CharestÂ’s legacy building doesnÂ’t come cheap

QUEBEC - There was something uncomfortably Kim Jong-il-ish about the massive "Great Builder of Quebec" billboards that provincial Liberals erected in honour of Jean Charest at their general council meeting. But the boards did serve to at least clarify what the third-term premier wants future generations of Quebeckers to remember about him.

When he finally leaves office, Mr. Charest's most lasting mark on Quebec will have quite literally been more hydroelectric dams. This speaks not only to his relatively thin political legacy, but also to his headstrong push to harness more rivers in spite of the idea's iffy economics.

Robert Bourassa - another Great Builder with whom Mr. Charest has invited comparisons - showed similar determination in the face of unfavourable economic odds when he launched the James Bay project almost four decades ago. He ended up beating those odds and abundant hydro power has been Quebec's ticket to industrial development ever since.

The 1,550-megawatt Romaine River project on which government-owned Hydro-Québec broke ground this month is barely one-tenth the size of the James Bay complex. Even by tacking on the 1,200-MW Petit Mécatina project that Mr. Charest now wants to accelerate, the Premier's hydro gamble is modest in historical terms. But that doesn't make it a safe bet.

If history is any guide, the Romaine project on Quebec's remote North Shore will cost much more than the $6.5-billion the government says it will. Hydro-Québec's cost overruns have averaged 25 per cent. Tack on $2-billion or so to build the transmission lines and Hydro-Québec's marginal cost of producing electricity on the Romaine will hover above 12 cents a kilowatt-hour.

That is roughly five times what Hydro-Québec now charges aluminum smelters in the province, and two to three times higher than current prices for electricity in spot markets in the northeastern United States.

Of course, export prices could recover before 2014, when the first kilowatts from the Romaine are slated to come on stream. Economic activity will have picked up by then and the United States may have moved to put a price on carbon emissions. Still, the more that Hydro-Québec exports, the more it depresses spot market prices in adjacent American states.

Hence, the Quebec government has undertaken a lobbying blitz to have its hydro power recognized as "renewable" electricity under U.S. federal and state laws. Those laws - 28 states and Washington have passed them - require U.S. utilities to include minimum percentages of renewable power (usually around 25 per cent) in their supply mix and/or make them eligible for subsidies to produce green power or purchase it under long-term contracts at fixed prices. The renewable designation would make buyers potentially willing to pay a premium for Quebec's hydroelectricity.

Quebec International Relations Minister Pierre Arcand is to meet tomorrow with New York state Senate majority leader Malcolm Smith and Manhattan Borough President Scott Stringer to push Quebec's case. This follows Mr. Arcand's previous meetings with senior officials at the U.S. State Department and in New York Governor David Paterson's administration.

Quebec Natural Resources Minister Claude Béchard is in Albany to meet Stephen Whitley, head of the New York Independent System Operator, the agency that operates the state's electricity grid and plans for future supply needs. Mr. Béchard also will meet with legislators and journalists in the New York capital to tout Quebec's cause.

Quebec was buoyed by the ruling by the U.S. Federal Energy Regulatory Commission (FERC) that authorizes two U.S. utilities to build a new transmission line from the Quebec border through New Hampshire. FERC chairman Jon Wellinghoff's description of Quebec's electricity as "clean, low-cost energy" was music to Mr. Charest's ears.

Unfortunately for the Premier, it will be up to federal and state legislators, not FERC, to decide whether Hydro-Québec gets the renewable label - and it has plenty of competition.

Renewable energy standards are meant to provide an incentive for the development of more costly, emissions-free electricity options, namely wind and solar power. Big hydro dams, which destroy the landscape and flood vast territories, typically don't qualify as renewable even though their power is emissions-free. But that hasn't stopped Hydro-Québec from trying. The problem is, nuclear power plants want in the action, too. So do power producers that burn garbage or waste from coal mines, even though both forms of energy produce huge amounts of greenhouse gases.

In a declaration worthy of a Monty Python skit, Bob Eisenbud, a vice-president at Houston-based Waste Management Inc., told The New York Times: "A banana is renewable - you can grow them forever.... A banana that goes into garbage and gets burned is a renewable resource and producing renewable energy." Though the argument seems absurd, it's not impossible that American politicians will buy it and those of other lobbyists for dubiously renewable, though cheaper than Romaine, options. If they do, Mr. Charest's legacy could be a white elephant.