Energy Probe

Don Macdonald
The Gazette (Montreal)
March 14, 1998

Churchill Falls II might not be Great Whale, but Hydro-Quebec faces some familiar skepticism over its calculations of `no-risk’ power generation

Job-hungry politicians. Angry Indians. Worried environmentalists. The cast of characters was all too familiar this week as Quebec and Newfoundland announced a $9.7-billion hydroelectric megaproject on the Churchill River.

Premier Lucien Bouchard and Newfoundland Premier Brian Tobin unveiled the proposal in Labrador, but it was hard not to think of James Bay and this decade’s other great hydroelectric project, the ill-fated Great Whale scheme.

Billed as the project to make Quebecers electricity sheiks of the North, the $13-billion Great Whale scheme was quietly shelved in 1994 after years of bickering and slackening demand in key U.S. export markets.

Now, Bouchard, Tobin and their respective utilities are promoting a new megaproject. They’re betting they can write a different ending to the story but they face many of the same forces that succeeded in stopping Great Whale.

“We see many parallels with Great Whale and definitely believe we have the power to kill this project,” warned Innu leader Daniel Ashini after his people blockaded and harassed Bouchard and Tobin relentlessly as they tried to announce the project Monday in the tiny town of Churchill Falls.

The Innu have been joined in attacking the project by energy analysts who question its economic underpinnings and environmentalists who decry the proposed destruction of habitat in Labrador and the North Shore of Quebec.

– – –

The Churchill River project is being touted by its promoters as the best remaining storehouse of hydraulic power left on the continent – an endless supply of cheap and clean energy that will power the economies of both provinces for years to come.

And in keeping with the mega-rhetoric that seems to naturally go with megaprojects, Hydro-Quebec president Andre Caille is claiming there “is absolutely no risk” that Quebec taxpayers can lose on the deal.

As part of the bargain, the two provinces are burying the hatchet on their 20-year feud over the 1969 contract on the original Churchill Falls development that gives Hydro-Quebec all of the power produced at rock-bottom prices until 2041.

While that contract remains in place, Newfoundland gets a much bigger piece of the pie this time around. The new development is to be built and operated by a joint venture owned 65.8 per cent by Newfoundland and Labrador Hydro Corp. and 34.2 per cent by Hydro-Quebec.

The proposed deal would add 1,000 megawatts of capacity to the existing 5,400 megawatts at the Churchill Falls site by adding two new turbines. The Smallwood Reservoir feeding the station will be expanded by partially diverting the Saint-Jean and Romaine Rivers on the North Shore of Quebec.

Another 2,200 megawatts of capacity would be installed downstream at the Gull Island site. New transmission lines will connect Gull Island to Churchill Falls and into the Quebec power grid. Hydro-Quebec is on the line for $4.3 billion in capital costs and has also agreed to roll the $3-billion cost of service of the new transmission lines into its rate base.

In addition, Newfoundland wants to build a $2.2-billion transmission line that could carry 800 megawatts of power from Labrador to the island of Newfoundland. And finally, the two utilities will also study another 800 megawatt generating station on the lower Churchill River, estimated to cost $2.1 million.

– – –

Hydro-Quebec will market at least 2,200 megawatts from the Churchill project and most of the power is destined for the energy-hungry northeastern United States, where deregulation is creating an open, price-based market for electricity.

Indeed, the electricity is part of Hydro president Andre Caille’s master plan to use electricity exports to increase Hydro’s profits from $760 million last year to $1.9 billion in 2002.

“If the price is right, the market is there,” Caille said of the market for power in the U.S.

But will the price of the Churchill River power be right? That’s not easy to predict regardless of Caille’s assertion that the project is risk free for the Quebec and Newfoundland taxpayers who will own it.

“There isn’t anybody who has a very good idea of what the market price of power in the U.S will be when this project comes online,” said Gordon Weil, an energy consultant in Augusta, Maine. “I can’t believe that anyone of the quality of Mr. Caille would say this a deal with no risk.”

Here are some of the concerns that energy experts have about Churchill River electricity, which is scheduled to begin flowing between 2006 and 2008:

– Some believe the utilities won’t be able to produce electricity as cheaply as they are claiming and, in particular, that Hydro will have higher transmission costs than it has acknowledged. Toronto-based Energy Probe estimates the true price of getting the new Churchill power to U.S. customers will be just over 5 cents a kilowatt-hour, well above the 4.5 cents Hydro-Quebec has cited.

