04 September 2009

Williams miffed Hydro Quebec rejecting ownership stake in Lower Churchill

Far from going it alone on the Lower Churchill or seriously pursuing a transmission route around Quebec,  the Williams administration has been working fervently to get Hydro Quebec on board as a co-owner  of the Labrador project. 

Those efforts have been in vain, according to natural resources minister Kathy Dunderdale.

Dunderdale  told VOCM Open Line show host Randy Simms on Friday morning that over the past five years, the Williams administration “got a path beaten to their [Hydro Quebec’s] door” in an attempt to have HQ become what Dunderdale described as an “equity partner” in the Lower Churchill.

Dunderdale described the Lower Churchill “piece” as a “win-win” for Hydro Quebec.  She said that despite efforts by the Government of Newfoundland and Labrador there was “no take up [from Hydro Quebec] on the proposal.”

The new version of events offered by Dunderdale is at odds with media reports this week of Premier Danny Williams’  speech to the Canadian Energy Forum meeting in St. John’s last Wednesday.  Williams reportedly accused Hydro Quebec of protecting its own interests and of blocking efforts to develop the Lower Churchill. 

However, Dunderdale’s comments fit with a more careful reading of  Williams’ remarks at the energy forum.

On Wednesday, Williams accused  Hydro Quebec of blocking the Lower Churchill project by not being interested in it at all.  Instead, the Quebec Crown corporation was pursuing other projects – like La Romaine – which Williams said was inferior to the Lower Churchill:  Williams is quoted by the Telegram in a Friday story [not online] as saying “La Romaine is not as good a project as the Lower Churchill.” 

Hydro Quebec is pursuing several projects within Quebec, including alternative sources of energy to hydro, all of which are aimed at boosting Hydro Quebec’s portfolio of capacity by more than 4500 megawatts. 

That was known at the time Williams made the decision in 2006 to “go it alone” on the Lower Churchill.  He also Williams attacked the other projects in 2006.  At that time, he claimed that those projects would get to market before the Lower Churchill and hence would beat out his pet project.  In 2006, Williams vowed to continue in spite of competition.

Friday marked the first time, however, that there was public acknowledgement the provincial government was actually trying to lure Hydro Quebec into an ownership position.

This week also marked the first time Williams linked a possible Hydro Quebec financial stake in the Lower Churchill to the 1969 Churchill falls contract.   Williams told the forum that as a result of Hydro Quebec’s exorbitant profits from Churchill Falls, “the very least I would expect Hydro-Quebec to co-operate with us to the fullest on getting the Lower Churchill through.” 

Previously,  Williams has consistently tied any negotiations with Hydro Quebec over the Lower Churchill with “redress” for the 1969 contract.  That’s inconsistent with offering Hydro Quebec an ownership stake in the new project.

Williams also said that Hydro Quebec had filed procedural applications in an effort to stall a hearing by the Quebec energy regulator - Regie de l’energie – into an objection filed by NALCOR/Newfoundland and Labrador Hydro over a regulatory issue. 

That’s a bizarre way to describe things, though.  Newfoundland and Labrador Hydro is one of several interveners in a decision on transmission rates for 2009.  NL Hydro filed its notice seeking intervener status at the last minute.  But since the rate hearings affect more companies than NL Hydro and NL Hydro is one of a dozen interveners, it’s hard to see how a routine regulatory process is part of a plot to frustrate the Lower Churchill.

What’s more, Williams’ claim flies in the face of successful efforts by NL Hydro to wheel power through Quebec.  Hydro started the process in 2006.   In early 2009, Hydro announced successful completion of a deal  with Hydro Quebec’s transmission arm to wheel power through Quebec to markets in the United States.  

Efforts to cut a deal with Hydro-Quebec while claiming something else are only the latest in a series of erratic moves and claims by the provincial government since 2003.

In 2006, Williams rejected out of hand a proposal from Hydro Quebec and Ontario’s Energy Financing Company to finance the Lower Churchill.  The proposal came in response to a called for expressions of interest issued by the Williams administration.  Under the proposal, Ontario and Quebec would buy the power and cover the costs of upgrading transmission facilities within the provinces and across the provincial boundaries.  The proposal also included flexible options on financing the construction of the two generating dams at Gull Island and Muskrat Falls.

Williams tossed that proposal and several others aside in favour of what he characterised at the time as going it alone.

In 2006, Williams said publicly that investors should look to the Lower Churchill instead of projects Quebec because Quebec is politically unstable.  Williams later apologised because people found the comment offensive but he did not retract his comments about Quebec’s political climate.

Williams has also sought financial support from others despite the “go-it-alone” claim. In successive federal elections, Williams has raised the idea of federal loan guarantees with federal party leaders.  He has also tied federal financial support for the Lower Churchill as some apparent form of compensation for having to run transmission lines around Gros Morne national park.

