11 August 2016

The Price of Revanchism #nlpoli

Churchill Falls occupies a unique place in Newfoundland and Labrador's political culture.

Most of what people believe about Churchill Falls is just sheer nonsense.  Made up.  Never true. Completely ludicrous.  But accepted as fact and unshakeable truth all the same.  And that's where things get weird. People use all that foolishness nonsense to make decisions in the real world.

One of the enduring legends is that Newfoundland wanted a corridor to wheel electricity through Quebec,  went to the federal government in the 1960s to look for one, couldn't get it, and thus wound up a slave to Hydro-Quebec in 1969.  It's been a popular story since the 1970s,  after the Newfoundland government nationalised BRINCO.

There's never been any evidence that Joe Smallwood ever put the question to Lester Pearson although lots of people will swear to it and swear by the story as evidence of how Newfoundland has been shagged by whatever version of the foreign boogey-man they favour.  Danny Williams trotted the story out, indirectly, in November 2010 when he announced he had committed the provincial government to build Muskrat Falls.  Our electricity would never be stranded again.  We would never again be held hostage by Quebec.  The new, magnificent power corridor through Nova Scotia was the way that we would break Quebec's stranglehold over our magnificent future.

Yay!  Hooray! people screamed, including more than a few editors and columnists.

The only thing was that what Williams said wasn't true.

And he knew it.
Make no mistake.  It wasn't true in 2005 when the Spindependent newspaper wrote about a refusal by John Efford to sanction a corridor through Quebec.  It wasn't true in late 2009 when good old Tom Careen was writing to the Telegram about it, citing the Vic Young Blame Canada commission as proof we needed to force a corridor through Quebec.

Williams knew in November 2010 what he said wasn't true because Nalcor had already sold electricity through Quebec in April 2009.  Not stranded anymore, Williams said at the time.  Stranglehold broken.

While Williams may have known the stranded power story was a lie in 2010,  the story fit into the wider narrative of his policy, left over as it was from the 1970s.  Williams energy policy was as much revanchist as anything else. Williams and his associates wanted revenge on Quebec for the 1969 power contract.  They studied every aspect of it, as Jerome Kennedy said, looking for an angle.  They hit on it in the theory that the contract wasn't fair.  So they sued and lost.  They lost not because the court was biased but because the entire premise of the Newfoundland argument ignored the actual history of the 1969 power contract.

By 2010, Williams was ranting about the great Laurentian conspiracy at virtually every opportunity (left).

"Quebec lovers,"  Williams hissed in the House of Assembly in early 2010, "if we could only keep the Quebec lovers quiet, Mr. Speaker, it would be nice."

Globe and Mail columnists who wonder if a Trumpian egomaniac could come to power in this country ignore not only our rich Canadian history  - Hello? Ever heard of Duplessis - but of the throw-back who dominated Newfoundland and Labrador less than a decade ago.

Williams and his associates weren't also so hell-bent on frigging over the frogs.  They originally tried to sell Hydro-Quebec a chunk of the Lower Churchill, as Kathy Dunderdale admitted.  At the same time, though,  Williams also said we would go it alone.  In 2007,  Nalcor tried to book space on the Quebec grid.  At the last minute,  Nalcor filed a series of appeals to the Quebec energy regulator over largely vexatious claims.

When Nalcor lost every single appeal,  Williams claimed that the whole thing was part of a vast conspiracy to frustrate development of the great Labrador powerhouse.  Local media never accurately reported what happened, preferring Williams' fairy tales than try and read the actual decisions.  The simple truth was that Nalcor couldn't build Gull Island because they couldn't get anyone to sign the power purchase agreement needed to secure the financing.  Nalcor's appeals were about screwing with the enemy,  about deflecting attention from what was going on.

Part of what was really going on is in one of the appeals.   Since 1969,  Hydro-Quebec has scheduled deliveries from Churchill Falls and treated the line from the plant to the Labrador-Quebec border as if the Churchill Falls plant was within the Quebec grid. As much as it had been a long shot, had Nalcor's appeal to the Regie succeeded, Nalcor would have broken Hydro-Quebec's control over power deliveries and hence HQ's control of water flows on the Churchill River.

And if that hadn't succeeded,  Nalcor and the Williams' Conservatives had another trick up their sleeve. In 2008, they introduced a new piece of legislation that gave Nalcor water rights on the Churchill River.  Supposedly, the Energy Corporation of Newfoundland and Labrador Water Rights Act was just about the Lower Churchill.

Kathy Dunderdale said just that in the House of Assembly in May 2008:  "... This legislation provides us with a tool, a mechanism to award water rights. That is all it does."
"Right now, in terms of all other rivers in this Province, they are governed  under the Water Resources Act through the Department of Environment. There is only one exception to that, and that is the Churchill River. The Lower Churchill Development Act gives us the mechanism to award those rights to LCDC, the Lower Churchill Development Corporation Limited, but that is all we can do. We are restricted in that piece.

We have decided that our Energy Corp. is going to provide the lead on the development of the Lower Churchill, therefore we need a mechanism to award them the water rights. All this legislation does is give us the mechanism, the tool to do that.
What was odd in hindsight, was that the government didn't repeal the old LCD Act or amend it to allow cabinet to assign water rights to another corporation.  They left the old Act in place with its definitions and introduced a new piece of legislation that was, as Kathy Dunderdale said during debate on second reading,  expressly designed to "ensure that there are no legacy rights on the Lower Churchill River granted by a previous government"  and to do so without paying compensation to anyone "whose rights have been extinguished. This provides the Province with the necessary protection from future claims."

And what was even more odd was that the new law changed the definition of the Lower Churchill from the one in the old LDC Act.  It now covered the whole of the Churchill River.  In essence it was another attempt at breaking the Churchill Falls corporation's lease.  Hydro-Quebec figured it out and forced the provincial government to call an unprecedented emergency session of the legislature in September 2009 expressly to gut the water rights bill from 2008.

At the time of the emergency session,  Williams and his energy minister did two things.  First, they down-played the significance of what was happening, which the local media dutifully accepted and reported as the gospel truth.  Second, they began to savagely attack Hydro-Quebec for - as Dunderdale explained - refusing to buy into the Lower Churchill, no matter what Williams had tried and no matter what he had promised voters before the 2003 election. The attack on Hydro-Quebec included screwing with a potential deal by Hydro-Quebec to buy New Brunswick Power. He delivered speeches about the evil plots from Quebec.  And after Williams was gone,  his hand-picked successor and the rest of his old associates carried on the war with law suits and words.

The cost of Williams' revanchism has proven to be high. Upwards of $15 billion to finish Muskrat Falls and now confirmation that not only can't the thing produce enough electricity to matter but that Hydro-Quebec has the upper hand in any future discussions on water management.  People who knew nothing of Labrador hydro-electricity but the popular myths acted on it and, in the process,  wrecked the province.

Before 2003, people who had taken a decidedly more sophisticated and mature policy toward hydroelectric development in Labrador had a viable deal to develop the Lower Churchill. They had forged a professional working relationship with Hydro-Quebec.  Had their plans carried on,  the entire Lower Churchill could have been developed long ago, with guaranteed profit for the province, and at perhaps one third the cost of the puny Muskrat Falls.

The legacy of Williams' revanchism is not just the debt and the failure of Muskrat Falls. It is the legacy of Trumpish insults and foolish law suits,  of good money thrown after bad, in pursuit of ridiculous ideas and reckless gambles, all of which earned the province the reputation of being little better than a gang of fools.

The price of revenge is steep.