– Fluctuations in currency, interest rates and construction overruns are all variables that have the potential to make the electricity more expensive, given its 8-to-10-year lead time.

– Canadian utilities aren’t the only players eyeing the northeastern U.S. market. Companies already have over 3,000 megawatts of new natural-gas-fired capacity on the drawing board, with new gas supplies on the way from Sable Island and Western Canada.

– Some analysts believe that efficient gas-fired plants can produce electricity for the equivalent of 4.5 cents Canadian per Kwh, well below the 5.7 Kwh claimed by Hydro.

– It’s difficult to foresee the effect of such new technologies as fuel cells or small-scale turbines on the price of electricity over the decades-long life of the Churchill project.

– Hydro-Quebec has guaranteed Newfoundland a minimum price of 2.2 cents/Kwh on electricity sales, presumably as compensation for the terms of the 1969 contract on power from the original Churchill Falls project. The minimum price – equal to the cost of generating the power – means Quebec ratepayers would shoulder the risk if power is sold below cost.

But Quebec and Newfoundland insist their forecasts are conservative and the price for the electricity includes enough room for a healthy return on equity of at least 11.5 per cent.

Thierry Vandal, Hydro-Quebec’s vice-president of planning, said the price of electricity from the new project can’t be touched by gas generation in the U.S..

“How can we lose?” Vandal asked. “We’re the Wal-Mart of electric generation. You can cut it anyway you want, these are great projects.”

U.S. energy forecaster Vito Stagliano agrees the new electricity will likely be “in the market” in the northeastern U.S. when it comes on line.

“Any delivery of clean, emission-free electricity in the range of 2.5 to 3.5 cents U.S. likely will find a market ,” said Stagliano, a director of Energy Security Analysis Inc., a Washington, D.C. consulting firm.

Stagliano said a key selling point for the Churchill project will be its value in helping to meet greenhouse gas-reduction targets set at the Kyoto conference in December. The project’s promoters say the hydro power is expected to account for 15 per cent of Canada’s commitment at Kyoto to reduce emissions by 6 per cent of 1990 levels by 2012.

Still, the Churchill River development looks to be facing a tough fight from the Innu and their allies in the environmental movement.

The utilities say the Indians will be invited to participate as partners in the project. They will be offered shares in the company that will develop the project and thus will receive a share of the profits.

But Innu leader Daniel Ashini said his people’s claims for land and compensation for flooding by the original Churchill Falls development must be addressed before Indians will negotiate the latest Churchill River project.

He said the Innu are in contact with the Cree of northern Quebec and are willing to resort to the same tactics used to such devastating effect against the Great Whale project.

Those include court actions, more protests, public relations in the U.S. and appealing to the United Nations.

“People are standing up and saying: We’ll make certain our rights are respected,” said Ashini, vice-president of Innu Nation, representing two Labrador communities.

Environmentalists will be equally tough, said Tom Holzinger, a spokesman for Vigie Energie, a coalition of environmental, consumer and labour groups opposed to Hydro-Quebec’s development plans.

“Environmentalists will fight this tooth and nail and we’ll beat it,” Holzinger said.

The project will flood 700 square kilometres as a result of the partial diversion of the two rivers, which themselves are home to precious Atlantic salmon. Holzinger also complained the project would disturb wildlife in Labrador and Quebec with new roads and transmission lines.

But despite the opposition and concerns, Hydro-Quebec ‘s Vandal said he’s confident the Churchill River project will go ahead.

“We’ve learned the lesson of Great Whale,” he said. “If people sit down and have good-faith discussions, I think people are going to realize the tremendous benefits for all communities to getting this development done.”

“And I’m totally convinced that these projects are going to get done.”

Economic impact of the Churchill project
Investment in $ billions (1998 dollars)
Gull Island 3.2 Churchill Falls upgrading 1.3
Transmission infrastructure 3.0
Lines to Newfoundland 2.2
Total investment: $9.7 billion
Plus Muskrat Falls (if developed) 2.1
Canadian jobs created (in person-years)
Direct employment 16,900
Indirect employment 32,100

Total: 49,000 person-years

CBC-Radio’s St. John’s Morning Show
March 7, 2002

Bernard Landry, Quebec Premier, is showing some serious interest in a $4 billion hydro project on the Lower Churchill River. Talks between the two provinces are still in the early stages, but there is more optimism a deal can be reached than ever before.

