Let it go, Newfoundland

Yes, you got screwed on the Upper Churchill, but bashing Quebec won't help you move on

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The Gazette, Sunday, June 13, 2010

When it comes to developing hydroelectric power, Newfoundlanders are like Palestinians -they will never be able to sign a deal. In this case, the deal is with Quebec. They will always walk away, leaving money on the table, because they can't get over their sense of grievance for what happened in the past.

Witness the speech Newfoundland Premier Danny Williams made in Ottawa last Wednesday. Never has the premier of one province unleashed such a tirade against another in denouncing "the sense of greed, arrogance and entitlement on the part of Quebec."

It was a clear declaration of war against the Quebec energy regulator, Hydro-Quebec, and the Charest government for their refusal to give Newfoundland access to transmission routes through Quebec to Ontario and the U.S.

The impasse is holding up development of the Lower Churchill Falls project, which would add 3,000 megawatts of capacity to the 5,000 MW already flowing through Quebec from the Upper Churchill in Labrador.

Newfoundland has an alternative route -across that province from Labrador, underwater to Cape Breton, through Nova Scotia and New Brunswick to Maine and New England. You can imagine how much electricity would be shed along the way.

But Newfoundland's outrage isn't about the next deal so much as it is about the last one -the 1960s agreement that enabled the development of the Upper Churchill. But under a 65-year contract, Newfoundland sold the power to Quebec for a fixed price at the equivalent of $1.60 a barrel. Looking ahead, Williams was looking back, and called the impasse over the Lower Churchill "such a bitter pill to swallow in that once again they are keeping us down."

The boilerplate response of successive Quebec governments has always been: "a contract is a contract." That's true as far it goes. And the deal on the Upper Churchill was approved by Joey Smallwood, the first premier of Newfoundland, who brought his province into Confederation.

Williams is the latest in a line of Newfoundland premiers, going back to Smallwood, who come to the mainland with a rhetorical chip on their shoulders. Brian Peckford and Clyde Wells were also viewed as populist champions of their home province for their angry attacks on Quebec and Ottawa.

Williams isn't wrong on the facts. Newfoundland did get screwed on the Upper Churchill -screwed by its own premier.

He's right when he calls the Lower Churchill "the best undeveloped green asset in North America," and "low hanging fruit in the world of green energy."

He's right when he calls it a key asset in building an east-west power corridor, which would create thousands of jobs and bring several thousand megawatts of much needed capacity to Ontario.

But on Quebec, he is so bitter and twisted about the past that he can't get on with the future. Not content to rant about the injustice of the Upper Churchill, he even thought to mention the British Privy Council decision of 1927, awarding Labrador to Newfoundland, and ripping Quebec for still including Labrador on its map on the government web-site. Get over it.

There was something unsettling about the contemptuous tone in his voice whenever he said "they" or "their" in reference to Quebec.

He denounced Quebec's "agenda to deny competitive power to the rest of North America," and called the decision of the Quebec energy regulator "the most biased decision that I have ever seen in 40 years as a lawyer ... The decision was so absurd and wrong as to be embarrassing to Quebec."

He added: "Quebec believes in free trade only when it benefits Quebec," and accused Quebec of "having the gall to criticize Canada" on global warming at Copenhagen. He even reminded his Ontario audience that Quebec "buys your power" cheap in the middle of the night and sells it back during the day at needle peak prices.

He also reminded his audience that Quebec receives 60 per cent of all the equalization money in Canada, and uses it to underwrite "the best daycare in Canada," and the cheapest university tuition fees, while freezing hydro rates that create billions of dollars of foregone revenues that help keep it on the equalization roll. He's not wrong about that, either.

Yet it's pretty ironic, coming from the premier of a province that, until the offshore oil came in, lived off equalization as much as the cod fishery.

But this much is clear -any deal on the Lower Churchill will have to compensate for the injustice of the deal on the Upper Churchill, even though it was a Newfoundland premier who gave away the resource.

Thirty years ago, when he was president of the Iron Ore Company, Brian Mulroney gave a speech in his hometown of Baie Comeau, in which he suggested a simple solution: front-end load a deal on the Lower Churchill to compensate Newfoundland for its losses on the Upper Churchill.

It's still a good idea. But the premier of Newfoundland has to stop behaving like the head of the PLO.

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