Atlantic energy co-operation: where Lower is higher

Natural resources minister Shawn Skinner is in Halifax talking energy co-operation with his counterparts in the Maritime provinces.

Odd that the provincial government didn’t play it up more than issuing a few lines in a media advisory on Monday, the day the meetings started.

After all, New Brunswick energy minister Craig Leonard is interested in some of Skinner’s Lower Churchill electricity.  As Leonard told the Telegraph Journal:

"There will be a considerable amount of energy that's moving through the province," Leonard says.

"That's an opportunity for us. That's clean, renewable power that will be moving through our transmission system, whether it's en route to New England or we could utilize it ourselves."

Now as regular readers of these scribbles know, the Muskrat Falls proposal is a hugely expensive proposition that Premier Kathy Dunderdale and her Conservatives expect Newfoundland and Labrador residents to pay for. The cost to produce the power, according to Dunderdale back before Christmas will be at least 14.3 cents per kilowatt hour.

Now that is interesting given that the old NB Power deal with Hydro-Quebec was supposed to lower electricity rates in the near term. When the New Brunswick government unveiled the deal, consumer electricity rates were around 11 cents per kilowatt hour.  Hydro-Quebec had oodles of electricity, some of it from very low-cost operations and could have made a tidy sum off New Brunswick customers even at reduced current rates.

Leonard and his colleagues campaigned against the deal and if they now buy Muskrat Falls power, they’d be doing exactly the opposite from what the Shawn Graham deal would have delivered.

Maybe the crowd in Fredericton will just settle for making some cash off the power that Nalcor will wheel through to the United States.

Oh.

That’s right.

There’s a power glut south of the border.

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New 500 MW intertie for NS and NB

New Brunswick Power and Nova Scotia Power are looking at the prospect of building a new 500 megawatt connection between the two provinces.

The Chronicle Herald estimated the connection would cost $200 million when they reported on the potential interconnection earlier in July.

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Let he who didn’t oppose The Deal…

cast the first stone against New Brunswick Power’s proposed 3% rate hike or any of the other proposals aimed at coping with the company’s financial problems.

The ones who worked to kill the NB Power/Hydro-Quebec deal can just suck it up end enjoy it.

(h/t David Campbell.

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Shawn the Bullet Dodger

labradore makes a couple of very interesting points about Danny Williams and the failed New Brunswick Power deal, what with a major story that remains unreported in the mainstream a full six months after it broke.

Frankly it’s hard to know what’s more interesting here:  Shawn’s failure, Danny’s intervention or the reason why the mainstream media continues to ignore a gigantic energy story in Newfoundland and Labrador that is directly related to the first two.

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Related: “Five years of secret talks…”

Graham abandons NB power deal

The deal to sell New Brunswick Power to Hydro Quebec is dead.

Both sides are pointing to risks and problems that turned up apparently by surprise.

New Brunswick Premier Shawn Graham said:

"However, over the past several weeks as we worked to take that agreement and turn it into a full legal document, Hydro-Québec has asked for changes to the agreement that would have unacceptably taken away some of the value and increased some of the risks for New Brunswickers."

And CBC reported:

Quebec Premier Jean Charest told reporters on Wednesday his province pulled out after its power utility found unanticipated risks and costs related to matters like dam security and water levels.

After due diligence was done, he said Hydro-Québec decided that "we were beyond what was acceptable."

It will be interesting to see what happens if the Tories win the next provincial election and have to cope with the NB Power debt pig.  So far their only bright ideas have been to oppose someone else’s bright idea.

NB Power deal: it’ll all be over soon

First there was talk about reworking the deal.

And now a cabinet minister says publicly he won’t be backing it.

Oh yeah and the schlemeil talks about cabinet confidentiality as he blabs about what went on in a caucus meeting.

Consider the deal to sell NB Power to be on life support, with a strong chance the provincial election will deliver the coup de grace.

The only thing to wonder now is what the New Brunswick provincial Conservatives will do with the whole NB Power mess once they take power after the next election.

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Lower Churchill, Nova Scotia and NB Power: “The sheer economics of it…”

And it is not like people haven’t said this before:

Premier Darrell Dexter said he’s not surprised Newfoundland and Labrador is looking for a cheaper option than an underwater cable connection to Nova Scotia for moving energy from Lower Churchill to market.

"The sheer economics of it are undeniable in terms of a transportation corridor for that energy," the premier said after a cabinet meeting Thursday.

Read down a wee bit further in the Chronicle-herald story and you get this:

An SNC-Lavalin transmission system study for the Nova Scotia government estimates the cost of connecting Newfoundland and Nova Scotia at $800 million to $1.2 billion. The estimate of connecting Nova Scotia to New England is $2 billion to $3 billion.

