Nfld Wants More Federal Money...

[August1991]

Newfoundland and Labrador has finalized a deal to develop the Lower Churchill hydroelectric project with Emera Energy of Nova Scotia, CBC News has learned.

...

The federal government has been asked for $375 million in support for an underwater hydro link to Nova Scotia through an existing infrastructure program.

CBC

Here's some more background:

In June, both provinces made a joint request for $375 million from Ottawa for a subsea power cable connecting the two provinces.

"We have not heard from them with respect to that application, I suspect, in part, because they would want to see what the final agreement looks like," said Dexter.

The cost of the cable project isn't known but a SNC-Lavalin study has estimated it would be between $800 million to $1.2 billion.

CP

----

Emera and the Newfoundland government can sign whatever they want but without financing, the signatures are a charade. Mere PR.

The population of Newfoundland & Labrador is about 700,000 people. $350 million is about $500 from each. If they want the cable, they should pay for it. The cable is of no benefit to anyone elsewhere in Canada. Indeed, the cable would only be a benefit to Danny Williams' ego - as if that needs any more inflation.

----

The bottom line here is that the valuable resource is not Churchill Falls or hydro potential in Labrador. The valuable resource is proximity to people who want electricity. Labrador does not have that. Quebec does.

Danny Williams is incapable of understanding this and now he wants a subsidy from the federal government (taxpayers across Canada) to overcome his cognitive dissonance.

Here's a comparable example: The NWT have oil and natural gas in the Beaufort Sea. To bring those resources to market, it would require long pipelines through the Mackenzie River valley (in addition to offshore wells in difficult climatic conditions). These pipelines and offshore wells pose numerous problems so the resource sits unexploited under the sea.

No one, except someone like Danny Williams, would have the ego to ask for a federal subsidy to exploit such a resource.

Edited November 18, 2010 by August1991

[punked]

I am pro this. Good for Newfoundland, good for Nova Scotia, and good for Canada.

[Wild Bill]

CBC

Here's some more background:CP

----

Emera and the Newfoundland government can sign whatever they want but without financing, the signatures are a charade. Mere PR.

The population of Newfoundland & Labrador is about 700,000 people. $350 million is about $500 from each. If they want the cable, they should pay for it. The cable is of no benefit to anyone elsewhere in Canada. Indeed, the cable would only be a benefit to Danny Williams' ego - as if that needs any more inflation.

----

The bottom line here is that the valuable resource is not Churchill Falls or hydro potential in Labrador. The valuable resource is proximity to people who want electricity. Labrador does not have that. Quebec does.

Danny Williams is incapable of understanding this and now he wants a subsidy from the federal government (taxpayers across Canada) to overcome his cognitive dissonance.

Here's a comparable example: The NWT have oil and natural gas in the Beaufort Sea. To bring those resources to market, it would require long pipelines through the Mackenzie River valley (in addition to offshore wells in difficult climatic conditions). These pipelines and offshore wells pose numerous problems so the resource sits unexploited under the sea.

No one, except someone like Danny Williams, would have the ego to ask for a federal subsidy to exploit such a resource.

You're just rationalizing, August. Newfoundland has good reason to want to avoid any more electricity deals with Quebec, after being burned so badly on the last one. It's not just Quebec, either. The Churchill Falls deal was rammed through with Ottawa help so there is little trust federally either.

Williams probably fears that if he opens negotiations with Quebec he'll get ramrodded into some deal where he has to give Quebec the power for a penny a kilowatt until the year 2367, or something equally ridiculous.

If he can make a deal with Nova Scotia on his own he probably feels much safer. Asking for federal money is just what every province does. Can't hurt to ask and he might even get some! He has some seats to offer Harper and so does Nova Scotia. For that matter, it could lead to a deal with New Brunswick.

If he can do it without dealing with Quebec, why shouldn't he?

Once burned, twice shy!

[August1991]

I am pro this. Good for Newfoundland, good for Nova Scotia, and good for Canada.

Good for the people of Newfoundland? Then why do they require a subsidy from taxpayers across Canada?

Why should someone in BC, or Quebec, give money for the construction of such a cable?

----

Imagine that you own a solar panel that can turn sunlight efficiently into electricity. Unfortunately, you live on the side of a mountain where it is cloudy 80% of the time. Your solar panel has no value. So, you ask for a subsidy to build giant seachlights... rather than negotiate with your neighbour who lives on the other side of the mountain and enjoys lots of sunlight.

