09 July 2005

Outing another Lower Churchill company

Rob Antle's July 6 2005 story in the Telly on a proposed underwater cable to carry Lower Churchill power into the Maritimes ("Proposal would skip Quebec") was based on this story by Stephen Maher in the Halifax Chronicle Herald from Monday, July 4.

Keep your eyes peeled. There may be other Maher stories coming. He's been working on this for a while now.

In any event, both stories report on a proposal by British Columbia company Sea Breeze Power to run a power cable under water from Labrador to either Prince Edward island or Nova Scotia to hook into the Maritime power grid.

Certainly, the idea is technically feasible. Engineers can put the arse back in a cat with enough time and money.

Time isn't an issue here.

It's money and that's what ultimately affected the Upper Churchill too, despite the nonsense foisted on local audiences by everyone from former politicians to crap talk mavens.

It's the financing that remains a question. Someone has to pay for it and if it is built as part of the overall project, the one paying will be the end user. The project economics will have to ensure that the power gets to a consumer at a competitive price.

Note in Maher's story that some unnamed industry experts predict Labrador power can be taken to an American market for little more than a third the current market price of electricity in New York.

Be very skeptical of those figures, if only because the source is unnamed.

Be skeptical too because megaproject proponents (and their official and unofficial supporters) grossly underestimate the cost of their projects. They deliberately minimise the costs. The undersea cable idea has been around since the 1960s and what prevented it from working then was cost.

There's an interesting reference to an unnamed source in Newfoundland who talks about the premier heading off to New York to try and get financing for the secretive Sino-Energy deal.

Note that according to the unidentified source Premier Williams' requests for financing were rejected in New York because the idea wasn't seen a viable.

If that's true, (and I'd be very skeptical of the source unless the name is revealed or the information confirmed) then we have yet another piece in the mysteriously secret deal that involved a Chinese company under sanctions in the US for illegal arms shipments. Rob didn't report that part in his Wednesday story likely because he couldn't confirm it and I doubt very much that you'll see anyone here coming forward to comment on it.

Energy minister Ed Byrne lied to the House of Assembly about discussions with the company and government kept secret its business dealings with the company for upwards of six months before suddenly springing the news. These include a secret memorandum of understanding that gave the alliance of two Canadian and one Chinese state-owned company unrestricted access to any information they wished on the Lower Churchill project.

Later revelations by ousted Newfoundland and Labrador Hydro Board member Danny Dumaresque suggest the sudden revelation may have be triggered by fear in the Premier's Office that some members on the Hydro Board, who were questioning the projects internal financial arrangements, might leak news of the secret Chinese deal.

Local news outlets never really got to the bottom of Sino-Energy.

There are a couple of other things worth noting from these two stories:

1. Quebec is a net importer of electricity.

2. The shortest route and the cheapest costs of production and hence the greatest potential profit come from selling the power into Quebec.

3. Sea Breeze's Eugene Hodgson knows how to pitch a story (see the quotes at the end of the Maher piece) but his deeper understanding of Lower Churchill power may not be quite as slick.

4. There are actually several proposals that have been confirmed, even though these stories note only one.

- We know about the joint Quebec-Ontario government proposal which includes SNC Lavelin as the construction manager. This proposal also includes a significant upgrade to the power grid between Ontario and Quebec around Cornwall, an area very familiar to Fortis Inc.

- There is another proposal from Quebec alone. Since Lower Churchill talks resumed in 1990, Quebec has insisted it has sufficient demand for the Lower Churchill power to be the only customer. While the Prem's Office may be silent, there is reportedly another proposal from Hydro Quebec.

- There is supposedly a proposal from Upper Churchill engineer and Stunnel proponent Eric Kierans. I wonder what it might involve.