amazing coincidence — to reflect exactly 100% — not 9% and not 101% but 100% — the interests of the Irving business empire, full stop. A generation of us eventually learned to read between the lines and look for the Irving-imperial interest[s] served by the Robichaud, Hatfield and McKenna administrations. In no field was this more blatant than that of oil-and-gas / energy.
Unloading NB Power onto Hydro-Quebec resolves quite a number of challenges to the Irvings’ future interests both in the short/medium-term and the longer term. The Irvings cannot possibly have a really profitable energy hub in Saint john, especially with a huge foreign investor partner such as Repsol SA, unless NB Power’s provincial monopoly is utterly tamed and retired as a potentially independent operatort not entirely under the Irvings’ control. The Irvings frequently use/attract Quebec-based capital to absorb assets that they find troublesome (remember Cabano? ever heard of Acadian Lines? SMT?).
What’s obviously no longer a source of maximum profit in minimum time are those penny-ante 30-year Bunker C contracts to supply NB Power thermal generating plants. Does anyone seriously expect Hydro-Quebec to maintain those aging and increasingly outmoded facilities?
In the wake of Hydro-Quebec’s digesting NB Power and thereby entirely monopolizing the export of electric power from east of Quebec into U.S. markets, I would look forward to Emera finding ways to dump any further long-term involvement in costly and decreasingly profitable monopolies like its current domination of the provision of electrical power throughout Nova Scotia. Central Maine Power which it already owns is a far better prospect, and in the U.S. there would be no hassles bringing unlimited quantities of Colombian blood coal to power the company’s generating plants. Well, then at least we won’t have to wait for a bad storm to knock or brown out our power services.
As for The Rock, those benighted folk have already been compelled to kiss a 400-year old fishery goodbye to make way for the offshore oil play that became Hibernia and the Hydro-Quebec coup will be curtains for any Lower Churchill dreams anyone was still harbouring. “Williamsville,” about to shrink to the size of a patch of Continental Shelf 300+ km or so southeast of St John’s, will just slide into a new desuetude as the easternmost oil tank of U.S. eastern seaboard oil refineries. Danny Millions’ personal republic will stay afloat on the basis of safety standards of the kind that sank the Ocean Ranger and took more than 80 workers’ lives nearly 30 years ago, and that contributed to the loss of almost everyone on Cougar Flight 491 when it ditched a year ago today (March 11). As for those pathetic 700,000-plus other folk still trying to carve out a livelihood on the island of Newfoundland, all I can say is: remember the Beothuk.
Having received the Atlantic Business magazine two days ago I was delighted yesterday to learn that New Brunswick has now decided to dump the power deal with Quebec – or perhaps as the Government of New Brunswick would prefer me to say….hmmm, Hydro Quebec pulled the plug on the deal.
I think not!
Last night I watched the New Brunswick premier try to keep up with Steve Murphy’s interview in which among other things he wondered how the Premier plans to get re-elected….that’s where the -it was Hydro Quebec’s dumping of the deal surfaced.
Having spent nearly 30 years in the media and a very large part of it working in Newfoundland and Labrador to try to get a “fair deal” from Hydro Quebec on the Labrador Hydro deal I feel qualified to offer the following.
The Alec Bruce article is a brilliantly written presentation of the power project. A case which openly wonders about what the deal would ever have meant to increasing value in Hydro Quebec – without something else, more devastating to the region to follow on the heels of this agreement. New Brunswick residents seemed at the outset of the “Plan” to twig to the potential black hole, in the fine print or in the what was not said.
Premier Graham almost made Jean Charest’s day, or perhaps more likely “Legacy of office: and don’t forget the business interests in New Brunswick to boot – they seemed destined for a comfortable future too.
The rest of Atlantic Canada should be happy with the outcome of the poor plan because as has been the mantra on the rock for over 4 decades now…isn’t it a tad strange that the “Government of Canada” could give permission to oil companies to build a pipeline from Alberta to Nova Scotia…but Newfoundland couldn’t run a power line across Quebec. I think to fully understand that you have to put Quebec and Hydro Quebec in that picture and you also have to put emphasis on the word POWER.
New Brunswick, you have just dodged a huge bullet – and don’t get too pent up in the very sad story about to enfold about how you missed the opportunity of a lifetime – I don’t think so!
To Atlantic Business Magazine – a perfect setup of the story of the year in this Region!