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The Hydro Quebec building is pictured on June 21, 2016 in Montreal.

Paul Chiasson/The Canadian Press

Hydro-Québec has poured US$8.3-million into a campaign to influence a referendum in Maine on a controversial new electricity transmission corridor, raising accusations of foreign election interference.

The Crown corporation, owned by the government of Quebec, has flooded Mainers' Facebook and Instagram feeds with paid posts, hired lobbyists, commissioned polls and funded a letter-writing drive in a bid to get voters behind the project.

At the centre of the battle is the largest long-term export contract in Hydro-Québec’s history, a 20-year deal to supply $10-billion worth of electricity to Massachusetts. The corporation needs the new 233-kilometre transmission line through Maine to get the power from Quebec to the New England grid. The project, dubbed the New England Clean Energy Connect, or NECEC, would be owned by Central Maine Power Co. and used by Hydro-Québec.

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One of the paid advertisements running in Maine with regards to a controversial new Hydro-Québec electricity transmission corridor.

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An unusual coalition of Maine environmental groups, local politicians and two companies that own gas-fired power plants in the state has come together to fight the corridor. Its aim is to stop the project through a referendum. For the moment, the referendum is on hold, after a court blocked it from appearing on the Nov. 3 ballot. But the corridor’s opponents are working to make the vote happen next year, meaning the battle is far from over.

Hydro-Québec has undertaken the Maine campaign at a time of heightened scrutiny over foreign meddling in the U.S. political system. Ironically, such interference would be illegal in Quebec, which prohibits foreigners from spending money on referendums.

“It really offends and violates the U.S. constitution’s principle of democratic self-governance by the American people when a foreign corporation comes in and spends a lot of money,” said Austin Graham of the Campaign Legal Center, a Washington-based watchdog group. “To have a corporation that’s not part of our political community influence whether or not we pass these new laws, that’s an offense against our democracy.”

Hydro-Québec, a crown corporation owned by the government of Quebec, has flooded Mainers' Facebook feeds with paid posts such as this.

Handout

Hydro-Québec is a crown jewel of la belle province’s economy, a public enterprise that took in $14.3-billion in revenue and gave $2.2-billion to government coffers last year. It is also in a tough spot, after the COVID-19 pandemic forced it to freeze an international growth plan. The agreement with Massachusetts, therefore, is crucial to shoring up the iconic firm’s expansion ambitions.

Hydro-Québec touts the contract as a major salvo in the fight against climate change, allowing Massachusetts to replace some of its gas-fired power with hydroelectricity. As a sweetener for allowing the transmission corridor, the company is also selling some discounted power to Maine and paying the state US$258-million.

NECEC’s opponents argue it would not actually guarantee emissions reductions because there is nothing to stop Hydro-Québec from diverting hydroelectricity from other markets, such as New York, to fulfil the higher-paying contract with Massachusetts. If New York replaced that electricity with gas-fired power, those emissions could cancel out the reductions achieved by Massachusetts.

They also object to a portion of the plan that would cut a new 85-kilometre right-of-way through forests in some of the most pristine parts of the state.

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“If we’re going to accept the damage this project would create through western Maine forest lands, we need to know there is an actual real additional climate benefit,” said Pete Didisheim of the Natural Resources Council of Maine, an environmental group that opposes the project. “Hydro-Québec and Central Maine Power have completely failed to demonstrate that there are additional climate benefits.”

Lynn St-Laurent, a spokeswoman for Hydro-Québec’s exports group, argued that Hydro-Québec has the right to battle the anti-corridor campaign because it is partly funded by Texas-based Calpine Energy Solutions and Vistra Corp., Hydro-Québec competitors that own gas plants in Maine. “I don’t think that creating politics around necessary regional initiatives is the way forward,” she said.

Ms. St-Laurent said that if the company does divert electricity from other places to fill the Massachusetts contract, any such diversion “would be insignificant.” And she said it was not practical to look at greenhouse gas reductions on a global scale.

“That’s not how the math is done,” she said. “When you look at the emissions, at the climate benefit of this project, you’re not calculating emissions from across the planet in different countries. You’re looking at this project.”

Maine’s Democratic governor, Janet Mills, and its Public Utilities Commission both approved the transmission corridor. So the opposition collected enough signatures to trigger a referendum under Maine law. Originally scheduled for Nov. 3, the ballot question would have asked voters to demand the state’s utilities regulator reverse its approval.

Hydro-Québec launched a multipronged influence effort to fight back. According to filings with the Maine Ethics Commission, the company spent US$8,301,035 through a ballot question committee called Hydro-Québec Maine Partnership.

