Muskrat Falls, on the Churchill River in LabradorPaul Daly
Newfoundland and Labrador Premier Danny Williams is making an end run around Quebec and striking a deal with Nova Scotia to launch the long-delayed Lower Churchill power project.
Mr. Williams has had a running battle with Quebec Premier Jean Charest over Hydro-Québec's refusal to transmit electricity generated in the province. On Thursday, he unveiled a $6.2-billion deal with Halifax-based Emera to begin the hydro project in Labrador, coupled with an undersea transmission cable to Nova Scotia.
The combative Premier scheduled a news conference in St. John's to announce plans to develop the 800-megawatt Muskrat Falls site on the Lower Churchill River. The power would be transmitted to Newfoundland, which would use some of it and send the surplus by undersea cable to Nova Scotia, where it would replace power generated by aging coal-fired plants.
Mr. Williams will be joined by Nova Scotia Premier Darrell Dexter, whose province hopes to work with Newfoundland and Labrador to eventually expand power exports to New Brunswick and the northeastern United States.
Newfoundland's provincially owned Nalcor Energy has sought for years the right to transmit power from the Lower Churchill through Quebec to markets in Ontario and the United States. But Hydro-Québec's transmission arm has insisted it needs all the existing capacity for its own projects, a position supported by the provincial regulator and Mr. Charest.
Earlier this year, Mr. Williams condemned Quebec's "patronizingly colonial attitude" on the development of the Lower Churchill, and slammed the "unmitigated gall" of Mr. Charest for sending a letter to Ottawa opposing the province's request for federal funding for a transmission cable across the Gulf of St. Lawrence.
Nalcor had been planning a two-stage project on the Lower Churchill - an 825-megawatt development at Muskrat Falls and a 2,200-megawatt site at Gull Lake. But the company is proceeding only with the smaller project because the market for Canadian electricity in the northeastern United States has suffered as a result of the recession and the emergence of cheap supplies of natural gas.
After being rebuffed by Quebec, Mr. Williams and Nalcor chief executive officer Ed Martin insisted the subsea route was viable, though more costly than transmitting the power through Quebec's existing system.
Charles Cirtwill, executive director of the Atlantics Institute for Market Studies in Halifax, said the project could be a "win-win" for Newfoundland and Nova Scotia. He said Emera's utility subsidiary, Nova Scotia Power, is heavily reliant on aging coal- and oil-fired power stations, and needs to find alternatives as those plants reach the end of their useful life.
"I don't think most people in Nova Scotia would object to sending their money to Newfoundland rather than Algeria [a source of oil for the province's oil-fired power plant]" he said. He added that Nova Scotia realizes its carbon-intensive power system is particularly vulnerable to policies aimed at reducing greenhouse gas emissions. The federal government, for example, has promised to introduce regulations that would prohibit utilities from building new coal-powered stations to replace existing ones.
At the same time, Nova Scotia would benefit from a transmission line to New Brunswick to export power there and into the U.S. because, over time, it may be able to tap wind and tidal sources. Prince Edward Island has already announced a deal with New Brunswick to expand transmission capacity for PEI's wind power.
Nalcor may have to wait to get market conditions that would justify the development of the Gull Lake site, said Gordon Weil, a Maine-based consultant who has studied Atlantic Canada's power market.
"I'm not sure there is the appetite needed for the full development of the Lower Churchill project," Mr. Weil said.