According to the Globe and Mail, Hydro-Quebec is negotiating its first long-term power purchase agreement in decades to ship power to New England for 20 years beginning in 2014.
New England is a major market for hydro and long-term power purchase agreements are the way to secure financing for a project like the Lower Churchill. Thus far, Newfoundland and Labrador Hydro hasn’t been able to secure a single contract – erroneous reports to the contrary - nor is there a sign any contract is forthcoming.
Both the Premier and NALCO(R) boss Ed Martin spent most of 2008 lowering expectations for the long awaited development of the 2800 megawatt facility. As recently as October, Martin blamed uncertain financial markets for the apparent decision to slide back project sanction by at least six months. In February, the Premier repeated a comment he made in January that the odds of the Lower Churchill going ahead were “50/50”.
Financial problems with the project – lack of secured markets being chief among them – are likely the reason the Premier keeps insisting on federal financial backing for the project, even though it supposedly one on which he intends to “go it alone:”
"It was an opportunity for the federal government to right the wrong of the Upper Churchill, whereby we are losing, like, a billion and a half dollars a year."
But Williams maintains the feud is over now, and says he hopes for co-operation from Ottawa on funding a new penitentiary, a federal ocean agency, the Lower Churchill project and transmission line.
Linking the Conservative family feud with the Churchill Falls deal is curious. While it plays well with the local tin-foil hat brigade – see the comment on the Globe story from “Calvin St. John”, for example – the federal government didn’t play a role in that project except as a Joe Smallwood negotiating ploy.
Linking the 1969 BRINCO deal with the federal government isn’t a sure-fire way to secure federal cash. A more successful approach would have been to look at a deal with both Ontario and Quebec of the type that the provincial government had in hand yet specifically rejected when it decided to “go it alone” three years ago.
There’s also no telling how the Abitibi expropriation will play with investors in Canada. American investors likely won’t look favourably on it at all.
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