Yes, stringing underwater power cables from some point in Newfoundland and Labrador to Nova Scotia would cost at least $1.2 billion.  Initial cost estimates are always low on megaprojects like this. 

But to get to that bit, you’d have to string the long from Gull Island, down to the coast of Labrador, across to the island of Newfoundland down to some point on the southwest coast of the island to get to the bit that costs at least $1.2 billion.

The cost of that plus the line out to Soldier’s Pond near St. John’s would be $2.0 billion or more.

You can tell the Nova Scotia option was never being seriously considered.  There isn’t any plan to do it currently under environmental review.

Now all this too has to make you wonder why Darrell joined in attacking Shawn Graham in New Brunswick. His whole position on this just didn’t make any sense before. And it really doesn’t make any sense now that he admits he knows the whole power line to Nova Scotia is just so much crap.

In fact, Dexter acknowledges the whole thing is crap because he adamantly insists that there’s no way Nova Scotia taxpayers would be on the hook to help build it.

“We’re not going to build it,” he said.

 

Not surprisingly, NALCOR Energy boss Ed Martin is talking about the cost of land transmission through Quebec. Hearings into NALCOR’s application/objections on that front are due to start this week. Land transmission is pretty much the only economically viable way of getting Labrador power out to any market.

The current estimate for building a new set of power lines across Quebec is $3.0 billion.  That’s not bad considering the estimates for the line Soldier’s Pond for a mere 800 megawatts.

You can tell the crowd at NALCOR understand the whole game currently being played.  Look at the way it wound up in the Telegram over the weekend:

Regardless of what happens, officials say the regulator's decisions will provide certainty for Newfoundland and Labrador's energy corporation as it tries to get the Lower Churchill hydro project off the ground.

"We've collected all the information we need," Nalcor Energy president Ed Martin said in an interview.

"This is one of the key pieces left. I'm going to have enough information (after) this to be able to complete my discussions with potential customers."

When people start talking about certainty, then you know they’ve comes to terms with reality.  “At least we’ll know for sure…” should be one of the stages of grief.

For the record and just for all those people who are still over the shock that the line through Gros Morne was a political racket for nothing, let’s get this straight as well.  The provincial government isn’t concerned that Hydro-Quebec is blocking the precious Legacy Project.

At least one person in the government is pissed off that the whole thing just can’t get off the ground for one simple thing:

the sheer economics of it.

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As bad deals go…

Okay.

So like, let’s just make sure we are all clear on this.

First, there was the disastrous deal with Venezuela that was supposed to support cheap power in New Brunswick but wound up costing New Brunswick taxpayers hundreds of millions.

Then there was the deal to upgrade Point Lepreau that has gone so well the New Brunswick government has to look at suing AECL about cost overruns.

And now the people who helped bring you those fiascos think it is a bad idea to sell NB Power, improve New Brunswick’s business competitiveness, control electricity prices for consumers and generally retain provincial regulation of the energy industry while getting rid of a Crown-owned debt pig.

Hmmmm.

Well, as bad deals in New Brunswick go…

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They can’t re-blackball him

Publisher Craig Westcott’s recent editorial from the Business Post has found its way to a New Brunswick newspaper.

Wonder what the locals will do besides despatch another of the Premier’s fanboys to post a comment on the piece?

It’s not like they can re-blackball Westcott from government interviews.

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Purely coincidental: Hydro-Quebec/NB Power version

Some of these things are linked.  Some may be purely coincidental.

1.  Hydro-Quebec plans to buy NB Power including the Point LePreau nuclear generating plant.  October 29.

2. Ontario Senator Lowell Murray thinks it’s time for the federal government to get interested in the Hydro-Quebec/NB Power thingy. December 15.

3.  Ontario considering sale of hydro-electric generation, transmission and distribution assets. December 16.

4.  Government of Canada announcements plans to sell off the Candu reactor division of Atomic Energy of Canada Limited.  December 17.

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Bon Deal. Bad Deal.

Turns out buying NB Power could be a very bad deal for Hydro-Quebec.

Of course, that would make it a very good deal for New Brunswickers.

Update:  As Mark correctly noted in a comment, a bad deal for one doesn't make it a good deal for the other.

If you read the article, though, you will see that many of the points made early on discuss what are the positive aspects for New Brunswick.  There are positive aspects for Hydro-Quebec as well; the variation just depends on what the price of power turns out to be down the road.

And of course, by the end of the article, Claude Garcia  of the Montreal Economic Institute, makes an argument based about MEi's projections for power prices over the medium- to long-term.

