Saturday, May 15, 2010

The Lower Churchill battle of 1980

This isn’t the first time NL and Quebec have gone at it

Thirty years ago the then-local CBC TV news show On Camera investigated the lower Churchill project and efforts to get it off the ground.

Like the Danny Williams administration of today, the government of Brian Peckford was anxious to do a deal.

The Power Authority of the State of New York was prepared to buy Lower Churchill power, but NL couldn't get permission to transmit it across Quebec.

Peckford argued Newfoundland had a constitutional right to transmit electricity through Quebec, the same way oil can be piped between provinces.

Ottawa was asked to intercede, but didn’t.

Below is an overview of the On Camera series from three decades ago. The series was included in The Independent newspaper’s 2004 cost-benefit analysis of Confederation.

The CBC spared no expense with the series, which took weeks to put together. Interviews were conducted with the major players in New York, Ottawa and Quebec.


In 1980 the lower Churchill project was described as the most attractive undeveloped hydroelectric project in North America.

The project involved two proposed hydro developments at Gull Island and Muskrat Falls.

Gull Island would be the bigger of the two (almost triple the output of Muskrat Falls), and located about 225 kilometres downstream from the Upper Churchill.

Construction actually began on Gull Island in 1973.

But two years and $70 million later the development was cancelled because of problems with marketing and financing.
The decision to go ahead with Gull Island was based on the sale of most of the power to external markets in Canada and the U.S.

Power from Muskrat Falls was to be used for the province’s own energy needs.

There were (and are) two ways to get the power from the lower Churchill to export markets.

Gull Island electricity would be sent through a transmission line to the existing station in Churchill Falls.

From there, another parallel circuit would be added to the existing three, to transport the power to Quebec.

In all probability, a second circuit would be needed to carry the required power to the New York market.

The second option was the so-called Atlantic route, which would funnel Gull Island power through the main generating station in Churchill Falls, and back past Gull Island to the southeast tip of Labrador.

From there, the power would cross the Straight of Belle isle by means of an underwater sea cable, and land on the Northern Peninsula.

The transmission lines would then travel down to the southwest coast.

The power would cross the Cabot Strait, then surface again in Cape Breton to begin its track across Nova Scotia and New Brunswick.

The hydropower from Gull Island would then reach its final destination in New York.
Premier Brian Peckford wasn’t interested in the Atlantic route because, he argued, it would cost too much, cutting into the province’s end profit.

He felt the province had the constitutional right to transmit electricity through Quebec.

Further, he argued that Ottawa wasn’t living up to its responsibility by not forcing Quebec to allow a power corridor through its territory.

“We’re not going to get the same value out of a resource that we could of got,” Peckford told On Camera.

“They (the federal government) have not lived up to their responsibility and we’ve got to force them to do it (put a power corridor through Quebec).”

Peckford told then-prime minister Pierre Trudeau that he must exercise what he saw as Ottawa’s constitutional right to intercede and allow the power corridor through Quebec.

At the time, Trudeau said electricity has to be treated the same as the passing of oil and gas through a province.

“I’m telling you now, ‘you’re afraid of two might-bes … that Quebec wouldn’t make a reasonable deal with you, and second that you would have no right under the constitution to apply for passage,’” said Trudeau.

“And I’m telling you that as far as we’re concerned … if Quebec refuses passage of that particular good or service, we would have to take our responsibility. But they haven’t been asked and how can you assume they will refuse?”
Then federal Energy minister Mark Lalonde wasn’t so definitive when answering questions on whether Newfoundland and Labrador has the right to put a power corridor through Quebec. He preferred that the two provinces negotiate.

“Well, we have indicated in the past, I have indicated in the past, that if there was fair evidence that the negotiations were impossible between the two provinces by themselves, the federal government was ready to try and help,” Lalonde told On Camera.

He said Quebec has the right to say no to a power corridor.

“It has the right, the question is does the federal government have the right to intervene? I suppose to those questions, my answer is yes to both. Provincial government can always say ‘No, I won’t co-operate, you must use my grid,’ and then the federal government has the power, I suspect under the Constitution, as it has the power to build pipelines.”
A power corridor through Quebec made some financiers on Wall Street nervous because of the separatist movement.

