30 July 2012

Those friggers from [insert name of province] #nlpoli

Anyone steeped in the whole Quebec-Newfoundland fight over hydro-electricity exports will look at the whole Alberta-British Columbia fight over oil exports and see the connections.

Sure, they are there.

The most obvious:  one province wants to get somewhere to export its energy product and there’s another province standing in the way.

What else could there be?

Well, lots actually.

Some will point to the difference.  In the Quebec racket, the federal government supposedly sided with Quebec.  In British Columbia, meanwhile, the pipeline will be an interprovincial undertaking of national consequence.  As a result, it’s a federal thing under section 92.10 (a) of the Constitution Act, 1867 so it will happen despite any BC objections.

The Myth of the Power Corridor

Let’s get that power corridor one off everyone’s mind right away.  For starters, the story everyone has heard about the federal government and the power corridor through Quebec in the 1960s is just that:  a story.

The truth is far more complicated.  Memorial University economist Jim Feehan is one of the few academics to dive into the story.  Feehan published the results of his research in Acadiensis last fall in a paper titled “Smallwood, Churchill Falls, and the Power Corridor through Quebec.” Feehan concludes that there “is no corroborating evidence that at the time the Newfoundland government ever tried to convince the federal government to use Parliament’s declaratory power to create a power corridor through Quebec.” 

The provincial government did use the threat of such a request in an effort to influence negotiations between Brinco and Hydro-Quebec. But the whole story, as most people in the province understand it? “Despite its powerful imagery and its on-going influence on Newfoundland political culture,” Feehan concluded that “that story is no more than a legend.”

The difference in the federal role in these two cases has as much to do with history as it does the commodities.  Writing in the University of Calgary faculty of law blog, Nigel Blankes noted recently that “the [National Energy Board] has long exercised jurisdiction over interprovincial oil and natural gas pipelines.” 


They have.

The Truth about Cats and Dogs

And that’s largely because the interprovincial transmission of oil and gas has been a much bigger political issue than has electricity transmission.  The provinces themselves have looked at it differently, in that they have been quite worked up about oil and gas.  That difference seems to be a logical result of the fact that since the early 1970s oil has been perceived as being a whole lot more lucrative than electricity.

Electricity has also been predominately a north-south issue.  The provinces who are big electricity producers have tended to deal primarily with the United States in order to make money.  Since these provinces are also border provinces  - with the exception of Newfoundland and Labrador – so they’ve been able to sort it out directly.

Electricity was an issue around the time the federal government created the board.  As Feehan notes, the energy board dated from 1959 and its powers with respect to electricity were limited largely because of provincial sensitivity to intrusion into an area of provincial jurisdiction. 

Quebec may have been the sorest point at the time but other provinces were not lined up on the other side of that debate.  Newfoundland and Labrador sided with Quebec on the question of provincial jurisdiction  before it got to thinking about asking the feds to do something else.

What’s happened in electricity is that American federal regulations have done what the provinces themselves have been unable to agree on for 50-odd years.  American regulations since the late 1980s have created the ability for provinces to move electricity across provincial borders.  There’s no such thing as stranded electricity in Canada anymore. 

Speaking of Fairy Tales

Regardless of how it happened, the thing is that interprovincial trade in electricity has happened.  Nalcor has been exporting electricity from Churchill falls into the Untied States since April 2009.  They lose money on the deal but the point is exactly what Premier Danny Williams touted at the time:  Labrador hydro isn’t stranded any more.  Nalcor has been able to wheel electricity across Quebec to market since the 1990s. 

The company chose not to do it before, but once it changed its mind, it happened.


Some people got sucked in later that year when Danny Williams claimed that the Quebec energy regulator was blocking Nalcor from wheeling Lower Churchill electricity.  Nothing could be farther from the truth.  Williams didn’t need to spin a fairy tale himself.  Some people invented stuff for themselves in order to make it fit their  - false – preconceptions.

The reality is that Nalcor didn’t pursue its plan to wheel power through Quebec because it had neither the markets nor the power from the Lower Churchill to send down the line.

There are plenty of parallels between what is going on in British Columbia today and what happened almost 50 years ago in Newfoundland and Labrador.  There are still current parallels, even if they aren’t the ones some people might imagine.

What’s going to be interesting is to see what the Council of the Federation task force comes up with on topics like the interprovincial transmission of what we’ll call energy products.