Despite the huge difference between the price offered and the real value of the assets being acquired, no allowance is made for the increase in electricity prices likely to result from the enforcement of a new international treaty significantly limiting carbon emissions. This deal is not acceptable as currently structured. The price is too high for the benefits to be obtained.Despite the huge difference between the price offered and the real value of the assets being acquired, no allowance is made for the increase in electricity prices likely to result from the enforcement of a new international treaty significantly limiting carbon emissions. This deal is not acceptable as currently structured. The price is too high for the benefits to be obtained.

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Energy audio and video roundup

1.  From CBC New Brunswick, a panel discussion involving the leader of the New Brunswick Conservative, Green and New Democratic parties and energy minister Greg Byrne.

2. From CBC Newfoundland and Labrador on 01 Dec 09, an interview with former premier Roger Grimes on the latest developments in the Churchill Falls saga.

3.  CBC Radio Crosstalk with guest Jim Feehan discussing Churchill Falls.

4.  Premier Danny Williams scrums with reporters after a speech in Calgary. At no point does Williams point out for the Alberta reporters that he spent five years trying to get Hydro-Quebec to take an equity stake in the Lower Churchill without any discussion of redress for the 1969 contract but couldn’t get them interested.  That was at the same time that he insisted that he wouldn’t cut a deal with HQ without redress.

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On the one hand…

Jean-Thomas Bernard, economics professor at Laval, finds the Hydro-Quebec move to the Maritimes a bit puzzling since he believes that HQ will have to bring expensive power online to feed the Maritimes.

"My position is that cheap hydro is gone, definitely gone," Bernard said.

"We still have a fair amount of (undeveloped) hydro but this is expensive hydro. We're talking about 10 cents (per kilowatt hour), 12 cents," he said, referring specifically to the Romaine megaproject far from Montreal on the province's north shore - poised to begin bringing 1,550 megawatts of power online for Hydro-Québec in 2014.

On the other hand, Jean-Thomas Bernard also thinks that New Brunswick would actually win from this deal:

However, Bernard said in the long-term Hydro-Québec may regret this deal because the corporation may wind up selling its power to New Brunswick at a much cheaper rate than to its other customers in the United States or in Ontario.

The same issue is at the heart of both Bernard’s comments.  He is looking at the pricing issue and the cost of developing new power projects.

In the short-term HQ gains markets;  in the medium to long term it may face a situation where it could sell the power more lucratively elsewhere but be forced to sell at lower prices in New Brunswick under the terms of the MOU.

It’s an interesting observation about a complex issue.

But here’s an idea for you to consider:  if La Romaine and other new HQ projects are being developed at the price of around 10 to 12 cents per kilowatt hour, how would the Lower Churchill compare to that?

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Graham smacks NL local preference policy

New Brunswick premier Shawn Graham has taken a poke at Danny Williams, accusing the Newfoundland and Labrador premier of engaging in cheap publicity stunts.

Graham said it is “ironic” Williams wants an open market for electricity transmission when New Brunswick companies “line up — this is important to note, they line up — behind Newfoundland providers for scraps left by local preferences on construction projects and labour needs.”

Ouch.

According to Canadian Press, Graham also said that the Lower Churchill is 15 years away from development.

All this comes as Graham released his written reply to a letter from Danny Williams and Nova Scotia Premier Darrell Dexter.  The Graham letter is below with the Williams/Dexter letter below that.

NB 1940

Dec. 4, 2009

Dear Premiers Williams and Dexter:

Thank you for your letter of December 2, 2009, regarding the potential for future energy development within the Atlantic region.

I share with you the desire to maximize Atlantic Canada's potential as a developer and supplier of clean, renewable energy for domestic and export markets. Our government is working to maximize New Brunswick's advantage as the energy hub of northeastern [sic] North America and the development of new energy projects across Atlantic Canada is a key element in fulfilling this vision.

New Brunswick is now, and will continue to be, an active partner in promoting the energy potential of Atlantic Canada. Our recent Memorandum of Understanding (MOU) with the Government of Québec does nothing to change that.

Section 3.1(b)(iv) of the MOU explicitly states that any changes to our regulatory structure resulting from agreement with Québec will "expressly contemplate open access to the transmission network in the Province of New Brunswick." The MOU also states in section 2.5 that transmission and distribution rates will continue to be regulated by the New Brunswick Energy and Utilities Board (EUB), a body comprised of New Brunswick citizens and experts in utility regulation, given regulatory powers by the Legislative Assembly of New Brunswick.

Therefore, rules are now in place that set conditions by which electricity can be moved through New Brunswick to export markets, either through use of existing transmission lines or construction of new capacity.