Now then: Is the valuable resource the solar panel, or the sunlight?

[punked]

Good for the people of Newfoundland? Then why do they require a subsidy from taxpayers across Canada?

Why should someone in BC, or Quebec, give money for the construction of such a cable?

I don't know why did the people of Alberta need NS and Newfoundland to build them a railroad with their fish money? Oh yeah it is because we are part of one country and what is good for many of us is good for all of us. I know you hate that NS and NFLD might actually be able to prosper on their own in the future but I don't.

Good for Canada.

[August1991]

The Churchill Falls deal was rammed through with Ottawa help so there is little trust federally either.

The Churchill Falls deal was not "rammed through". To get financing, investors critically wanted to see Quebec's signature because they wanted to know that Brinco had a market for its electricity. Without customers, Churchill Falls was no more than water under a sluice.

Indeed, Lévesque (as Quebec Minister of Natural Resources in the 1960s) tried to make a reasonable deal with Smallwood but Smallwood's ego - like Danny Williams' ego now - prevented it. Lévesque even warned Newfoundlanders (in the early 1960s) of the consequence of rejecting a reasonable deal.

Newfoundland fishermen are notoriously independent, and sometimes pigheaded. (The recent financial meltdown in Iceland comes to mind. Something about small island people.)

[punked]

The Churchill Falls deal was not "rammed through". To get financing, investors critically wanted to see Quebec's signature because they wanted to know that Brinco had a market for its electricity. Without customers, Churchill Falls was no more than water under a sluice.

Indeed, Lévesque (as Quebec Minister of Natural Resources in the 1960s) tried to make a reasonable deal with Smallwood but Smallwood's ego - like Danny Williams' ego now - prevented it. Lévesque even warned Newfoundlanders (in the early 1960s) of the consequence of rejecting a reasonable deal.

Newfoundland fishermen are notoriously independent, and sometimes pigheaded. (The recent financial meltdown in Iceland comes to mind. Something about small island people.)

Someone is mad his province wont get a piece of the pie because they were greedy in the past.

[Alta4ever]

I don't know why did the people of Alberta need NS and Newfoundland to build them a railroad with their fish money? Oh yeah it is because we are part of one country and what is good for many of us is good for all of us. I know you hate that NS and NFLD might actually be able to prosper on their own in the future but I don't.

Good for Canada.

the railway was there long before nf entered confederation. The railway wasn't built for any one province it was built to retain territory to stop its loss to the US.

[August1991]

Oh yeah it is because we are part of one country and what is good for many of us is good for all of us. I know you hate that NS and NFLD might actually be able to prosper on their own in the future but I don't.

Good for Canada.

You define Canada by a federal subsidy to build a hydro cable under 180 kms of water?

If it were a bridge, you might possibly (very possibly) get my attention. But a hydro cable to export electricity to the US? That's your definition of Canada?

----

And BTW, Newfoundland now has oil. It pays its way.

Edited November 18, 2010 by August1991

[punked]

the railway was there long before nf entered confederation. The railway wasn't built for any one province it was built to retain territory to stop its loss to the US.

Yah I think you might want to look at the money that went into that railroad. It was almost all NS money. You know what sucks to? NS wasn't even connected to that railway they built.

Edited November 18, 2010 by punked

[punked]

You define Canada by federal subsidy to build a hydro cable under 100 kms of water?

If it were a bridge, you might possibly (very possibly) get my attention. But a hydro cable to export electricity to the US? That's your definition of Canada?

It is my definition of a united Canada, which diversifies its economic wealth and does not put all its eggs in one basket.

[Wild Bill]

The Churchill Falls deal was not "rammed through". To get financing, investors critically wanted to see Quebec's signature because they wanted to know that Brinco had a market for its electricity. Without customers, Churchill Falls was no more than water under a sluice.

Indeed, Lévesque (as Quebec Minister of Natural Resources in the 1960s) tried to make a reasonable deal with Smallwood but Smallwood's ego - like Danny Williams' ego now - prevented it. Lévesque even warned Newfoundlanders (in the early 1960s) of the consequence of rejecting a reasonable deal.

Newfoundland fishermen are notoriously independent, and sometimes pigheaded. (The recent financial meltdown in Iceland comes to mind. Something about small island people.)