Jim Brown: The premier of Quebec is showing some serious interest in the $4 billion hydro project on the Lower Churchill River. Talks between the two provinces are still in the early stages but there is more optimism that a deal can be reached than ever before. Our reporter Nancy Walsh is here now to tell us why all this optimism is there, hello Nancy, what is behind all of this?

Nancy Walsh: Well there are some things happening at the same time, all of which point in the direction of this being a good time to start a hydro project in Labrador. And I just want to be clear here, this is not the big $11 billion project that Brian Tobin pitched a few years ago you know, rivers in Quebec and all that stuff. This is a smaller $4 billion project and it would involve putting a hydro station at the water falls at Gull Island at the Lower Churchill River. This province and Quebec have been talking about doing this smaller development for a while now, but there were problems that we heard about before on the cost of transporting electricity all the way to the U.S. Well now there is no need to transport the power to the US, because Hydro Quebec needs the power to use inside of Quebec, it appears to be desperate for it, and this is one of the things making Quebec interested in Churchill Falls power.

Jim Brown: Why does Quebec need the power so badly now?

Nancy Walsh: Well as we know, Hydro Quebec uses its cheap power to attract many industrial enterprises, like aluminum smelters. And according to one observer it doesn’t have any more power to offer. Tom Adams is an energy consultant with Energy Probe in Toronto, and he says that like many things in Quebec, this renewed interest in Churchill Falls has a lot to do with politics.

Tom Adams: I think the starting point in this difficult situation, electorally, government faces: trying to boost a lagging economy they offer subsidies to some aluminum industries, together these handouts translate into another 600 megawatt requirement on Hydro Quebec, but it is clear that we don’t have capacity in their existing system to supply these new requirements.

Nancy Walsh: So Jim, Adams said to create jobs that have promised electricity to aluminum companies to attract industries, now have to go looking to supply that electricity. And Hydro Quebec recently launched a call for tenders for private companies to supply 600 megawatts of power. Adams says this is not enough and it is forcing the province to look at getting more electricity and that is why they are looking at the hydro potential in Labrador.

Jim Brown: Just how bad is it?

Nancy Walsh: Well Adams pointed out that Hydro Quebec is making some very aggressive moves to try and generate new power. The province has negotiated some agreements with the Cree of Quebec, and these agreements will pave the way for future hydro projects being developed on their land. As well, Hydro Quebec is looking at making electricity using thermal generation, not hydropower at all, so Adams says this shows the company is in a real power crunch.

Jim Brown: So if Hydro Quebec has maxed out its power supply, is it possible that these aluminum companies like Alcoa will put their smelters in Labrador?

Nancy Walsh: Well I asked another researcher about that, Philip Dunphy is the director of the Helio Centre in Montreal, it is a non-profit energy research and consulting group.

Philip Dunphy: It could be any number of factors of course that smelters hook into, but certainly cheap energy is one of the most important. Energy being 25-30% of a smelter’s total cost. Quebec has historically had very cheap energy, but it has really used up the vast bulk of its hydroelectric potential, they are actually talking about generally don’t go building thermoelectric plants simply because the costs are far too high. So certainly if they can find cheap hydro power elsewhere it will go there.

Nancy Walsh: So Jim, we know that Alcoa has been talking with the provincial government here about building a smelter in Labrador, Alcoa is a huge aluminum company, and I have been told by a source close to the talks that Alcoa is looking at several options for Labrador, not just even for one smelter but for several. A hydro project on the Lower Churchill would be able to power four big smelters and in total that would be 10% of the world’s aluminum demands. So it wouldn’t be done all at once, that’s too much at the same time. But Alcoa is looking at the possibility of building one smelter, then a few years later maybe building another one and a few years later another one. So in the interim, the power that Alcoa is not using could be exported west to Quebec.

Jim Brown: Do companies like Alcoa plan that far ahead because really we are talking decades here?

Nancy Walsh: Right, if the construction of the hydro project started tomorrow, it would take nine or ten years before the power would be available, and I asked someone who watches Alcoa if the company plans 10 years ahead like that. He actually laughed and said it felt like they planned 100 years ahead. And that was the feeling of a metals analyst in New York that I spoke with too. Leo Larkin is with Standard and Poors.