Then-provincial Energy minister Leo Barry said Ottawa was exercising political favouritism by not forcing Quebec to allow a power corridor.

“Well I think we don’t have to stretch the bounds of the imagination to realize that when Quebec supplies the government in power close to one half of their seats, if not more, then they are going to be very reluctant to do what, as the government, the responsible government, they have the clear duty to do,” Barry told On Camera.
Quebec Liberal leader Claude Ryan said at the time he didn’t feel the Government of Canada could do any more than suggest that Quebec allow a power corridor through the province.

“So unless it were to be declared a matter of national interest, and even there, the jurisdiction of the federal government would be highly dubious, you know,” Ryan told On Camera.

“It has to be decided between Quebec and Newfoundland. It may serve as an interpreter of the needs of one province … provided it is not done in an authoritarian fashion.”
The Power Authority of the State of New York was desperate for a clean energy source to get away from its reliance on foreign oil.

It was estimated that the sale of Gull Island power to New York could give Newfoundland and Labrador up to $400 million a year.

Then-chairman John Dyson said the power authority would look for a guaranteed 30-year supply of electricity.

He didn’t care if the power was brought to market via the Atlantic route or through Quebec.

Nova Scotia would have gained from the Atlantic route, which would have transmitted electricity from that province — specifically the Fundy tidal project — to the northeastern states. (The full tidal project, which would have been the largest of its kind in the world, never went ahead.)

“Newfoundland can transmit power across our province tomorrow if they want to,” then-Nova Scotia premier John Buchanan told On Camera.

Dyson and the Power Authority of the State of New York did not have a preferred route.

“There are certain advantages to going that (the Quebec) way, there are certain advantages to going with the so-called Atlantic route,” he said.

“I am at this point undecided to which one I would prefer. I think it relates to lots of questions which have yet to be reconciled, which include political and economic as well as engineering calculations … the reliability of one electrical system over another.”

The power authority was also prepared to finance the project, at least partly.

“We would have to play a major role in that I think, in financing at least the United States part of it through any of several different states, but any way you go it’s at least three other states before it comes to New York plus two other provinces of Canada. That will require a lot of negotiations and a lot of financial slights of hand I think, probably before we get finished. That will take time, but if that can be worked out so that it’s still economical wee would be prepared to do that.”
Atlantic Energy was a resource development company that acted as an energy broker. It was in the business of finding a credit-worthy market that needed power, then assigning the power source.

In this case, Atlantic Energy knew that the Power Authority of the State of New York needed hydropower; it also knew the great potential of the lower Churchill.

Chairman of the board of directors of Atlantic Energy, Franklyn D. Roosevelt Jr., told On Camera the province of Newfoundland and Labrador should go with the Atlantic route as a means to get power to New York.

Roosevelt argued the cost of a power corridor through Quebec would almost equal the Atlantic route, a difference of only $19 million.

“From the dollar and cents point of view, I think it (the Atlantic route) makes a lot of sense. It makes the province of Newfoundland totally independent. It gives them an alternative to the monopoly that Quebec no has on the distribution of the Labrador-introduced power.”

Vic Young, then-chairman of Newfoundland and Labrador Hydro, argued the cost of the Atlantic route would be much higher.
In the end, Peckford’s war with Quebec eventually killed the lower Churchill development. He tried to regain control of the upper Churchill by attempting to take back the water rights, but eventually lost his case in the Supreme Court of Canada.

With time running out, the Power Authority of the State of New York proceeded with other power options.


marion said...

I recently came across your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


Anonymous said...

Nice bit of spam that last comment.

I wish the province would at least proceed with part of the Lower Churchill development - either Gull Island or Muskrat Falls and then the in-feed to the island.

Taking all oil and gas thermal stations on Newfoundland (and ideally Labrador) offline and replacing it with green power would be a huge bonus and keep money in the province rather than sending it out of province to buy oil imports (our own oil goes elsewhere). Not to mention what new and plentiful cheap green electricity would do to excite local industry. Aside from that once an upgradeable in-feed was built making the connection to NB or NS would suddenly seem more feasible and attractive and the remaining half of the project could be completed to supply export markets.

Ryan perhaps you could raise the question with one of your political contacts or somehow float the question where it will be answered. Why not build the Lower Churchill piecemeal and get the damned thing started sooner rather than later?