Under the Electricity Act of New Brunswick, any owner of a transmission system must provide market participants with open and non-discriminatory access to its transmission system. The terms, conditions and charges for this access are specified in the open access transmission tariff that was originally approved by the New Brunswick Public Utilities Board in 2003 and continues today under the authority of the EUB. This New Brunswick open access transmission tariff (OATT) is consistent with the industry standards for open access transmission in North America and sets out the obligations for both the provider of service and the transmission customer. All service is to be provided under the tariff and there is no provision for the owner of the transmission system to treat any customer in a preferential manner. In fact, it would be against the law to do so.

Entities in both Nova Scotia and Newfoundland and Labrador are transmission customers in New Brunswick and are taking or pursuing transmission service under the tariff. They have been, and are continuing to be, treated in a fair and non-discriminatory manner.

Please allow me to respond directly to the specific requests stated in your letter:

1. finalize an agreement, by February 2010, prior to signing of the definitive agreements between New Brunswick and Hydro-Québec, subject to normal environmental assessment and permitting, to construct a new interprovincial transmission line through New Brunswick to the Maine/NB border, separate from the existing NB grid.

New Brunswick has always been open to discussions on the potential for constructing additional transmission capacity to meet the projected needs of Nova Scotia and Newfoundland and Labrador. This will not change. As I have stated above, there are clear rules and processes for developing additional transmission capacity for export. If these rules and procedures are followed, additional transmission capacity can be constructed within New Brunswick to meet your future needs.

2. ensure that existing open access applications will be handled by NBSO under existing NB OATT rules until the process is complete and service agreements have been offered to Nalcor Energy or any other Atlantic Canadian companies that may seek such access before the signing of the definitive agreements between New Brunswick and Hydro Quebec next Spring (i.e., grandfathered and handled by NBSO under current rules).

It is a key principle of the EUB that all parties seeking access to use our transmission system be treated in a fair and non-discriminatory way. This request by Nova Scotia and Newfoundland and Labrador would require that preferential treatment be given to specific companies in contravention of the law. This could also jeopardize our standing under U.S. Federal Energy Regulatory Commission (FERC) rules as an exporter of electricity to the United States. I am sure you will agree that this would be contrary to all of our interests.

In accordance with these rules, New Brunswick held an auction in 2008 for excess capacity on the new transmission line connecting New Brunswick and Maine. I note that Nalcor Energy did not bid for capacity at that time. Should Nalcor or any other company require transmission capacity through New Brunswick, long-term firm reservations for transmission capacity can be secured via a request for such capacity or through an open season bid process.

In fact, it is my understanding that Nalcor Energy has been working for some time with the New Brunswick System Operator on a system impact study for a transmission route via New Brunswick. I encourage you to continue with this work. This process, as I have indicated, is compliant with the OATT rules and will remain under the New Brunswick Energy and Utilities Board's oversight, now and into the future.

I believe that the process for negotiating transmission lines must be open and transparent. All parties must have a clear understanding of the rules being applied, with assurances that these rules are applied fairly to all. For this reason, New Brunswick must ask that all parties, including the governments of Nova Scotia and Newfoundland and Labrador, respect these rules and be prepared to make application in good faith within the process.

I understand that you are advancing these requests to promote the interests of your respective provinces. I share with you the desire to build a stronger, more prosperous and self-sufficient Atlantic Canada. I am confident this can be done if we work together and respect the rules designed to ensure fairness for all.

Yours truly,

Shawn Graham
Premier

c.c.: Honourable Robert Ghiz, Premier of Prince Edward Island

09/12/04

And the one that started it:

December 2, 2009
Honourable Shawn Graham
Premier of New Brunswick
P.O. Box 6000
Fredericton, NB E3B 5H1

Dear Premier:

Atlantic Canadians are well served when our provincial governments work together to gain the best possible opportunities for the region as a whole as well as the separate interests of each province. This is particularly true in the energy field, where better connections improve the economic opportunities for each and all provinces in Atlantic Canada It is why our two governments favour a significant improvement in transmission capacity with New England and thus the rest of North America.

We were pleased that the recent Council of Atlantic Premiers meeting in Churchill Falls provided an opportunity for all four premiers to discuss potential impacts of the Memorandum of Understanding (MOU) between the Government of Quebec and the Government of New Brunswick.

We are writing to seek further clarification and to make two specific requests.

We understand your position that New Brunswick’s open access transmission tariff (OATT) will continue to be offered in a fair and nondiscriminatory [sic] manner after the transaction with Quebec is completed. In this regard, you suggest that other Atlantic Provinces will have the same open access to and through the New Brunswick transmission system as we do today.

Assurances that the Federal Energy Regulatory Commission (FERC) of the United States will enforce the OATT and ensure non-discriminatory access to New Brunswick’s transmission infrastructure do not allay our concerns regarding open access. It is through New Brunswick’s regulatory authorities, which have jurisdiction in the Province, that this access can be guaranteed and any issues resolved expeditiously. That is why our governments seek an outline of the process and mechanisms that New Brunswick will employ to guarantee this access.