Leo Larkins: Over time as the global economy grows and consumption picks up worldwide they certainly want to be able to meet that demand. They have to think in very broad long-term perspectives.

Nancy Walsh: So Jim it seems as though all three parties involved are looking for the Lower Churchill at the same time, Newfoundland and Labrador, Quebec, and Alcoa, and as I said the talks are very preliminary and it is not known yet what shape any potential development could take, you know if Quebec and Alcoa would be partners in developing or would they just be customers and buy the electricity in the end. But the timing seems to be better than it was before, because it is not like the power has to be exported into the U.S. which was one of the holdups in the previous discussions. The market for power could be right in Labrador and in Quebec.

Jim Brown: Okay Nancy thank you very much.

Nancy Walsh: You’re welcome.

——-

This morning, CBC News reported that talks about the development of the Lower Churchill are back on. This time at the insistence of Bernard Landry, Premier of Quebec. "Premier Roger Grimes" reacts to this report. Premier Landry is looking for some much needed power for Hydro Quebec and he is looking at either becoming a partner in the development, or at least a customer.

Theresa Blackburn: This morning, CBC News reported that talks about the development of the Lower Churchill are back on. This time at the insistence of the Premier of Quebec.

Jeff Gilhooly: Yes, we reported that Bernard Landry is looking for some much needed power for Hydro Quebec and he’s looking at either becoming a partner in the development or at least a customer. Now today, Premier Roger Grimes addressed that story following a noon-hour luncheon in Mount Pearl.

Roger Grimes: We have chatted to the extent of saying that we should at least have our officials have a discussion to see whether or not there’s any circumstance under which we would fully engage negotiating teams. So we haven’t made that decision, but we certainly have had a more extensive discussion in the last little while than we would’ve been having say three or four months ago.

Unknown Speaker: A $4 billion project though certainly is much more affordable because I remember you were talking about the $10 billion you’d have to max out the province’s credit card. This with a potential customer like ALCOA, it’s a bit easier to bring to the financial brokers and say here’s what we want to do right?

Roger Grimes: There’s no question that the price tag is different. Some financing options are very different and I guess the most accurate way to have it reported for the people of Newfoundland and Labrador is that we do have two separate track discussions going on at this point in time. There’s a discussion going on with ALCOA that doesn’t involve the Quebec government or Hydro Quebec and there’s a discussion going on, I wouldn’t describe it as negotiations because there aren’t official negotiating teams or anything of that nature, but there are discussions going on with the government of Quebec and Hydro Quebec that don’t involve ALCOA. But what will happen from that whether one or the other will conclude to something separately or whether the two might merge and converge because of common interest, is something we’ll see over the next several weeks or months.

Unknown Speaker: Is it true that Premier Landry basically has softened his stance on royalties between Newfoundland and Quebec?

Roger Grimes: I wouldn’t describe it that way. I think it’s more along the lines of that we’re discussing a project that is much more financial now than the larger scale project that in any event seems like it has a prospect to actually become reality because of the size and scope of it. It also has eliminated from it some of the other considerations, which were a drawback, which were environmental and otherwise because the bigger scheme involved diverting rivers from Quebec into Labrador and those things were complicating factors actually that made the 1998 version of this deal not achievable. Now we’re talking about a self-contained Lower Churchill just the one river the Gull Island project. Four billion dollars is something that we could probably handle ourselves, again it might stretch our ability to do other things. If we wanted to we might partner with someone. So that whole range of discussions is at least being conducted to see whether or not there’s enough substance to it to put some negotiating teams back together. What myself and Premier Landry have both committed to do is this, is that and we’re both of the same mind in this matter and neither of us wants to make an announcement that turns out to be a false start. If he’s going to go before the people of Quebec and if I’m going to go before the people of Newfoundland and Labrador, either separately or jointly and combined to say we are now going to put our teams together to see if we can do the Lower Churchill and this time both of us will do enough investigation beforehand so that there’ll be a considerable degree of certainty as much as you can possibly bring. That if you see myself and Premier Landry standing together, we’re on the same base standing in our respective provinces saying we’re putting our negotiating teams back together to look at the development of the Lower Churchill. Then I start betting some money on that’s going to happen this time.

Jeff Gilhooly: Premier Roger Grimes speaking in Mount Pearl at noon today.

