Tagged: Hydro Quebec
A bad deal for NB? – feedback
Contrarian reader Cliff White writes:
I’m in Quebec at the moment and, as you can imagine, the deal with New Brunswick is playing very well here. I can’t see how this won’t turn out to be a very bad deal for New Brunswick in the long term, similar to, but eventually worse then, the one Newfoundland agreed to under Smallwood.
At the time Smallwood signed the Churchill Falls deal, it looked pretty good, given the cost of energy at the time. The problem arose when energy prices went up dramatically and Quebec refused to renegotiate. The length of the agreement meant that Newfoundland was getting fleeced, while struggling financially, for many decades.
In New Brunswick’s case, of course, the deal is permanent. One of the things this latest deal highlights is the continuing inability of Atlantic Premiers to work together in their own interest.
One last thing I’ve wondered about for some time is why our energy resources aren’t being use here at home rather then exporting it. It has always seemed to me a better strategy to use any excess energy supplies as cheap energy to attract business rather then shipping it off to other jurisdictions. I realize this is a complex issue, but there have to be better strategies then the ones we’ve followed to date. One would hope that the NDP government will take a more innovative approach in the future.
The short answer to the last question is that intermittent supplies like wind and tidal work better as part of a large system—one that can absorb their ups and downs. Also, intermittent energy sources need backup supplies that can be summoned in a hurry when the renewables go down. And since, as a practical matter, electricity can’t be stored, it’s helpful to have someone you can sell it to when there is an excess. Hopefully, those sales will balance the cost of buying backup power from time to time. All three needs argue for robust interconnections with regional suppliers and customers. This is why a Quebec Hydro monopoly poses so much risk for the est of Atlantic Canada.
As to Cliff’s main point, five years goes by in the twinkling of an eye. From that point on, the deal’s downsides may look bigger and bigger.
As Frank Corbett’s off the cuff comment in Question Period Thursday shows, the Dexter Government is dismayed at Graham. Dexter’s comments have been appropriately muted because he has to deal with things are they are, not as he might wish them to be.
Half way through its mandate, Dexter’s task force on renewable energy, headed by Dalhousie University’s David Wheeler, faces a daunting challenge: many of the assumptions it has been operating under are out the window.
Hydro Quebec deal is bad for NS & NL, but how good is it for NB?
As Contrarian has noted, the Hydro Quebec-NB Power deal poses huge for problems Nova Scotia. What’s more surprising is how shabby the deal seems to be for New Brunswick:
- NB sheds $4.8 billion in debt, but also loses critical long-term strategic assets, including its transmission grid and a potentially lucrative energy portal into the insatiable New England electricity market.
- NB remains saddled with the ballooning costs for refurbishing the aging Pt. Lepreau power plant, but Quebec Hydro gets the plant. NB does get some relief in the cost of replacement energy while Lepreau is offline.
- NB remains stuck with NB Power’s thermal stinkers—one dirty coal-fired plant and two oil-fired peaking plants—with no guarantee Hydro Quebec will continue to buy power from them.
- Existing NB industries get an immediate 30 percent reduction in power rates, but the new rates are not frozen and will increase in step with industrial rates in Quebec. After five years, all bets are off.
- Moreover, new industries, or existing industries that expand beyond historic consumption, will pay market rates.
- Customers get a five year price freeze. Rates thereafter are theoretically capped to increases in the Consumer Price Increase, but this capping provision goes out the window if Hydro Quebec’s costs go up.
- Graham argues that NB has avoided the huge cost of rebuilding or decommissioning the Mactaquac dam, which is approaching the end of its life expectancy.
- NB essentially surrenders regulatory authority over electricity.
- Hydro Quebec will pay no taxes in NB.
Hydro Quebecwick unveiled
Inter-provincial power grid diagram shows the startling degree to which Nova Scotia is an energy island. This is a big obstacle to the development of local renewable energy supplies like wind and tidal, which are intermittent and therefore require robust interconnection with nearby power porducers and users. The Hydro Quebecwick deal means that any increase in our connectivity with the rest of the world will be at the mercy of the new monopoly owner of the grid, the Government of Quebec.