How will New Brunswick assure other energy producers in New Brunswick and in the other Atlantic provinces that they will have the same level of open and non discriminatory access to the NB transmission system (i.e., to existing surplus capacity or existing capacity with appropriate system upgrades), and to new energy corridors?

Reviewing the MOU, we are concerned with the provisions that eliminate a truly independent system operator, require conformity to the Quebec regulatory system, create difficulty in changing these laws in the future, and narrow the scope of the energy hub from the region to the province. These provisions may enable Hydro Quebec to hinder transmission development, whether it is expansion of the existing system or the development of a new corridor if it is not seen to be in Hydro Quebec’s own interests.

Newfoundland and Labrador’s experience of dealing with a system operator that is imbedded within Hydro Quebec has show that this model can significantly delay decisions (4 years or more) even under an OATT process. It is this experience that leads us to believe the proposed move by Hydro Quebec to take over the NB System Operator (NBSO) role will likely lead to similar outcomes.

I trust this information helps you to understand in greater detail our concerns about the future of open access in New Brunswick, and its effect on development of Atlantic Canada’s renewable energy resources. That is why we are asking the New Brunswick government to:

1) finalize an agreement, by February 2010, prior to signing of the definitive agreements between New Brunswick and Hydro Quebec, subject to normal environmental assessment and permitting, to construct a new interprovincial transmission line through New Brunswick to the Maine/NB border, separate from the existing NB grid; and

2) ensure that existing open access applications will be handled by NBSO under existing NB OATT rules until the process is complete and service agreements have been offered to Nalcor Energy or any other Atlantic Canadian companies that may seek such access before the signing of the definitive agreements between New Brunswick and Hydro Quebec next Spring (i.e., grandfathered and handled by NBSO under current rules).

Thank you for your consideration on this matter.

DANNY WILLIAMS, Q.C.                                         DARRELL DEXTER
Premier of Newfoundland and Labrador    Premier of Nova Scotia

cc. Premier Ghiz

-srbp-

What makes news: the recycled edition

News – by definition – is supposed to be new.

New, as in not the same as something before.

The CBC news from yesterday on the latest jihad from Newfoundland was that the guy driving the jihad was in Calgary.  But once you get beyond that, there is not a single thing which is new.

Not even the words, as CBC showed in its coverage online.

The reason is pretty simple.  The CBC story filed on Calgary has only a single quote from what was said out west:

"We have the best green project in North America right now on the sidelines. It could mean a lot of work for Newfoundlanders and Labradorians , Nova Scotians, New Brunswickers, Prince Edward Island, Quebecers, and Ontarians," said Williams. "This is a mega project, of several billion dollars, that is very, very important — not only to us as a province but also to the region. So that's another reason here, to give people the details of exactly why that project is being stalled by Quebec."

That’s hardly news.  The favourite refrain for the provincial government is that the Lower Churchill is “the best green project in North America”.  It’s a hollow, meaningless piece of marketer bullshit, but it is a sold as the hills. 

And after you get beyond the first four paragraphs the rest is recycled filler:

December 4  story:

“We are in a situation where Ontario, which is probably at its most vulnerable moment in its history, will be on its knees on a go-forward basis. That's not a good situation for the country. ”

October 29 story:

“We are in a situation where Ontario, which is probably at its most vulnerable moment in its history, will be on its knees on a go-forward basis. That's not a good situation for the country. ”

December 4:

"Quebec is a province that receives roughly $16 billion a year in transfers from Canada as a have-not province. So, the irony here is a have-not province that receives significant largesse from the rest of the country … is now going around and buying up energy assets."

October 29:

"Quebec is a province that receives roughly $16 billion a year in transfers from Canada as a have-not province. So, the irony here is a have-not province that receives significant largesse from the rest of the country … is now going around and buying up energy assets."

December 4:

"If [Quebec also] acquires P.E.I. and Nova Scotia [power], we will find ourselves in a situation where one province will have energy control of the entire Maritime provinces," said Williams. "It will be attempting to strand Newfoundland and Labrador. So good, cheap, competitively priced energy can't be offered to that whole region.”

October 29:

"If [Quebec also] acquires P.E.I. and Nova Scotia [power], we will find ourselves in a situation where one province will have energy control of the entire Maritime provinces," said Williams. "It will be attempting to strand Newfoundland and Labrador. So good, cheap, competitively priced energy, can't be offered to that whole region.”

December 4:

"[The Lower Churchill project ] will be developed, and it will be developed on our terms, and as I've said before, over my dead body am I going to hand this over to [Quebec Premier] Jean Charest and Quebec."

