Politics and Hydro

Plus the Reading List for 12 Jan 24

News about the latest talks between Quebec and Newfoundland and Labrador about Churchill Falls are like the water flow over the cliff most days: not much of anything.

A year after Quebec Premier Francois Legault swept Newfoundland and Labrador Premier Andrew Furey off his feet, we know that both sides have long been involved in formal negotiations.

And that’s it.

Lot of speculation, all the same. Lots of people wondering what’s going on, what a good deal might look like, and all the issues that could be swirling around about power, price, and problems.

Just remember that any talk of hydro-electric development in Labrador is about politics.

When Andrew Furey talked about green nickel or green steel or the growing demand for electricity, he wasn’t describing anything new or special that is driving the current talks. Far from it. All that has been true for a long time or is just speculation.

Even the idea Quebec will need electricity is not new. That need drove talks in the late 1990s about expanding Churchill Falls and building Gull Island, the latter always being the more lucrative of the two dams that were part of the Lower Churchill Project.

The expansion at Churchill Falls fell apart largely because of problems with water supply. But the two sides kept talking and by 2002, there was a workable agreement to develop Gull Island with the bulk of the power going to Quebec for 45 years at a floor price of 3.5 cents a kilowatt hour. It was a good deal with a price escalator and other protections for Newfoundland and Labrador. The only objection was politically-driven and in the weakened state of his caucus and cabinet Roger Grimes couldn’t push ahead in the howls of protest that were all about politics and not about the deal itself.

A couple of years later Hydro-Quebec and Ontario Hydro teamed up for another proposal to develop the Lower Churchill. Danny Williams dismissed it out of hand and then struggled to interest anyone in the very expensive and entirely political project that eventually became Muskrat Falls.

Practically, Furey and Legault could come up with a deal to expand Churchill Falls, build Gull Island, and even rejig the Churchill Falls contract either as three separate projects over time or all in one complex shot. The deal could balance off all the issues involved so that both sides win.

But what will matter is politics.

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Indigenous issues are resolved. There’s a development agreement with the Innu already and it might just take a bit more cash to resolve any lingering issues there. A smarter deal would add some job opportunities and support Indigenous education and training. There are no other Indigenous claims at a stage to cause this project a hiccup. The major issue with the Innu is caused by the way the provincial government keeps ignoring them, needlessly or, as the Premier did in his year-end interviews, gloss over them as no biggie. The Innu have legitimate issues and the government could be handling them better. The point here is that they do not represent a show-stopper.

The show-stoppers are further away. Francois Legault has seen a dramatic change in his political fortunes in the past year. Lots of anger over cost of living and health care to the point where any other suggestions of paying more for electricity or of a give-away to the Newfs would only add to his misery.

In Newfoundland and Labrador, Andrew Furey has no political ability to persuade anyone of anything. Any suggestion his deal is not a good one or might add to local costs - Muskrat Falls’ hit on electricity rates is still fresh and not settled - would be something even a persuasive minister like Andrew Parsons might have trouble convincing people to accept.

Make no mistake. Furey and his Dad are conscious of the political risks. Hence, their creation of the Genius Committee. That’s not a dig at the people Furey appointed. Just a reminder that it’s like Kathy Dunderdale’s defence of Muskrat Falls: all the geniuses are on our side. Lest you think this is not true, look at Andrew Furey’s reaction to the lame Pea Sea criticism over Christmas. VOCM buggered up the reference but Furey said the Expert Panel didn’t need to look at whatever deal there is. They’d already advised him on what to do. Implicitly the people who criticise the deal are not experts, which is basically what the perpetual defence of Muskrat Falls has been.

The Genius Committee also took out of the public view some people George and Andrew Furey likely thought might lead a public attack on their deal. People like Dave Vardy. A seat on the committee tied them up with a non-disclosure agreement, to boot, so people can never know what the committee actually did or said.

As for Labrador itself, none of the practical issues there are connected to this deal either except in potential knock-on consequences. There’s plenty of electricity available to meet current and likely future demand. There’s just no way of getting it into western Labrador, for example. New transmission lines from Churchill Falls are tied up in a disagreement over who would pay for them.

And that’s tied to the larger issue of how government prices electricity in Labrador. A deal that drives up the cost of Churchill Falls electricity to Quebec - NALCOR and HQ each pay the same low prices for Churchill Falls power - would likely trigger price increases in Labrador, too. Gone would be the days of electricity at three and a half cents. Pushing up Labrador rates to meet those on the island or even to come closer to them than 25% of island costs as they are now would be a political pill that would be very hard for folks in Labrador to swallow.

That would threaten Labrador seats provincially and federally and Andrew Furey has no political capital to persuade Yvonne or Perry or Lisa of the need to back his deal when their seats would be on the line. Danny Williams could have sold Labrador to Quebec for a buck and the loons everywhere would have backed him. Forty percent of them still think Muskrat Falls will be great. I knew Danny, to paraphrase Lloyd Bentsen. He wasn’t a friend of mine. And Andrew Furey is no Danny Williams. Not by a long shot.

Labrador Hydro is all about politics, not need or fairness or demand or anything else.

Always keep that in mind.