Only the brave gamble with Hydro-Quebec

By Konrad Yakabuski
Globe and Mail


Barely a week ago, a sprightly young lad from Upper Island Cove, Nfld., melted television viewers with the most mellifluous rendering of Danny Boy this side of the Emerald Isle only to see the title of Canadian Idol fall to a smouldering Latina-Quebecoise from Gatineau. He was such a good sport about it, though, that he made detente between Newfoundland and Quebec - a sort of Canadian idyll - seem briefly possible.

Briefly, we said.

"The voting is as rigged as anything has ever been," a St. John's radio phone-in show host declared the next day. Caller Emma agreed: "If he had been up against any other contestant than a Quebec contestant, I really do believe that he would have had this hands down."

Newfoundland and Labradorians' reaction over the Canadian Idol outcome is as forgivable (after all, Craig should've won) as it is fleeting. Don't expect tempers to calm as quickly, or ever, over another Quebec-Newfoundland rivalry - the one we call Hydro Idol.

Newfoundland Premier Danny Williams decided earlier this year to go it alone on a proposed $6-billion to $9-billion (according to already stale estimates) hydroelectric development on the lower Churchill River in Labrador, rejecting an offer from Hydro-Quebec and the Ontario government to jointly build the 2,800-megawatt project. It was great politics. Newfoundlanders still feel they're being stiffed by Quebec on the massive 5,400-MW Churchill Falls hydro deal that their late premier Joey Smallwood negotiated in the sixties. They'd dearly love to see their current leader stiff Quebec on the lower Churchill.

The problem is that it's impossible. Hydro-Quebec is the biggest and most savvy hydroelectric company on the continent. When Mr. Williams turned his nose up at its offer, it took about two seconds for Hydro-Quebec chief executive officer Thierry Vandal to move to Plan B. The latter entails fast-tracking 4,500-MW worth of hydro developments within Quebec. If Hydro-Quebec's stated goal is not to prevent Newfoundland from proceeding without it on the lower Churchill, its decision to green-light competing projects in la belle province certainly casts enough of a pall over Newfoundland's project in order to make it a tough sell for Mr. Williams.

In addition to the 900-MW Rupert River project on which Hydro-Quebec expects to break ground within months, and which will produce electricity at an unbeatable 4.4 cents per kilowatt-hour, the utility is gearing up to build two more massive projects worth an estimated $14-billion on the province's North Shore. The most advanced of these is a 1,500-MW project on the Romaine River; a similar-sized development on the Petit Mecatina River farther east is also on the drawing boards.

For a monolith, Hydro-Quebec is astonishingly nimble. It promises to have a feasibility study completed on the estimated $7-billion Romaine project by early 2007, one that will include detailed environmental impact and cost-benefit reports. Provided negotiations with natives and other local communities go smoothly - and there have been few signs they won't since all sides welcome the development - Hydro-Quebec could start building the project in 2009.

Mr. Williams has been so vague about prospective starting dates for the lower Churchill project that even his compatriots are starting to see through the smoke. The opposition is accusing him of dropping the ball, warning that Newfoundland's slow-poking will see it once again being had by Quebec if the latter arrives first to market - in Ontario or the U.S. Northeast - with power from the Romaine.

Building a big hydro project is risky enough, given uncertainty about where prices for competing sources of electricity will be years down the road. It gets even riskier when two hydro projects are being proposed that, without massive investments in new transmission interconnections, wouldn't both be able to get their power to market.

So, Mr. Williams must do everything he can to stall Hydro-Quebec. Last week, he unleashed Natural Resources Minister Kathy Dunderdale to tell reporters in St. John's that Quebec's plans for the Romaine and Petit Mecatina projects need Newfoundland's approval because the rivers Hydro-Quebec wants to dam originate in Labrador.

It's clear environmental impacts do not respect borders. But Hydro-Quebec's Mr. Vandal countered that the area flooded by the dams will be entirely within Quebec, notwithstanding an age-old dispute between the two provinces over where the border actually lies. Besides, Mr. Vandal pointed out, if Newfoundland has not sought environmental approval from Quebec to proceed with the lower Churchill project, why would Quebec need Newfoundland's approval to build dams on the Romaine? All such projects are subject to federal environmental reviews anyway.

Then again, maybe Mr. Vandal is bluffing, too. Harnessing electricity on the Romaine would be an expensive proposition, probably surpassing 9 cents per kwh. Mr. Williams has provided no cost estimates on power from the lower Churchill; it may or may not be more economical, depending on whether Newfoundland can get federal loan guarantees to proceed with the project. Or, Mr. Williams finally does the smart thing and starts talking to Quebec Premier Jean Charest about developing the lower Churchill together.

Otherwise, the Hydro Idol finale might not be pretty to watch. Although it will undoubtedly spawn entertaining conspiracy theories on Newfoundland talk shows.

Posted by Arthur Caldicott on 27 Sep 2006