02 May 2006

The rubbish tip of history

A self-congratulatory column in the Toronto Star this weekend by Independent editor in chief Ryan Cleary included some curious comments, among them the claim that Hydro Quebec made $2.0 billion in profit from the Upper Churchill last year compared to $34 million for Newfoundland and Labrador Hydro.

"With that in mind," wrote Cleary, "The Independent took a strong Newfoundland and Labrador focus from the start. Most of our investigations delve into motherhood issues. From the 'negotiations' that led to the Terms of Union to the infamous upper Churchill contract - which saw Quebec rake in an estimated $2 billion in profit last year alone, compared to this province's $34-million take - most projects have a distinct local flavour."

According to Hydro Quebec's 2005 annual report, the company had a net income of $1.87 billion in 2005. That's analogous to profit, in that it is the money left over from revenues after all the bills are paid.

Perhaps, Quebec made more in profit than it actually made.


But the financial statements also report an income from operations of $2.249 billion.

So if Cleary is right, then the Upper Churchill is responsible for 88% of Hydro Quebec's net income. That doesn't seem right since the Upper Churchill, as large as it is, doesn't constitute 88% of Hydro Quebec's generating capacity.

Something tells me Cleary's numbers are not correct.

But let's take it a step further; Cleary claims Newfoundland and Labrador earned $34 million from the Upper Churchill. The 2004 recall power purchase agreement with Quebec on a $130 megawatt block of power yields the province about $46 million each year over its five-year term. That isn't counting the revenues that flow from the sale of the rest of the Upper Churchill's 5, 800 megawatts of power to Quebec.

Clearly, something is missing in Cleary's numbers.

This doesn't mean the Upper Churchill contract is a fine and wonderful thing. Rather Cleary's column points yet again to the fundamental misunderstandings and misrepresentations that are the bedrock of so much discussions of the Upper Churchill contract. Since that contract is the fuel for so much political rhetoric about ending give-aways of our resources, it doesn't take long for fundamental errors - like Cleary's - to become the basis for public policy goals that are out of whack with what can be realistically achieved.

We wind up with a case of policy GIGO. Computer programmers will recognize that acronym: garbage in, garbage out.

"With that in mind", referred to the idea that Confederation was a giant con job, what I like to call the idea that the fiction yarn Secret Nation was actually a documentary:
There have been whispers of conspiracies and plots, treason and treachery ever since, based on the theory that Newfoundland didn't so much join Canada as was manoeuvred into it.
What was also in mind was everything from mainlanders referring to the province as "have-not" to the jokes about "newfies".

The distinct local flavour Cleary mentioned, though, is that GIGO business and the mythology that goes with it.

It is a flavour we can do without.

That is, we can do without it unless we want to keep going back to the rubbish tip for another whiff or, God forbid, another taste of the myths that have hobbled Newfoundland and Labrador and its people for too long.