Have you ever bothered to google up the history of the Churchill Falls deal, August? You can yell all you want that it was fair but you don't have to convince me. You have to convince the entire population of Newfoundland!

I've given you this link before, from a Montreal newspaper:

http://www.canada.com/montrealgazette/story.html?id=17f52755-7ede-45a5-8b2f-6a8b7d004957

"The infamous Churchill Falls hydro agreement - giving Quebec long-term access to discount-priced power from Newfoundland and Labrador - was not only a bad financial deal for Newfoundland, it was also signed under coercive conditions, which may raise "substantive questions of business ethics and law," according to newly released research on the 1968 deal."

"In the 1960s, Newfoundland began talks with Hydro-Quebec to sell power from Churchill Falls, because Quebec would not allow Newfoundland to transmit the power through Quebec to other markets.

Quebec still gets power today at bargain-basement prices from Churchill Falls, and has a legally binding contract to do so for a total of 65 years, until 2041.

That contract was initially designed to last only 40 years, from 1976 (the year Churchill Falls power came onstream), to 2016.

According to the new study, a letter of intent, or draft contract, signed between Hydro-Quebec and CLFCo in 1966 gave each side the option of renewing the contract - under mutually agreeable terms and fresh negotiations - upon its expiry in 2016.

By 1968, however, after years of negotiating under such terms, Hydro-Quebec suddenly altered its demands, only months before the final deal was signed.

It wanted an automatic renewal of the contract, without negotiations, for another 25 years starting in 2016. And it wanted a guaranteed price even lower than the original price paid before the renewal.

"That's like me asking you, 'Why don't you agree to sell me your product at a lower price than prevails today, starting 50 years from now and continuing up to 75 years from now," Feehan said. "It's so incredible, you wonder how anyone could have conceived it."

Hydro-Quebec's new demands, although extraordinary, were impossible for CFLCo to refuse because the company was then in the midst of building the hydro project, was heavily in debt, and nearing the end of its cash flow. By February 1968, it had only three months worth of money left.

If it refused Hydro-Quebec's demands, and Quebec walked away from its commitment to purchase Churchill Falls power, CFLCo wouldn't be able to raise more money to finish construction, sell any electricity or repay its debts. It would almost certainly go bankrupt.

An archived, handwritten note by one of CFLCo's chief negotiators, written at the time Hydro-Quebec issued its new demands, calls the automatic renewal clause a "do or die condition."

The study also says Hydro-Quebec made the demand days after learning about CFLCo's financial pressures.

Hydro-Quebec had access to this information because while it was negotiating with CFLCo, Hydro-Quebec was also a minority owner of the company, and its president sat on CFLCo's board."

Do you even know what Quebec is paying Newfoundland for power from Churchill Falls, August?

"The present purchase price under the contract is approximately one-quarter of one cent

per kw/hr and the renewal contract fixes the purchase price at one-fifth of one cent for

the 25 year period beginning in 2016. This will mean that, for the remaining 32 years of

the power contract, Upper Churchill power will be sold to Hydro-Quebec for less than 5

per cent of its recent commercial value. This permits virtually no return to CFLCo and its

shareholders for the next 32 years."

Now, tell us why on earth Newfoundland would want to sign any more hydro deals with Quebec!

[Shady]

I am pro this. Good for Newfoundland, good for Nova Scotia, and good for Canada.

Sounds like you're pro meaningless slogans too. This project is completely ridiculous. Another example of us pissing away good money.

[August1991]

Someone is mad his province wont get a piece of the pie because they were greedy in the past.

Newfoundlanders (ie. Danny Williams/Joey Smallwood) want the whole pie and they can't get through their thick skills that they have to share - because the valuable resource is not just a waterfall. It's also proximity to clients.

Quebec (Charest/Bourassa) will negotiate in good faith but Newfoundland (Williams) won't. As a result, Williams now wants a federal subsidy. From taxpayers across Canada. From Stephen Harper.

Yeah, right.

-----

Danny Williams (like Joey Smallwood) is a blowhard, and a terrible negotiator. Danny Williams made his money in cable TV licences. Is it any wonder...

Edited November 18, 2010 by August1991

[punked]

Newfoundlanders (ie. Danny Williams/Joey Smallwood) want the whole pie and they can't get through their thick skills that they have to share - because the valuable resource is not just a waterfall. It's also proximity to clients.

