Quebec guilty of powerline protectionism

Lower Churchill transmission dispute spotlights Hydro-Quebec access rules, Nalcor funding needs, National Energy Board jurisdiction, and interprovincial grid tariffs, as Ottawa weighs subsea cables versus Quebec corridors amid Churchill Falls fallout and Canadian federalism friction.

My office phone rang the other day and the conversation went something like this: “Hello, it’s Danny Williams here,” said a familiar voice.

“Er… hello, Premier.”

“I’m not very happy about today’s column, where you compared me to Robert Mugabe….”

“Er… no, Premier.”

I’d written about allegations of intimidation during the last election in the Newfoundland riding of Avalon, where it was suggested Mr. Williams’ Anyone But Conservative campaign had led to tactics more familiar to political campaigns in Zimbabwe than Canada.

According to Mr. Williams, the allegations are untrue “on my father’s grave”. I tried to substantiate the rumours during the campaign, with no success. So until someone comes forward with some proof, we must take the Premier at his word.

In any event, it proved an interesting, if tangential, aside to the real issue I’d been writing about – namely, Newfoundland and Labrador’s attempted purchase of the federal government’s stake in the Hibernia oil field and Ottawa’s potential investment in a sub-sea electricity transmission line, amid allegations of Quebec meddling, from a putative Lower Churchill hydro-electric project to markets in the south and west, including the U.S. market many exporters covet. The province’s electricity corporation, Nalcor, has applied for $375-million in federal funding to help pay for the multi-billion underwater transmission line.

The main lesson that readers should take away from this story is what a sorry admission of failure in Canadian federalism it represents. The obvious route to markets in Ontario and the U.S., where Quebec seeks U.S. support for hydro projects, for Lower Churchill’s power is overland through Quebec. Hydro-Québec claims that upgrades of up to $3-billion would be required to transport power through the province. Quebec’s energy board, the Régie de l’énergie, has, in effect, said no to transmitting Labrador power while siding with its own power corporation against Nalcor, even though it was prepared to pay for “reasonable upgrades” and up to $200-million in annual tariffs. Needless to say, Mr. Williams unleashed a broadside when the decision was announced in May, protesting Quebec’s “arrogance and discriminatory business practices”.

You won’t read this in this column very often, but Danny Williams, who was also upset by the NB Power deal earlier in the year, has a point. The Régie decision is an insult to add to the considerable injury of the existing, long-term Churchill Falls contract, under which Newfoundland and Labrador is forced to sell power for a quarter of a cent per kilowatt hour and then watch Hydro-Québec resell it for up to 36 times that price.

Both situations are a disgrace but only one is within the federal government’s purview to change. The National Energy Board, an independent regulatory body created by Ottawa, has jurisdiction over designated inter-provincial power lines by determination of the federal cabinet. No such lines have been designated, leaving the field to provincial regulators. But a government that genuinely believed in making the federation work more effectively, not to mention saving Canadian taxpayers billions of dollars, would demand that Quebec let Churchill power flow through its transmission lines, rather than maintaining barriers.

Contrast this mess to the situation in Europe where the much-maligned European Union has stepped in to remove barriers to cross-border exchanges in electricity. New regulations mean transmission system operators are obliged to take new generation and compensation is paid by the operators of the national transmission systems from which cross-border flows originate.

If 27 sovereign states can reach agreement on a system that forgoes protectionism and monopolistic market dominance, in exchange for more competition and lower consumer prices, why can’t Canada? Quebecers should be embarrassed.

Related News

• Electricity Forum News

• Energy Policy News