Hydro-Québec’s chief executive officer is denouncing the Canada Pension Plan Investment Board for backing natural gas producer Calpine Corp.’s campaign against the utility in an increasingly hostile fight over a new power line that would carry Quebec hydropower to New England.
Sophie Brochu says Canada’s biggest pension fund manager is complicit in a deliberate attempt by Calpine to undermine what is one of North America’s biggest decarbonization projects. With the comments, a battle that has largely played out in the United States over the past two years between supporters and opponents of the New England Clean Energy Connect, or NECEC, project is now spilling over the border as construction begins.
“I think that CPPIB, a Canadian pension fund, has to understand that one of its investments is unduly hurting a Canadian company,” Ms. Brochu said in an interview with The Globe and Mail. “If they do nothing about it, there’s a problem.”
CPPIB, which operates as CPP Investments, has been a minority shareholder in Calpine since 2017 when it bought the company with a consortium of investors for US$5.6-billion in cash. Waleed Elgohary, an executive who works in the pension fund’s sustainable energy group, sits on the Calpine board.
The situation marks a rare instance where one government-controlled entity is taking aim at another. It highlights just how high the stakes are for Hydro-Québec, and just how frustrated it has become with the course of events, that it is willing to go public with its criticism.
The drama dates back to 2018, when Hydro-Québec and Central Maine Power won a call for tenders by Massachusetts to supply the region with 1,090 megawatts of renewable hydropower for 20 years. To carry the power, a new 233-kilometre transmission line known as NECEC needs to be built stretching from the Quebec border to Lewiston, Maine.
The project has widespread support among both political and business leaders and has obtained all the required permits over a rigorous process lasting more than 30 months, according to Hydro-Québec. Nevertheless, the Quebec utility says rivals led by Calpine, which generate electricity from fossil fuels, are still relentlessly trying to block NECEC by financing local groups, such as No CMP Corridor, that are spreading misinformation and launching numerous legal and political challenges to the project.
In one such challenge, opponents obtained an injunction preventing Hydro-Québec partner Central Main Power from starting construction on a major part of the line for several months. The U.S. Federal Court of Appeal overturned the injunction this past week in what Hydro-Québec called a confirmation that the authorization process was solid. Opponents insist their concerns are legitimate and that the line is “nothing more than a clean energy scam” that will destroy forestland, a No CMP Corridor release said last month.
Ms. Brochu said future tactics to block the project are also bound to fail but could delay the line’s entry into service unnecessarily and force both sides to spend millions more in legal fees and appeals. In addition to the injunction, opponents have collected enough signatures to force a referendum on NECEC in November.
Richard Bennett, a state senator, has also sponsored a bill in the Maine legislature that would prevent foreign government-owned entities like Hydro-Québec from “meddling” in the state’s elections, as he put it in a recent opinion piece. Hydro-Québec counters that the referendum concerns a commercial matter, not the election of any candidate, and that it has a right to campaign to defend the NECEC project.
Houston-based Calpine is the biggest generator of electricity from natural gas and geothermal resources in the United States. The privately held company owns a gas plant in Westbrook, Maine, that supplies the region, in addition to generation facilities in several other states. The company, together with two other power producers serving Maine, NextEra Energy and Vistra Corp., stand to lose as the NECEC project cuts New England’s reliance on electricity generated using fossil fuels, Hydro-Québec says.
Ms. Brochu said CPPIB has every right to invest in Calpine. But she said the pension fund should use its board representation to influence the strategies that Calpine is putting forward, which are in “direct opposition” to CPPIB values on environmental, social and governance issues and its support for the transition toward renewable energy.
“If I ran CPPIB, I know what I would do,” the Hydro-Québec CEO said. “I’d talk to the senior leaders at Calpine and ask them what their strategy is given the project has been awarded, has been won, and exactly how far they’ll go to hit back and spend money [to fight it]. Because right now, they’re putting money in the toilet.”
Steve McCool, a spokesman for CPPIB, declined to comment. Brett Kerr, a spokesman for Calpine, did not respond to an e-mailed request for comment.
In an interview with The Globe in March, CPPIB CEO John Graham said the pension fund will continue to invest in energy projects, including Alberta oil and gas businesses, and attempt to profit as these companies shift toward sustainable business models. “We think energy transition, including the shift to renewables, will be one of the biggest investment opportunities over the next 10 years,” Mr. Graham said.
Ms. Brochu said Hydro-Québec is being “bullied” and urged Calpine and the other companies financing opposition groups to drop their campaign and move on, or face a more aggressive adversary. “I’m all for people playing their cards within the regulatory process but now the game is over,” she said, using a hockey analogy. “The referee has blown the whistle. We won. Go into your locker room. Don’t try to fight from behind the net.”
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