Selling NB Power would be short-sighted
Published Thursday November 5th, 2009
The memorandum of understanding signed last week between the government of New Brunswick and the government of Quebec for the proposed sale of NB Power bears a striking resemblance to Quebec's 1966 acquisition of the Churchill Falls hydro-electricity plant in Newfoundland. If history is doomed to repeat itself, the lessons learned from the Newfoundland-Quebec agreement should be strongly considered before New Brunswick enters into a reactionary and short-sighted agreement that involves losing one of its Crown corporations at the behest of another province's long-term gain.
Throughout his service as premier of Newfoundland from 1949-1971, Joey Smallwood was renowned for making political blunders. In his memoirs he writes that he was "guilty of more failures and policy mistakes than any premier or prime minister in [Canadian] history." In the fall of 1966, Smallwood was responsible for the Churchill Falls deal that granted Hydro-Québec unrestricted access to Newfoundland's electricity. This permitted Quebec to sell vast amounts of Newfoundland's domestic power to American markets at a healthy mark-up. The 65-year-deal, which was particularly one-sided, witnessed the growth of Quebec's revenue at the expense of Newfoundland. While Quebec continues to reap a multibillion-dollar windfall from this arrangement, Newfoundland has been left with dwindling profits.
The current memorandum of understanding proposed by the government of New Brunswick presents an equally short-sighted plan - one that recalls to the Churchill Falls agreement. Although at a glance the immediate benefits of this deal appear attractive (with a $5-billion buyout), there are currently no laws to prevent Quebec from repeating its previous practice once again with NB Power, forcing New Brunswick into a long-term disadvantage - in this regard, much like Newfoundland - as energy prices will inevitably soar once the initial five-year freeze expires. If this acquisition is ratified, over time New Brunswick would be deprived of billions of dollars of possible revenue.
Conventionally, provinces transported their electricity across provincial borders in what is called a "wheeling agreement," which allows the letting province to maintain its electricity at a fair market price. Although inter-provincial cooperation has always been (and should remain) a hallmark of our federation, it does not justify the capitulation of one province to the manipulative tactics of another, particularly in a scenario that would result in a weaker and far less competitive energy market for the entire Maritime region.
The New Brunswick government has a fiduciary duty to consult its citizens before selling (in part or whole) NB Power, just as they have a responsibility to become engaged in this debate. One needs to look no further than the lessons learned by former Premier Joey Smallwood and the Churchill Falls agreement to see that if this deal is passed, the albatross that continues to weigh down Newfoundland and Labrador will soon be the burden of New Brunswick as well.
Kurt Beers is from Rexton, New Brunswick. He is a former Executive Assistant to former Prime Minister Joe Clark. He holds a Masters in Political Communication and a Bachelor in Political Science and History. He currently lives and works in London, England.
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Comments (16)
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Sorry Joey, Shawn has screwed up more times in 3 years than you ever dreamt of in your 22.
Quebec wanted Newfoundland's power. This time, NB wants Quebec's. The bonus for Quebec in this deal is access to the transmission lines. In exchange we get lots of stuff like cheaper rates and debt reduction ... but most importantly we get access to tons of much cheaper, clearn, and renewable hydro power.
The previous comment indicated that New Brunswick wants Quebec power, well then why is Quebec Hydro buying NB's power utility?? If NB wanted Quebec power then wouldn't our province be buying Quebec Hydro? She indicates that NB will get "lots of stuff" but she is wrong - a 5 year rate freeze, which is a freeze that is still 60% more expensive than what Quebecers currently pay for hydro so that is not deal. Further, there is no guarantee that after the 5 year freeze that Quebec Hydro won't spike the NB hydro rates as it will be totally out of the control of NB to decide - not good! This is a short-term, short sighted agreement that says nothing about NB gaining access to "tons of much cheaper, cleaner, and renewable hydro power" - nowhere does this agreement state that...in fact, the only thing Shawn Graham is doing is auctioning our power away for Quebec to control! I used to be a Liberal, not anymore!!!
Generations of our people have now had to live with a deal forced upon us by Quebec Hydro because they knew we were in financial need. Now it seems to be happening again but this time they aren't just doing it to NB, they are cutting off U.S. access to all of Atlantic Canada.
I don't blame the Province of Quebec or Quebec Hydro for that matter. They know a good deal when they see it. Nobody should expect anything less from them. It's the right thing for them to do, unfortunately just because it is right for Quebec (or Quebec Hydro)that doesn't make it right for NB or anyone else in Canada.
I ask the people of NB, please don't allow yourselves to suffer the same fate we are.
"...By owning our power grid, when the NFLD & Quebec deal ends on Churchill Falls...Quebec will be able to force NFLD into another deal because they control the transmission lines."
You are absolutely right John. Major corporations, unlike smaller companies, don't plan 5 or 10 years out, they plan 25 or 30 years in advance. We've seen it in NL with companies like Exon-Mobil and offshore development.
The Upper Churchill contract will expire in 31 years meaning negotiations will happen between Quebec Hydro and Newfoundland & Labrador 5 or 6 years before that.
Some believe this is an attempt to block Lower Churchill development. While that may play a part in this that development may or may never go ahead. I believe instead, along with other benefits, it is actually pre-planning for the Upper Churchill that is on the minds of the executive of Quebec Hydro and Shawn Graham is helping them in their efforts to once again rape our resources.