Quebec (Charest/Bourassa) will negotiate in good faith but Newfoundland (Williams) won't. As a result, Williams now wants a federal subsidy. From taxpayers across Canada. From Stephen Harper.

Yeah, right.

-----

Danny Williams (like Joey Smallwood) is a blowhard, and a terrible negotiator. Danny Williams made his money in cable TV licences. Is it any wonder...

Then he will negotiate with NS wont he? We will see in the near future what a "fair" price is.

[August1991]

I've given you this link before, from a Montreal newspaper:

...

Wild Bill, you don't have to yell.

Here's a quote from The Gazette editorial (and BTW, The Gazette hardly represents Quebec):

A new study, by two professors at Memorial University in St. John's, says the Newfoundland company that developed the massive hydro project signed the extraordinary contract because Hydro-Quebec, after years of negotiating in goodwill, chose at the last minute to exploit inside information that the developer would go bankrupt without a deal.

"... two professors at Memorial University... " There's your first clue, Sherlock.

But note critically also: "... inside information that the developer would go bankrupt without a deal."

IOW, without Quebec, Brinco would never have existed and Churchill Falls would still exist as a wondrous waterfall - water over some rocks.

Quebec didn't need "inside information". It's painfully obvious to everyone that without access to a market, Newfoundland has no valuable hydro resource at all.

That's why Danny Williams is now asking for a federal subsidy - he wants access to customers.

Edited November 18, 2010 by August1991

[August1991]

It is my definition of a united Canada, which diversifies its economic wealth and does not put all its eggs in one basket.

Punked, your definition of Canada involves a subsidy to export electricity to the US? And you claim that this diversifies economic wealth?

WTF?

To me, this little federal subsidy debate, and Williams' gambit, illustates well my definition of Canadian federal politics.

Unlike in France, the US, the UK where Left/Right ideology drive national political debates - in Canada, it is regionalism that drives our federal politics. Harper is no more left/right than Ignatieff or Martin. That's not the issue.

At the federal level, the key debates/controversies are not left/right debates. They concern regional politics and agreements. In many ways, Canadian federal politics are sophisticated - and civilized.

[robert_viera]

No one, except someone like Danny Williams, would have the ego to ask for a federal subsidy to exploit such a resource.

What about this?

Northern BC Communities Electrified Over Federal $130 Million Investment in the Northwest Transmission Line

Sep 17, 2009

TERRACE, BRITISH COLUMBIA – Communities across central and northern British Columbia were unanimous in their thanks to Prime Minister Stephen Harper and the Government of Canada for its announcement of $130 million to ensure that the Northwest Transmission Line is built along Highway 37.

Source: http://northerndevelopment.bc.ca/news/71/18/Northern-BC-Communities-Electrified-Over-Federal-130-Million-Investment-in-the-Northwest-Transmission-Line

Federal investments in green infrastructure include:

* $130 million to build a transmission line that will tap into the renewable energy potential of northern British Columbia (e.g., hydro, geothermal, wind and biomass).

Source: http://www.actionplan.gc.ca/eng/feature.asp?featureId=4

... or this?

$71 million for a hydro generation and transmission project in the Yukon that will boost the availability of green power in the territory.

The population of the Yukon is about 35,000. That works out to more than $2,000 per person.

[August1991]

What about this?

...

The population of the Yukon is about 35,000. That works out to more than $2,000 per person.

Madness.

But at least the electricity is for other people in Canada.

And thank God the federal government can collect royalties from diamond mines in the NWT - if not the Yukon - to pay for this. (BTW, as another poster showed me, the NWT now has the highest GDP per capita of any jurisdiction in Canada - if not the world. The NWT has a population of about 40,000. Do the math.):

For example, Indian and Northern Affairs Canada estimates that over the life of the mines in the Northwest Territories (NWT), the Ekati, Diavik and Snap Lake projects will collectively generate royalties of C$1.6 billion, federal business taxes of C$2.6 billion, territorial taxes of C$1.3 billion, and employee and other business income taxes of C$4.7 billion (2004 estimated figures).

Link

Robert Viera, Nfld (Danny Williams) is asking for something very different.