Reuters News Service
Planet Ark
August 2, 2002

HALIFAX — The Canadian provinces of Quebec and Newfoundland said yesterday they had reached an informal agreement on developing a massive hydro-electric project at Gull Island in the remote Labrador region of eastern Canada.

Speaking at the annual premiers conference in Halifax, Quebec Premier Bernard Landry and Newfoundland Premier Roger Grimes told reporters that the deal was a prelude to any formal agreement that may be reached between the two provinces. The estimated cost of the dam and transmission lines in Labrador could reach C$4 billion ($2.5 billion).

A full agreement is expected in the fall, following formal negotiations, they said. Newfoundland had been dealing with aluminum giant Alcoa Inc. over the Gull Island project but a deal fell through a few months ago.

"We don’t anticipate something at this point in time that could completely throw the project off the rails and see it not happen," Grimes told a news conference.

The premiers said that any deal would include the development of a 2,000 megawatt power project, a long-term contract reflecting fair value and sharing of project risks. Provincially owned Hydro-Quebec would finance the construction while Newfoundland would own the production and transmission facilities in Labrador.

"We have a high level of confidence that we’ve talked through those issues for a year now informally, that we’ve thought about them extensively, that we believe they’re do-able," Grimes said.

Gull Island is about 225 km (140 miles) from the massive Churchill Falls hydro-electric development in Newfoundland’s central Labrador region.

All the electricity produced would be sold to Hydro-Quebec with recall rights held by Newfoundland. Both provinces said a deal would involve the Innu aboriginal people who live in the area.

Environmental assessments would also be conducted to gauge the impact of the project, which would see the flooding of about 85 square kilometers (33 square miles) of land.

If a deal is approved this fall, construction could start in three years and be finished in 2012.

Montreal CBC

October 21, 2003

Montreal: Ontario Premier-elect Dalton McGuinty and Jean Charest agreed Monday to try to resuscitate a long-delayed transmission line between Ontario and Quebec.

The transmission line, which was first talked about in 1999, would bring about 1,200 megawatts of electricity into Ontario.

Ontario’s Hydro One was supposed to have it built by last year, but the project was put on hold.

McGuinty, who was elected earlier this month, hasn’t given up on it.

"What we intend to do is to look for ways to establish some kinds of agreements that will enable us to rely on a greater extent on the province of Quebec," said McGuinty.

But many observers believe that Ontario may have a hard time persuading Hydro-Québec to go ahead with its end of the transmission line.

Energy Probe‘s Tom Adams said it was never in Quebec’s interest to allow exports of power to Ontario.

"The electricity demand in Quebec is now at the level where Quebec has to build new generating stations—they don’t have any surplus power," said Adams.

Adams said he believes nothing will happen in the short term.

Konrad Yakabuski
Globe and Mail
October 31, 2003

On a steamy Thursday evening last August, traffic on the bridges spanning the Ottawa River was molasses-thick. This situation was not the result of one of those occasional political exoduses to which Canadians have become accustomed over the years. Rather, this time, the cars were headed in the other direction.

You see, Quebec had power. Ontario didn’t.

The Aug. 14 blackout that left Canada’s richest province and most of its U.S. neighbours without electricity underscored what has always seemed an incontrovertible truth: Quebec is a power island, isolated not only by the circuit breakers that surround it, but in its cheap, abundant and clean hydroelectric resources.

Electricity has become a scourge for millions of North Americans jostled by their governments’ messy experiments with deregulation. Quebeckers have been spared this upheaval. There never has been much talk of dismantling Hydro-Québec. The state-owned monopoly remains the embodiment of the "maîtres chez nous" (masters in our own house) slogan that Liberal premier Jean Lesage used to nationalize its competitors in 1962.

By all accounts, it’s been a good deal for most Quebeckers. Electricity rates are among the lowest in the world. And apart from interruptions owing to Mother Nature’s wrath – remember the ice storm? – the juice has been steady and cheaper than ever since the former Parti Québécois government froze electricity rates in 1998.

So, Hydro-Québec gave Quebeckers quite a jolt last week when it revealed that it is rapidly running out of power. The province that only last year exported scads of excess megawatts south of the border, accounting for $3.5-billion or 27 per cent of its revenue, will be barely self-sufficient in electricity next year. In 2004, the power imported during consumption peaks will roughly equal that exported in other periods.

Somehow this seems to surprise people. It shouldn’t.