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Hydro-Québec paid US$384,542 to Maine-based marketing firm Blaze Partners LLC. In a foreign agent registration with the U.S. Department of Justice, Blaze said its work included helping to orchestrate a letter-writing campaign by identifying “authors/influencers” who would support the project. Blaze also introduced Hydro-Québec to newspaper editors and business leaders across the state, did public opinion research and bought paid Facebook posts for the project.

The Crown corporation also hired two Washington, D.C.-area companies, lobbyists Forbes Tate Partners and market research firm Certus Insights. These firms handled “message development,” monitored media and social media, helped target advertising and conducted public opinion research, including a tracking poll.

In Hydro-Québec’s polls, disclosed by Forbes Tate in a foreign agent filing, Maine voters were given a series of negative statements about opponents of the corridor. The statements say the opposition to the project is coming from Hydro-Québec’s competitors, who “want to keep selling their dirty, carbon-emitting fuel,” which would mean “high electricity prices for you and higher profits for them.”

Certus’s only other foreign registration involves work for the Kingdom of Saudi Arabia, a petrostate where oil revenues constitute roughly two-thirds of the government’s income.

Hydro-Québec’s Facebook and Instagram ads, which largely took the form of paid posts, were labelled as coming from a group called “Side by Side for Good.”

“Oil and gas companies are spending $6M to protect their profits and to keep energy bills high for Mainers,” one paid post read. Another, headlined “Money for Maine,” touted the US$256-million the company had promised to put into the state.

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Opponents of the corridor were rankled that Hydro-Québec used images of Baxter State Park in its advertising, given that the NECEC would cut through natural areas. In an open letter, Friends of Baxter State Park asked the company to stop using these images, describing its plan as “outside interference.”

In January, Hydro-Québec paid a US$35,000 fine from the Maine Ethics Commission after it admitted spending US$100,000 before registering its ballot initiative committee. The company said it had been “unfamiliar with certain procedures” in the state.

In a state of 1.4 million people, such campaign spending is significant. According to the Ethics Commission, the top two spending committees this year were Clean Energy Matters, Central Maine Power’s pro-corridor campaign, and Hydro-Québec’s group, which spent a combined total of more than US$20.6-million. Mainers for Local Power, an anti-corridor group funded by Calpine and Vistra, spent US$1,188,229. Another project opponent, Stop the Corridor, refused to disclose its source of funding and is suing the commission to keep its financials secret.

Representative Kent Ackley, an independent state legislator, introduced a bill in the Maine legislature this year that would have banned foreigners from spending money in referendums. But the legislature adjourned amid the pandemic before the bill could move forward.

“This is happening at a time when we’ve got national concerns about foreign meddling, and here we have little old Maine who’s got a northern neighbour who seems to think they’ve got First Amendment rights within the boundaries of the state,” Mr. Ackley said.

No U.S. company would be allowed to do the same in Quebec. Under the province’s campaign finance laws, only Quebec voters are allowed to donate money to referendum committees.

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Parallel to Hydro-Québec’s campaign, Central Maine Power and its parent company, Avangrid, sued to stop the referendum. In August, Maine’s Supreme Judicial Court found in their favour. In its decision, the court found that the wording of the referendum question, which would have ordered state regulators to reverse their approval of the project, was unconstitutional. The state only allows referendums on legislative matters, the court found, but the regulator’s decision was executive.

Corridor opponents have already filed a petition to get a referendum back on the ballot next year. They are hoping to avoid legal pitfalls by framing the question differently. Under this proposal, the referendum would enact a law requiring a two-thirds vote of the legislature to approve the construction of new transmission lines.

Hydro-Québec is keeping its campaign alive. Forbes Tate’s records show that it conducted more tracking polling for Hydro-Québec after the court decision. Among other things, it polled Mainers on their awareness of and support for the ruling.

Sandy Maisel, a professor of government at Colby College in Maine, said Hydro-Québec’s actions were unprecedented. “I don’t believe there has ever been this sort of foreign investment in a referendum in Maine,” he said.

Federal campaign finance law bars spending by foreigners on U.S. elections, but contains loopholes. The term “election” is ambiguously defined, so it is not clear if it refers only to elections involving candidates for office, or also to referendums. Foreign-owned companies with U.S. subsidiaries can also contribute to Super PACs, political groups that are allowed to spend unlimited amounts of money to sway elections, provided only U.S. employees are involved in the decision to make the donation.

In 2018, a U.S. company run by Canadian steel magnate Barry Zekelman gave US$1.75-million to a Super PAC backing President Donald Trump. Encana, headquartered in Calgary at the time, helped bankroll a Republican Super PAC that demonized Latino asylum seekers as “criminal illegal immigrants” ahead of the 2018 U.S. midterm elections. And U.S. subsidiaries of Stars Group, a Toronto online gambling company that runs PokerStars, gave a combined US$125,000 to national and local Super PACs.

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With a report from Jon Horler, special to The Globe and Mail

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