October 29:

"[The Lower Churchill project ] will be developed, and it will be developed on our terms, and as I've said before, over my dead body am I going to hand this over to Jean Charest and Quebec." [Note the minor editorial change]

December 4:

"If [Quebec also] acquires P.E.I. and Nova Scotia [power], we will find ourselves in a situation where one province will have energy control of the entire Maritime provinces," said Williams. "It will be attempting to strand Newfoundland and Labrador. So good, cheap, competitively priced energy can't be offered to that whole region.”

October 29:

"If [Quebec also] acquires P.E.I. and Nova Scotia [power], we will find ourselves in a situation where one province will have energy control of the entire Maritime provinces," said Williams. "It will be attempting to strand Newfoundland and Labrador. So good, cheap, competitively priced energy, can't be offered to that whole region.”

December 4:

"Quebec is a province that receives roughly $16 billion a year in transfers from Canada as a have-not province. So, the irony here is a have-not province that receives significant largesse from the rest of the country … is now going around and buying up energy assets."

etc etc

You get the idea.

Now if you look at some other stories from other news outlets, you have to wonder yet again what all the fuss is really about.  Natural resources minister Kathy Dunderdale repeats that the provincial energy corporation will pay for transmission through other provinces now and in the future.

Okay.

So since that is already happening with NALCOR through Quebec in a sale to Emera, what’s the fuss?

That’s a good question.

And the lovely people who keep writing stories at CBC and other news outlets in New Brunswick and across the country about this latest jihad based on recycled stuff from before might find some real news if they actually asked that “very, very” good question.

After all, as Danny Williams said himself : 

It's unfair to "play one region of the country off against the other"…

If you look for a story, you can see it.

But you gotta look first.

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The NB Power deal: AIMS releases comment

The Atlantic Institute for Market Studies today released its assessment of the NB Power/ Hydro-Quebec memorandum of understanding. 

The author is Gordon Weil, an energy consultant in Maine with decades of experience in electricity issues.

The conclusions:

• The cash price of $4.75 billion to be paid by Quebec to New Brunswick is subject to reduction if the Lepreau nuclear generator does not return to service and because of additional debt that New Brunswick must assume.
• NB Power customers will receive significant rate relief in the initial five-year period following the sale of NB Power’s assets, but the promised additional benefits are considerably more speculative and will be received over a period extending more than 30 years. The initial benefits may be as much as $1.25 billion.
• Transmission and distribution rates will be based on actual cost plus several surcharges and can be expected to increase after the initial period much more than they have in the past.
• NB Power will retain and close, mainly at its own cost, five major generating stations with the future of the nuclear facility in some doubt. HQ will acquire only the Mactaquac hydro station, three combustion turbine facilities and possibly the Lepreau nuclear facility.
• HQ will obtain, manage and control the NB Power transmission and distribution system, which can enhance its ability to exploit its own generation resources.
• The size of the HQ power supply and its control of an extensive transmission system may cause anti-competitive concerns for entities outside of the two provinces.
• Utility regulation in New Brunswick will be required to follow the Quebec regulatory system and be subject to specific legal requirements limiting its discretion. Such a transfer of regulatory control is unprecedented.
• New Brunswick customers will continue to deal with NB Power, the HQ subsidiary.
• Full impacts, both positive and negative, will depend on a host of variables that are impossible to forecast with reasonable certainty.

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Cutting to the heart of the matter

If Shawn wants to shut Darrell and Danny up pretty fast, here’s a draft reply designed to do just that. 

It’s called the “Money talks.  Bullshit walks” letter.

Dear Danny:

Thanks for your letter of December 2, 2009 which you allowed Darrell to sign as well.

It is with great pleasure that I learn of your plans to build an electricity transmission line across New Brunswick, subject to environmental and other provincial laws.  As you are aware, the line will be subject to the same open access transmission rules that apply to every other transmission provider.

This is a welcome show of confidence in the economic future of New Brunswick.  All four Atlantic provinces can succeed but only when political leaders display the maturity it takes to refrain from histrionics and fear-mongering.

I look forward to seeing your application to the various regulatory authorities, the deeds of sale for the land and the firm contracts in place to begin construction by February 2009, 2010 which is the date included in your letter. I take it from your letter that you both already have the cash and the markets for the power and that the Lower Churchill will start construction very soon afterward.

Thanks again for letting me know of your plans for bringing new economic activity to New Brunswick. I look forward to seeing your deposit cheques clear the banks before February.

Sincerely (but not holding my breath)

Shawn

Some of it might have to be edited a bit, but you get the point.

 

-srbp-

Yet more on the NB Power, Hydro Quebec, Danny Williams racket

 

1.  Shawn Graham had some strong words in advance of yesterday’s meeting of the Atlantic premiers. At the end of the meeting things were not much different.