Edited November 18, 2010 by August1991

[Smallc]

(BTW, as another poster showed me, the NWT now has the highest GDP per capita of any jurisdiction in Canada)

That was me...and it was the world, not just Canada. That said, Newfoundland is quite up there as well in terms of GDP per capita. What makes one province richer, makes us all richer. Exporting our products means that we make more money to pay for thing at home. $375M is a pittance in terms of the revenue potential of this project, and the benefits it will bring (monetarily) to the federation.

Edited November 18, 2010 by Smallc

[August1991]

That said, Newfoundland is quite up there as well in terms of GDP per capita. What makes one province richer, makes us all richer. Exporting our products means that we make more money to pay for thing at home. $375M is a pittance in terms of the revenue potential of this project, and the benefits it will bring (monetarily) to the federation.

Well then, let Newfoundland pay for this export to the US.

But why should any Canadian subsidize electricity consumed by Americans?

My whole career has been based on the proposition that somewhere, under all the insults and lying and general bad behaviour that makes up the bulk of political life, there was some genuine issue at stake: that if you could just strip away the politics, you would eventually get to the policy. It has taken me all these years to understand that, no, its just politics all the way down.

Andrew Coyne

Andrew Coyne studied not economics but political science at the LSE and only now discovers that regionalism, not economics or any political ideology, drives Canadian federal politics.

Politics all the way down?

Canadian federal politics are life itself. And we Canadians conduct it in a very civilized way.

Edited November 18, 2010 by August1991

[Smallc]

Well then, let Newfoundland pay for this export to the US.

But why should any Canadian subsidize electricity consumed by Americans?

Canadians won't be subsidizing electricity consumed by Americans. We'l be subsidizing economic development, as we so often do in every province, including (or perhaps especially) your own.

[blueblood]

Canadians won't be subsidizing electricity consumed by Americans. We'l be subsidizing economic development, as we so often do in every province, including (or perhaps especially) your own.

See this is something I can get behind. Harper needs seats in NFLD, and if he has to pay 375 million, that's bugger all. Considering that this is comparable to Bipole III which other provinces are helping to pay for through transfer payments, Williams has a case here. 375 million bucks is a rounding error. If I'm Harper and if Danny Williams can help get me seats in Newfoundland, that 375 million is a sound investment.

Quebec now has a choice, it can renegotiate, or Williams will get his line even if he goes into debt to do it.

As for Alberta taking rates on Mackenzie Oil pipeline, I can assure you that they are not charging obscene rates for access, because they know damn well that if they charge too much, that pipeline takes a detour. Quebec is going to take a bath for this.

Considering that this whole thing was pretty much done with heavy gov't backing, complaining about further public financing on this thing is a moot point.

I'll pose this Question to August, if your so upset about English Canada contributing to a more efficient means of power transfer, are you as upset about English Canada bankrolling the arts industry in Quebec which is propped up by Cancon and gov't financing?

Edited November 18, 2010 by blueblood

[Smallc]

Other provinces are not helping to pay for bipole III. That is (as fas as I know) money borrowed from the bank.

[Newfie Canadian]

Some interesting points you make, August, as always.

What exactly is the problem?

All provinces, including Quebec, have received subsidies for projects of one kind or another. Businesses, even crown corporations such as Nalcor, have received funding through programs designed by the Feds for just this kind of purpose. We can get into facts about the Régie de l'énergie and Hydro-Quebec, the former siding with the latter about not having the 'space' to transfer the power long it's transmissions lines and so on, but that isn't the point. (As an aside, if HQ wanted it's transmission lines upgraded to what it says it needed to be to the tune of 3 billion dollars, would they expect the Feds to help with that? Of course they would.)

How does this benefit Canada, you ask? If it benefits any Canadians, such as Newfoundlander and Labradorians and Nova Scotians, then it's a benefit to Canada. As a Canadian, and yes I am one, I find that a little bit insulting.

But all of that is neither here nor there. Perhaps we should look at this:

The agreement says a power plant will be built at Muskrat Falls in central Labrador with more than 800 megawatts of power to be generated. About 500 megawatts will flow to Newfoundland, allowing the aging and expensive oil-burning plant at Holyrood to be decommissioned.

Nova Scotia could choose to replace coal as an energy source, or sell the power to New Brunswick or clients in the U.S., or a combination of options.

CBC Article

One could argue that this not only benefits Canada and ALL Canadians, but the world by possibly eliminating a potent greenhouse gas emitter.

Wouldn't you agree?

Edited November 18, 2010 by Newfie Canadian