Premiers Shawn Graham (NB) and Jean Charest (QC) have unveiled the details of the Hydro Quebecwick deal. Quebec gets a monopoly on eastern Canadian access to US power customers; New Brunswick gets a mess of short term pottage and some debt relief, but gets to keep two white elephant dirty coal power plants. This may one day turn out to be as big a fleecing as the one Quebec gave Joey Smallwood 40 years ago.
It’s hard not to see this as a dark day for the rest of Atlantic Canada. Bye bye, Green Grid, a critical element in developing promising renewable but intermittent local Maritime energy sources like wind and tidal. Bye bye, fair access to US electricity markets, an equally critical element in developing those resources.
David Wheeler take note: This is very bad news for anyone anxious for action on climate change in Atlantic Canada. Considering he was blindsided, Premier Darrell Dexter’s response has been appropriately dignified, but make no mistake: this presents his administration with a huge challenge. Like Newfoundland, Nova Scotia’s influence on the national stage has reached such a low ebb that hardly anyone there will give it a thought.
See also: News release. MOU. MOU summary. (All are PDFs.)
Hydro Quebecwick? Not just Danny’s problem
This promises to be a continuing Contrarian topic, but I will flag it briefly: NB Power’s apparently imminent sale to Hydro Quebec represents a tectonic shift in Nova Scotia’s energy options.
I mention this because, as is typical, the national news media seem to view the story as just another installment in Newfoundland Premier Danny Williams’s (to them) clownish battles with central Canada. Such a view is as witless as it is patronizing.
The sale poses huge problems for Nova Scotia and PEI, as well as Newfoundland. If Quebec can use its windfall profits from Joey Smallwood’s disastrous 1969 deal on Upper Churchill Falls to buy up all the available routes that might get Lower Churchill Falls power to market, you have to wonder whether Canada really is a country any more.
Nova Scotia needs desperately needs to get off dirty imported coal as an energy source. Of our three local renewable energy prospects—wind, biomass, and tidal—two are intermittent and require large amounts of dispatchable backup energy. (Dispatchable means it can be turned on and off quickly, unlike thermal plants, and when needed, unlike wind and tidal). Pt. LePreau nuclear and Churchill Falls Hydro are the two best only two prospects. To justify the cost of Churchill Falls, we need to be able to transit any excess electricity to New England.
Premier Darrell Dexter speaks bravely about turning the sale, and Newfoundland’s antipathy to Quebec Hydro, to Nova Scotia’s advantage by building an undersea cable from Yarmouth to Maine. That would add a third undersea cable to the project. (The first two would cross the Strait of Belle Isle and the Cabot Strait.) Maine Governor John Baldacci, keen on forging an energy alliance with NB, has previously rejected that idea.
Dexter may by hoping to keep the young’un’s spirits up by whistling past this graveyard, but he must understand that this is first big crisis to face his administration.
A sale would also blows a big hole in nascent plans for a green energy pool involving the four Atlantic Provinces, another potential solution to the problem of intermittentcy of renewable energy supplies.
The Globe and Mail reports that Quebec is holding out a sweet carrot to NB Premier Shawn Graham: wiping clean NB Power’s $4.7-billion debt, and cutting power rates to consumers and businesses by $5-billion. That will be hard for the province to resist, and it goes without saying that no national government would risk offending Quebec by blocking the sale, even if it cripples energy options for three poor-sister provinces.
More on this in the days ahead. Meanwhile, Costas Halavrezos has a good interview with Yves Gagnon, KC Irving Chair of Sustainable Development at Université de Moncton here, CBC-New Brunswick’s estimable Jacques Poitras has some cogent analysis, and, as always, AllNovaScotia is on top of the story (subscription required). Reaction from Williams here and here. The Fredericton Gleaner likes the deal, as does the New Brunswick Business Journal.