2.  An independent panel will review the NB Power deal.

3.  A quick review of recent events will show that as far as the argument goes from Newfoundland and Labrador, something under the bed is still drooling.

4.  Note the reference in that 2006 post to selling power by avoiding Quebec.  Little did your humble e-scribbler  - or anybody else in the province for that matter – know until recently.

4.  The completely invented (i.e. false) nature of some of the comments used in the pure emotional arguments about the boogey man are glaringly obvious if you know something of the actual story.  Danny Williams said yesterday that “it's obviously symbolic that we're here today at the place where the original Upper Churchill deal was done.”  That’s in the Telegraph-Journal story in the first link.

Apparently they were in Montreal, not Churchill Falls.  Yes, Williams was being his usual hyperbolic, figurative, never-literal self, but that sort of comment is taken as fact by too many people – perhaps even Williams himself – given how little is evidently known about the 1969 boogey man in the first place.

Take as another f’rinstance, the tale of Ottawa’s role in the whole affair as described in the story about the power corridor. 

5.  And if you want a sense of the reason why hysteria, fantasy and emotion are so powerful, consider Russell Wangersky’s observations on the nature of modern media and the audience they work hard to serve.

We're conditioning ourselves to expect the crack cocaine of immediate gratification - and when we can't get that short, sharp shock immediately, we move on to somewhere where we can.

Indeed we are.

And his words are worth the time given that so much of what he says is both a cause and a symptom of a very current issue in the province. It’s a topic tackled around these parts before:

On another level, though, what the Premier meant in that case is actually irrelevant. What it is simply worth noting that not a single reporter thought it worth asking a simple question. Not one thought to ask what he meant, just to be clear. Inquisitiveness - supposedly at the core of the journalistic profession, let alone the source of our species' progress - was absent.

Not one wanted to know.

Reporters reflect the society in which they work. There's no way of knowing if the Internet has changed the way people are thinking or if it merely facilitated a trend already present. Television was decried as an idiot box and in some respects, Carr and others are simply transferring the epithet to the box sitting on or under many of our desks.

The source of the change is not as important as the consequences of the shift, the lessening desire to know things.

Chenza at court, the court of silence, as the Tamarians would say.

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The Tempest Tick-Tock: key events in the Hydro Quebec and NB Power tirades

It helps to put a timeline on things sometimes.

2006

May:  While a bill that is supposed to create the energy corporation is introduced as the first bill of the session, the text of the bill doesn’t show up until near the end of the spring 2006 session. The record for the bill is bizarre.  It shows the bill passed through second reading and committee stage four days after it passed first reading.

2007

June 4 and 5:   In a couple of short sessions and with very little public debate and discussion, the legislature passes two bills revamping the hydro corporation and creating the energy corporation.  This amounts to a massive  reworking of the province’s energy corporation, originally created in 2006.  

Newfoundland and Labrador Hydro forms the initial core of the company but internal structure  creates series of interlocking directorates of subsidiaries.

NL Hydro retains exemption given in 2006  to EPCA restriction that electricity producers in province delivering to customers in province may only be engaged in electricity activities.  PUB must still set Hydro rates to ensure profitability.

At some point in the re-organization, CF(L)Co becomes a subsidiary of NALCOR instead of CFLCo.  This makes NLH – the Lower Churchill proponent – equal within the internal corporate structure  to the company that was once its subsidiary.

June 13 and 14: In a high-speed process and with very little debate or public scrutiny, the  House of Assembly amends the Electrical Power Control Act 1994 (EPCA) to lay out method for making water management agreement where two projects exist on same watercourse.   Amendments to take effect on date set by cabinet. 

2008

June 3 and 4:   At high speed and with very little debate, the legislature approves major changes to the energy corporation legislation. Includes significant changes to the rules governing creation of subsidiaries, as well as massive changes to the province’s Access to Information laws to shield the company activities from scrutiny.  Cabinet retains the ability to transfer any function to the energy corporation it wishes to transfer, regardless of what it is about. 

June 3 and 4:  At high speed and with very little debate, the legislature passes a water rights management bill later revealed to strip CF(L)Co of its lease to Churchill Falls.

December 16:  Surprise seizure of hydroelectricity generation and transmission assets of three private sector companies on the island of Newfoundland (AbitibiBowater, Fortis and ENEL).  Assets assigned to NL Hydro.  NALCOR given responsibility for all government negotiations with Abitibi on compensation.

2009

January 16:  EPCA  amendments made in 2007 come into force.  Amendments are gazetted along with regulations but there is no news release or other public notice.

April:  Talks start on water management agreement between Newfoundland and Labrador Hydro and CF(L(Co) .