Since the second phase of the vast James Bay hydroelectric development was completed in the late 1980s, Hydro-Québec has added very little new capacity. Its dreams of building huge dams, notably at the proposed Great Whale River in Quebec and on the Lower Churchill in Labrador, were punctured by politics.

Meanwhile, the utility and its owner have done everything to encourage consumption. In real terms, residential consumers in Quebec are paying 13 per cent less for their electricity today than they did in 1997. Since the vast majority of Quebeckers heat their homes with electricity, that is a powerful incentive to crank up the thermostat.

Second, successive governments have offered electricity at ridiculously low rates to lure energy-voracious industries. Take, for instance, the "risk-sharing" contracts in which electricity costs for a number of smelters are pegged to the price of aluminum. With the latter expected to lag at around 68.5 cents (U.S.) a pound until 2008, according to Hydro-Québec’s own projections, there is no doubt which party comes out on the short end of this deal.

And for what? For a few hundred smelter jobs? Even Hydro-Québec, in its 2004-2008 strategic plan tabled last week, recognizes that these kind of projects constitute "a transfer of wealth to industries whose economic impacts are relatively small."

Yet, two-thirds of the additional electricity demand Hydro-Québec projects by 2008 is attributable to big users who pay the utility’s preferential – read lowball – rate. The Alouette aluminum smelter in Sept-Îles, which is undergoing a $1.4-billion (Canadian) expansion, alone accounts for 43 per cent of the additional demand. This is the result of a political decision. The former PQ government not only anteed up cash but agreed to set aside a permanent supply of 500 megawatts of cheap power to butter up members of the Alouette consortium, which is 40 per cent owned by Alcan Inc.

The result is that Hydro-Québec now says it must build. And build. The utility last week proposed capital expenditures of $3.5-billion annually between 2004 and 2020, for a total of $52.5-billion. Some existing hydro stations would be expanded; several new ones would be constructed, including a 3,000-megawatt (MW) project in the Minganie region on the remote North Shore. The $10-billion project would be the biggest hydro development in Quebec in more than two decades.

To keep the lights on until this new hydro capacity comes on stream, which is at least a decade or more away, Hydro-Québec wants to construct its own 800-MW natural gas-fired generating station and buy another 500 MW from a gas-fired plant that Alberta-based TransCanada Energy Ltd. is supposed to erect near Trois-Rivières. Those projects would substantially increase Quebec’s greenhouse gas emissions just as the province is supposed to start reducing them under the Kyoto Protocol.

Is all of this development really necessary?

Premier Jean Charest’s government will have to sort through that question. The new hydroelectric dams will be much more difficult, and hence expensive, to build than existing ones. This only stands to reason, since Hydro-Québec naturally harnessed the best sites first. So, the incremental cost of producing electricity rises with each new kilowatt of capacity added to the system.

Hydro-Québec buys electricity from Churchill Falls (Labrador) Corp. Ltd. at less than 0.3 cents per kilowatt-hour. Hydro-Québec’s own most cost-efficient stations generate power at less than 4 cents per kilowatt-hour. The plants the utility now proposes building would face production costs of up to twice that amount.

Is there a better way to go, one that doesn’t entail flooding vast amounts of untouched animal habitat or spewing additional greenhouse gases into the air?

Tom Adams, executive director of Toronto-based Energy Probe, suggests a system of "tradable electricity permits" (TEP) under which residential and industrial users alike would be allotted a block of power, based on their historic consumption pattern, at a fixed rate. If they use less than their allotment, they could "sell" the surplus back to Hydro-Québec at the market rate, earning a rebate on their next electricity bill. Similarly, if they use more than their allotment, the extra power would be priced at the spot market rate.

The TEP system could spur so much conservation, Mr. Adams contends, that it would not only erase the need for new generating capacity, it would free up loads of power for Hydro-Québec to export at profitable rates.

The problem with Mr. Adams’ idea is that it lacks the sex appeal of a megaproject. Mr. Charest reacted to August’s blackout this way: "Previous Liberal governments showed vision in developing our hydroelectric resources . . . We need to be vigilant and continue to develop [them] because we are running up against the limits of our capacity."

"Masters in our own house" is still a powerful rallying cry.

CBC News
April 4, 2005

St. John’s, Newfoundland: The president of the Canadian Electricity Association says the time is right for the federal government to help with a hydroelectric project on the lower Churchill River.

