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Jeffrey Simpson (Bill Grimshaw)
Jeffrey Simpson (Bill Grimshaw)

Jeffrey Simpson

Newfoundland's never-ending power politics Add to ...

Canadian federalism's version of the Wars of the Roses has resumed, with Labrador's hydroelectric power potential again at the centre of the battle between Newfoundland and Quebec.

As usual, the federal government is sitting on the sidelines of the battle, desperately eager not to become involved. No federal government wants to irritate Quebec, and this federal government does not want to help Newfoundland, whose Premier Danny Williams has so annoyed Prime Minister Stephen Harper.

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The latest battle is part of a much larger struggle with tens of billions of future dollars at stake, as many as six provinces implicated directly or indirectly, and the possibility of bringing either greater harmony or severe discord to the Canadian federation.

At issue is the proposed takeover of New Brunswick Power by Hydro-Québec. Whatever the benefits for New Brunswick - lower short-term rates and the elimination of debt - the deal is going down badly in that province, where the latest polls showed opposition outstripping support by more than 2 to 1.

In Newfoundland, Hydro-Québec's takeover has infuriated Mr. Williams, who, in typical rhetorical style, has attacked Quebec for "declaring war" on his province and New Brunswick Premier Shawn Graham for selling out his province's interests.

Viewed from St. John's, the Hydro-Québec offer is part of a decades-long effort to prevent Newfoundland from being the principal beneficiary of Labrador's huge hydro potential. If N.B. Power falls into Hydro-Québec's hands, then the massive Quebec utility will geographically encircle Newfoundland.

No matter how Labrador power moves - through Quebec to Ontario and/or the United States, or underwater to Nova Scotia and then through New Brunswick - Hydro-Québec will have Newfoundland squeezed.

Quebeckers, whose motto is Je me souviens, remember lots of things about their own history, mostly the bad things done to them by les anglais, against which French-speakers valiantly battled. In Newfoundland, the province's own sense of Je me souviens revolves, in part, around what bad things Quebec did to it.

Specifically, every Newfoundlander above the age of 3 learns how their province negotiated a deal in the 1960s with Hydro-Québec to develop the Upper Churchill Falls power in Labrador. The deal seemed fine at the time, but as the world price of energy, including hydro, rose way beyond what the signatories intended, Quebec reaped the benefits.

Newfoundland has tried every strategy to renegotiate the deal, from which Quebec derives a profit of about $2-billion a year. Newfoundland has tried moral suasion, shame, rhetoric, negotiations, court challenges, all to no avail. Quebec's response has always been the same. We helped you get the project going. We took risks, too. A deal is a deal is a deal. Tough. Especially galling for Newfoundland, the deal runs to 2041.

Courtesy of American regulatory rulings, hydroelectricity destined for the United States is supposed to pass from one jurisdiction to another with only a negotiated tariff to the transmitter. Newfoundland is using this ruling to insist Hydro-Québec open up its transmission lines to the large power potential waiting to be exploited in what is called the Lower Churchill project. But Quebec authorities have delayed a hearing on the Newfoundland action for almost four years. It is finally supposed to start in January, but Quebec's delay strikes Newfoundlanders as typically hostile and premeditated.

At the very least, Newfoundland wants the same guarantees from New Brunswick for transmissions access, whether its utility is taken over by Hydro-Québec or not. Otherwise, Newfoundland fears its power will be bottled up, or might be sold to Hydro-Québec at prices that will allow that utility to capture most of the profits.

Lower Churchill is essential for Newfoundland, in part because it would send cheap power from Labrador to the island of Newfoundland and allow eventual large-scale wind power projects in Labrador to have access to the new transmissions. For Quebec, the Lower Churchill project is just one among many.

Quebec is developing big projects within its own borders, and can wait for Labrador. Newfoundland, by contrast, wants Lower Churchill up and running by 2017 as part of a long-term plan to become an energy powerhouse.

Quebec apparently now sees Newfoundland as a competitor, not a potential ally. Squeezing a competitor by purchasing New Brunswick Power is part of how to deal with the situation in a cut-throat world.

That the two provinces are both in Canada, and might therefore try to work together, certainly doesn't seem to bring them together. Ontario, strangely, is almost silent in this struggle, although it could desperately use clean, cheap power from Labrador.

As for the federal government, it decided decades ago not to involve itself, lest it irritate Quebec. In a country without a national energy policy or a national electrical grid, and with no political appetite for intervening in interprovincial struggles over natural resources, the only movement from Ottawa is that of heads ducking.

Meanwhile, the bad relations between Newfoundland and Quebec deteriorate further.

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