The erratic public positions don’t stop there. 

In 2008, natural resources minister Kathy Dunderdale indicated the provincial government was considering a law suit against the federal government over the 1969 contract.  Later in the day, the provincial government backtracked.

In early 2009, an official with NL Hydro hinted that the provincial government was considering financing options other than the “go-it-alone” version.  Little did the people of Newfoundland and Labrador know what the other options were.



WJM said...

In 2006, Williams vowed to continue in spite of competition.

Operative word: spite.

Mark said...

If getting an equity stake in our other energy projects was a source of great "pride" for the people of Newfoundland and Labrador, what's the state-sanctioned description of giving up such an equity stake to the people of Quebec?

Edward G. Hollett said...


One of the other things underdale said confirmed that the offshore plays have been all about pushing funds to cover the provincial portion of going it alone.

I suspect that, as the Chronicle herald reported a few years ago, the provincial government's efforts to secure funding in the marketplace has been met with a stifled yawn.

No one was willing to advance the cash, even backstopped by oil.

That was when there was cash. In the current market, capital is even more scarce.

All that would also explain too why DW has been obsessed with securing a federal loan guarantee or cash handouts to build the project and why - as Dunderdale makes plain - they've been desperately trying to get HQ and its cash on board.

It's easy to put this back to the tendency Wangersky writes about this weekend: impulsiveness. That's a trait many people have noticed. This administration has a tendency to deal with very important issues impulsively, erratically, mercurially or capriciously.

There's been plenty of bizarre decision-making on the LC since 2003 that is only explained by capriciousness. And that tendency to erratic, impulsive decision-making is essentially why the project is today where it was 11 years ago: no where.

In fact, a successful project was closer in 1990 or in 2202 than it is today. And, impulsively, he's decided to stay to see if he can get that illusive legacy "piece" rather tha n go out as the being yet another guy who failed to deliver his LC promises.

WJM said...

If getting an equity stake in our other energy projects was a source of great "pride" for the people of Newfoundland and Labrador, what's the state-sanctioned description of giving up such an equity stake to the people of Quebec?

By necessary implication, wouldn't that be "shame, weakness, and fatalism"?

ClaudeB said...

No doubt about it, Hydro-Québec is the natural partner here. With HQ, you get a quality signature and loads of cash, a proven record of projects delivered on schedule and a long-term buyer who's committed to large-scale hydro.

If both parties were completely rational, they would make a more comprehensive deal regarding much more than the Gull Island and Muskrat Falls stations: such as more water for the Romaine and Petit-Mécatina projects, an agreement on developing the Old Harry formation in the Gulf of Saint Lawrence, the refurbishment of the Churchill Falls G.S. and a settlement on the border issue. Heck, add the renewal of the 1969 contract to sweeten the pot.

In my humble opinion, a comprehensive settlement would accelerate economic development in the energy and mining sectors, help settle the Innu land claims on both sides of the Labrador border (make them part of a James Bay and Northern Quebec Convention-like deal) while being very lucrative for Quebec and NL.

A Former Civil Servant said...

ClaudeB, that's what a lot of us have been saying for ten years, if not more.

The dissenting voice in the room has always been the slogan-barking, flag-tearing, fear mongering, loyalty-demanding, traitor-calling tempermental lunatic who purports to represent Newfoundland's interests.

The man we call Premier.

WJM said...

Mostly sensible ideas, Claude. But the Innu are politicially divided (Innu Nation, Mamit Innuat, Mamuitun), and not going to have a single agreement. (They'd also not likely be keen on joining JBNQA.)

And what border issue is there to be settled after 1927, other than to survey and delineate?

WJM said...

One more for Claude's list: the provinces should get their acts together and co-ordinate the extension and improvement of the Quebec-Labrador highway system.

One Woman said...

What ever happened with the Premier’s visit to Qatar to seek investment money from them? You will recall that while the federal delegation to Qatar was coming out the door, the provincial delegation was going in (or vice versa). Did the Qataris turn down both the provincial and the federal request for investment?

Edward G. Hollett said...

I don't recall any federal request for investment but you could be right.

The thing that struck me at the time was that there simply was no reason for Qataris to invest in a hydro project in North America.

And don't forget, there were plenty of these phantom investors and junkets in the original CF days. Nothing ever came of any of it and much of the activity was merely to make it look like things were happening when actually they weren't.

WJM said...

And don't forget, there were plenty of these phantom investors and junkets in the original CF days. Nothing ever came of any of it and much of the activity was merely to make it look like things were happening when actually they weren't.

Geeze, you almost make Danny sound like Smallwood there.

One Woman said...

I think that they were both after the same pot of money for two different projects. The federal government was there, perhaps in support of a project in Nova Scotia; certainly not on behalf of Newfoundland and Labrador.

Anonymous said...

This all sounds like Joey Smallwood all over again. A. Morris