Newfoundland Premier offers a cautionary tale

CHURCHILL FALLS, LABRADOR - The premiers of New Brunswick and Newfoundland and Labrador emerged from a meeting to say they've agreed to disagree on the impact of the planned sale of NB Power to Hydro-Québec.

Shawn Graham and Danny Williams met with their Atlantic counterparts from Nova Scotia and Prince Edward Island at a session of the Council of Atlantic Premiers in Churchill Falls, Labrador. The setting is at the heart of a growing dispute between Graham and Williams.

It was their first meeting since a war of words erupted between the two over the sale.

Graham says the $4.8-billion agreement would erase NB Power's debt, reduce industrial power rates and freeze consumer rates for five years, a package the government says is worth another $5 billion.

Williams says the deal would give Quebec an energy stranglehold on the Maritime provinces and would "strand" Newfoundland and Labrador as it prepares to develop a hydroelectric megaproject on Labrador's Churchill River, aiming to export power to the United States through New Brunswick.

Williams told reporters after the meeting that he asked Graham to guarantee in writing that Newfoundland and Labrador could access transmission lines if the province wanted to export power through New Brunswick.

Graham wouldn't commit to that, telling reporters that the power lines are already completely booked up by Hydro-Québec.

"It would be a moot point," Graham told reporters. "It's unnecessary."

However, Graham said there is nothing to prevent New Brunswick from building new transmission lines.

Williams's disdain with Hydro-Québec dates back to the 65-year Upper Churchill contract, under which Hydro-Québec buys power at inexpensive rates from Newfoundland and Labrador and pockets the profits. Williams describes it as "lopsided and patently inequitable."

Williams wrote a public letter to Graham, earlier in the fall, that he copied to Nova Scotia Premier Darrell Dexter and P.E.I. Premier Robert Ghiz.

"I caution you, based on our experience with Hydro-Québec, that a short-term opportunity can turn into a long-term loss of significant magnitude, as they will most definitely find ways to recoup their investment and more from New Brunswickers who no longer control their energy destiny," Williams wrote.

Although the market has changed dramatically since the contract was signed, Hydro-Québec has "prevented a fair distribution of benefits," Williams said in the letter.

In 2008, for example, the net value to Hydro-Québec from the Labrador project was $1.7 billion, but only $63 million has flowed to Newfoundland and Labrador, Williams said.

"It is somewhat ironic when you consider that in an indirect way the profits from a Newfoundland and Labrador project will help finance Hydro-Québec's purchase of any New Brunswick assets," he said.

Earlier, Graham called Williams's comments partisan politics, and said he'd use the meeting to correct "misinformation" being spread about the planned sale of NB Power.

"You know, we are not giving up our energy sovereignty in the province of New Brunswick as Danny Williams says," Graham told reporters earlier this week. "We can continue to set out energy policy."

Following the meetings, the four premiers toured the Churchill Falls power plant.