August 31:  Ed Martin (CEO of provincial energy corporation) tells Toronto Star that he :

… doesn't see the Quebec issue as a major stumbling block, as regulation requires the province to allow access to its grid in return for a set tariff. Hydro Quebec and Nalcor are just working out the details. 

Any costs to Ontario would build in the price of that tariff, but what's most important is how that final cost would compare to the next-best alternative. [Emphasis added]

01 Sep:  Emergency session of the legislature called for September 8 to deal with amendments to 2008 water rights legislation. 

Amendments and session are given rather benign description initially:

"This amendment is necessary in order to facilitate an agreement between Nalcor Energy or its subsidiary and CF(L)Co," said Minister Dunderdale. "As these negotiations are currently underway, we wanted to get into the House early and make this amendment to avoid any uncertainty to the parties involved. We thank the opposition for their cooperation on this matter and we look forward to further discussion on the amendment when the House reconvenes next week."

03 Sep:  In a speech to a national audience, Premier attacks Hydro Quebec for supposedly throwing up roadblocks to lower Churchill development.

04 Sep:  Dunderdale reveals the full  - the real - story.  (Locals media have not covered Dunderdale’s comments two and a half months later)

09 Sep:   Amendments pass in House emergency session.  True nature of story is revealed in comments during the debate:

“They [Churchill Falls (Labrador) Corporation lawyers and directors] felt that we had extinguished their rights to the whole watershed area that they require to produce electricity in the Upper Churchill and that would cause them some concern,” said [natural resources minister Kathy] Dunderdale.

Unspecified time in September:  Deal reached with CF(L)Co on water management.

October 23:  According to NALCOR, this is the date the CF(L)Co board met and rejected the deal agreement.

October 29:  NB Power deal.

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What Hydro Quebec gets in the Maritimes

Quebec Premier Jean Charest revealed today that Hydro Quebec has started negotiations to take over electricity delivery on Prince Edward island.

He made the announcement at a major energy conference in Boston that brought together every major actor in the energy business on the north-eastern part of the continent. 

Hot on the heels of news about Hydro Quebec’s deal to buy NB Power, this is hardly surprising. 

Hydro Quebec has seen its revenues from electricity exports shrink by about 30% over last year.  There’s little chance of that rebounding in the near term as the Untied States gropes its way out of a recession.

There’s hardly a better place for Hydro Quebec to go hunting for new customers than New Brunswick and Prince Edward Island.  In both places, electricity rates are in no danger of dropping.  Hydro Quebec has a pile of power and no place to sell it. they’ve also got the cash ready to go.

Sounds like a match made in heaven.

Hydro Quebec has deep enough pockets to buy up the financial mess known as NB Power, deliver electricity rate relief to New Brunswick consumers and make good money when a hunk of Quebec electricity would normally be making a better return somewhere else.

Watch for the same sort of deal in Prince Edward Island.

It works for everyone.  What’s been missing in all the second rate commentary, hype and pure political bullshit flowing in Atlantic Canada these past few weeks is that Hydro Quebec is cutting a straight up business deal in the Maritimes.  They are in business to make money and make money they will.

When the American markets rebound Hydro Quebec will be ready with its existing generating capability, the 8,500 megawatts in development through wind and hydro in Quebec, Point LePreau,  and the hydro in New Brunswick and the wind generation that has been and will be developed in both PEI and New Brunswick.

All of that is considerably closer to American markets than the Lower Churchill.  It will be shipped over existing infrastructure.  Any new power lines that are needed will be shorter and considerably less costly to develop than either new lines through Quebec from Labrador.  let’s not even talk about the so-called Anglo-Saxon route.  It was ludicrously expensive in 1965 and it remains so the better part of a half century later.

There’s no surprise, in all this, that the Newfoundland and Labrador energy corporation and Premier Danny Williams decided to stay away from a meeting of anybody who is anybody in energy in New England and Eastern Canada.

Not only would there be the embarrassment of being in the room for Charest’s announcement, they’d also have to spend two days with a bunch of people who know the real score on the Lower Churchill.  These people just don’t have the time or the inclination to have smoke blown up their backsides.  They’ve got better things to do.

No surprise either that the same day the big news breaks in Boston, the provincial government here announced a one day junket to New York to talk about an imaginary future energy project  and other what-ifs with an unknown group of people.  They’ll turn out for the free nosh, if nothing else, and back home the locals can just cover this as if it was news.

Hydro Quebec went to the Maritimes and it’s been picking up assets, customers and future earning potential on both sides of the border along the way.

Danny, Kathy and Ed are going to New York for a few hours.

Bet they won’t come back with much more than a few souvenir pictures of Danny, Ed, Kathy and Liz standing in front of the Ed Sullivan Theatre.

It’s right around the corner from the Hilton on Avenue of the Americas.

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