10 May 2006

Lower Churchill solo act could end in shock

Konrad Yakabuski has an interesting column in today's Globe and Mail on Danny Williams' plans to got it alone on the Lower Churchill.

It's "premium" content for the Globe but if you go to google news and search "lower churchill" the thing will pop up.

Yakabuski says the best option for Newfoundland and Labrador remains a deal involving Hydro Quebec:
Developing Lower Churchill with a partner and letting Newfoundlanders determine their own economic destiny are not mutually exclusive propositions. Indeed, joint development of the project with Quebec still makes the most economic sense for Newfoundland, if only because, if Hydro-Quebec is not a partner, it necessarily becomes a competitor.
He notes that Quebec is fast-tracking development of its own hydro-electric potential that would arrive on the market at the same time as the Lower Churchill, if development begins in 2009. In the meantime, Quebec has already committed hundreds of millions of dollars in environmental studies and is moving quickly to negotiate power purchase deals with Ontario.

As with the Upper Churchill, one of the issues for both financiers and prospective customers will remain the same: can the proponent deliver? Yakabuski describes it this way:
Those are the same customers [Ontario and the United States northeast states] Mr. Williams must court to sell power from the Lower Churchill project. The buyers will not choose their supplier based on price alone; since the contracts must be signed before the first shovel goes into the ground, the buyers must have the confidence, if not assurance, the seller can deliver the merchandise.
Undoubtedly, the Premier will dismiss these observations out-of-hand as will local commentators who have built a notoriety around all things electric. It is still food for thought as we contemplate doubling the provincial debt, with or without loan guarantees from the federal government and other investors in the Premier's supposed go it alone approach.