Hans Konow says the government has a daunting task in trying to meet the strict terms of the Kyoto environmental protocol.

Federal help would make it a lot more feasible to transmit Labrador hydro power across central Canada.

While the federal government was not willing to help when Newfoundland and Labrador tried to launch a hydro project a few years ago, Konow says the government has now signalled a willingness to help with these types of ventures.

"It doesn’t mean the federal purse will simply open up and poor money all over Canada," Konow says.

"I think it will have to be very selective, and the merits of each project will be competitive for a limited amount of financial resources, but I think the timing is probably very good."

In its last budget, the federal government announced a $250-million fund for projects such as east-west transmission links.

Newfoundland and Labrador Premier Danny Williams is expected to release more details this week about possible developments on the Churchill River.

Ontario and Hydro-Quebec announced last week they had set up a partnership with engineering firm SNC Lavalin to bid on a Lower Churchill project that would generate 2,824 megawatts of power.

While some factors appear to be in Williams’ favour – oil prices have been high, and Ontario is winding down its reliance on coal-fired energy – there are no guarantees of a development.

Tom Adams, who works with the environmental watchdog Energy Probe, is not sure the project will proceed.

"It still bears the burden of geography," he says.

"It’s still very far away, and that makes the power relatively costly. So, the economics of Labrador power are by no means a certainty."

Adams says the project would be more viable if the federal government was willing to offer some sort of subsidy.

Canadian Press
CTV.ca
October 19, 2006

Danny Williams says he’s sorry if he offended anyone when he described Quebec’s political climate as "volatile," but the outspoken Newfoundland premier refused to retract the remarks, saying the blunt assessment was "reality."

"It is not my intention to offend the people of Quebec under any circumstances," Williams said Thursday. "If I have offended them in any way, absolutely, I’d be sorry for it – but acknowledging as well though that I was stating reality."

Three weeks ago, in a bid to garner support for the massive Lower Churchill hydroelectric project in Labrador, Williams said Canada should reduce its reliance on energy from Quebec because the province is too politically unstable.

"The more we can spread out our energy supply means that we won’t be totally dependent on Quebec for energy which, given the volatility of the politics in Quebec, could be a very, very sensitive situation in the years to come," Williams said Sept. 27.

Williams was responding to reports that Quebec was moving ahead with an ambitious, 10-year plan to develop hydroelectric projects in an area known as the Five Rivers in the Lower North Shore region, just south of Labrador.

The Conservative premier said Quebec’s plans are an attempt to thwart Newfoundland’s multibillion-dollar bid to develop a hydroelectric project down river from the existing Churchill Falls dam – an accusation that was quickly rejected by the Quebec government.

On Thursday, Williams struck a more conciliatory tone, saying he is willing to strike a deal with Quebec to develop the Lower Churchill project to sell power into Ontario – but only if Newfoundland and Labrador has complete control over the project.

If a deal can’t be reached, he said, the province is still examining the feasibility of sending power through submarine cables to the Maritimes where it would be relayed to markets in the United States – even if such a project would cost billions more and delay any profits.

Such an engineering feat would be extraordinary, if not unthinkable, said Tom Adams, executive director of Energy Probe, a Toronto-based consumer research group largely funded by individuals and publication sales.

"Nobody’s ever done a submarine cable of the kind he is imagining," Adams said. "I think he is trying to talk his way around previous statements about going it alone. I don’t think there’s a practical possibility of transmitting the power straight from Labrador to southern markets without going through Quebec."

The Lower Churchill project has been on the drawing board in one form or another for several decades. A final decision on the feasibility of building the project, estimated to cost up to $9 billion, will be made by 2009.

If the project is given the go-ahead, the earliest it could produce power is 2015.

The desire to build more power plants on the Churchill River in central Labrador can be traced back to 1972, when the Churchill Falls hydroelectric dam was completed with Quebec’s help.

Under that lopsided deal, set to expire in 2041, at least $750 million has flowed into Newfoundland’s coffers as of 2004, the most recent figures available. Quebec has pocketed almost $1 billion annually.

Kathy Dunderdale, Newfoundland’s natural resources minister, will meet with officials from Ontario’s Energy Ministry next week to discuss the Lower Churchill project.

Observers have warned Ontario faces energy shortages over the next five to seven years without significant new sources of power.