The revised agreement is similar, but for one substantial difference. In lieu of New Brunswick formally retaining ownership of its transmission infrastructure (including its 1,000-megawatt export capacity into the United States), the adjusted price tag to Hydro-Quebec is only $3.2-billion. As for the touchy business of “priority access”, the System Operator explains it comes bundled and provided to whichever entity owns the generating assets located in the province, as it always has. Since such reserved capacity rarely rises above 25 per cent of the total on any given day, however, nothing prevents another power supplier – either within the province or without – from negotiating its own transmission arrangements with the reserve holder. As New Brunswick retains full regulatory control, the chance of any corporate behemoth monopolising the system is slim to none.
It sounds reasonable. It seems reasonable. Except that for many opponents, the basic premise of the argument to sell out doesn’t support the logic of the deal. If NB Power is such a cash drain, then why is Hydro-Quebec prepared to bail it out? And if the utility’s assets are so undervalued, then why is the Province of Quebec willing to cover its operating losses? And there are other questions. When, for example, did New Brunswick’s premier decide, after witnessing years of underwhelming financial performance, that NB Power was finally, fatally insupportable? How, precisely, did he throw in the towel? There must be something else, something nefarious, unfolding behind the curtain: Something about greed and Machiavellian manipulation on the one hand, and fear and political capitulation on the other.
Williams, for his part, doesn’t subscribe to such alarmist dream-weaving. And he is at pains to point out he has no interest in interfering in the affairs of another province. For him, the issue is strictly about the constitutional right of his province – indeed, the rights of all provinces – to develop their resources without fear of hindrance. This is, after all, a cornerstone of national unity. Despite assurances from the New Brunswick System Operator, a Hydro-Quebec monopoly on transmission could easily undermine Newfoundland and Labrador’s hope to export energy within and beyond the Maritimes simply because the rates HQ would charge would be prohibitively expensive. History makes his case.
“I would issue a word of caution to New Brunswickers and to the Government of New Brunswick, in a friendly way, as a neighbour who has been burned by Quebec,” he says. “We’re in a situation now as a result of the Upper Churchill deal where we’re losing anywhere from $1.7-billion to $2-billion a year. This is an enormous number, obviously, for an Atlantic Canadian province. Spread out over 70-odd years, the cost has been to us, and will be to us, anywhere from $75-billion to $100-billion. With New Brunswick’s population, you can extrapolate what that kind of relationship [with Hydro-Quebec] would mean on a per capita basis.”
A related worry is what this deal does to the concept of an Atlantic Energy Grid, which has topped the agenda of every Council of Atlantic Premiers meeting for years. Prince Edward Island Premier Robert Ghiz endorses the agreement. But, until the revised deal, Nova Scotia Premier Darryl Dexter concurred, in large measure, with Williams. Now, he supports the effort. So, then, have the negotiations with Quebec fatally fractured the slow, commodious, progress towards Atlantic energy cooperation?
Graham doesn’t buy any of these arguments. His more immediate concern has been the reaction to the deal within his own province. “Okay,” he says, “if I stood up today and said that I was going to lock in the price of gasoline at the pump for the next five years, New Brunswickers would be ecstatic. But, that’s what we’re doing with their electricity rates right now, today. The advantage of this will only be seen through time. Other jurisdictions, like Ontario and Nova Scotia, will see dramatic increases in their electricity costs due to their reliance on fossil fuels for power generation.”
Sure, but what about the sovereign right of every New Brunswicker to chart the course of his or her own energy future, even if that future is fatally compromised by escalating energy costs and massive debt?
“Think of it this way,” Graham sighs. “I’ve always alluded to NB Power as your little, kid brother. You hate him. And then, all of a sudden, when someone’s going to pick on him, you’re going to stand up and defend him. Well, that’s what has been going on in New Brunswick.”
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!