Loan guarantees for Newfoundland-Labrador hydro project: implications for Ontario

Stephen Harper, Canada’s prime minister and leader of the federal Conservatives, just promised loan guarantees for the proposed 824-megawatt hydro project at Muskrat Falls on the Lower Churchill River in Newfoundland-Labrador. Opposition parties, when they’re being honest, have cautiously supported this. New Democrat Thomas Mulcair, in a fight for his political life in Outremont, the NDP’s only Quebec seat, on March 31 told CBC Power and Politics host Evan Solomon that he supports carbon-free energy and that “all provinces should have access” to similar financial backing for similar projects.

Mulcair is taking a bit of a risk saying this, because Bloc Quebecois leader Gilles Duceppe called the Conservative announcement a “slap in the face for Quebec.”

Duceppe doesn’t like the route of the transmission lines that will wheel Muskrat Falls power into the northeastern U.S. That is, it will not go through Quebec. Duceppe hopes his criticism will play well in Quebec, where he enjoys a tenacious kind of popularity.

Mulcair knows this, which is why his support in principle—Muskrat Falls, after all, is about 824 MW of zero-carbon power, which the NDP supports—is risky.

Of all the politicians in Ottawa, I find Mulcair one of the most interesting. He appears regularly on inside-politics talk shows like Power and Politics and CTV’s Power Play, and always delivers forceful and intelligent commentary that completely belies the prevalent but facile notion that minority parliaments are unworkable. He knows his policy, argues it well, and does a masterful job of balancing policy with partisanship—both of which are inalienable elements of a stable democracy.

Could his cautious support for Muskrat Falls indicate a better knowledge than Duceppe’s of the politics of clean energy in Quebec? Again, he lives on the edge of a volcano in Outremont, and he was the provincial minister of sustainable development for two years prior to winning his federal seat. I’d say he knows what he’s doing.

Mulcair’s support of the Muskrat Falls loan guarantees is very encouraging. If all provinces should have access to similar financial backing, then that must apply to Ontario’s new nuclear construction project at Darlington. The project could be for up to 3,500 megawatts.

The Muskrat Falls loan guarantee is promised for an 824-MW project that is expected to cost $6.2 billion. Back in 2009 when the Ontario government asked vendors for proposals to build the new Darlington reactors, federally owned AECL’s bid was rumoured to be around $26 billion. Do the arithmetic, and you see that the federal Conservatives are willing to back a Newfoundland-Labrador power project that is, dollar for dollar and megawatt for megawatt, almost exactly proportional to Darlington.

Of course it’s not just about dollars and megawatts. It’s also about votes. Harper hopes his support of Muskrat Falls will get his party back onto the Rock, where he was shut out in 2008.

Well, if that’s the case, how would similar support for Darlington help him in Ontario?

It is impossible to say how the election will turn out. But it is not inconceivable that we could end up with another Conservative minority government. If that happens, then at least two federal leaders—Liberal Michael Ignatieff and NDP Jack Layton—will be on their way out. If Mulcair wins in Outremont, then he is a sure candidate as NDP leader, and probably the instant front-runner.

The Conservative budget was released on March 22. Mulcair’s NDP said it would not support it in the form in which it was presented. Though that form included $405 million for AECL, that doesn’t appear to have been where the disagreement lay.

So if the Conservatives win another minority, then how would the NDP play the continued support for AECL? With Mulcair in charge of the NDP, I like the chances. What needs to be clearly understood is that of all the forms of clean energy, nuclear is demonstrably the cleanest.

The Canadian Institute Nuclear Symposium will be held just ahead of the May 2 election. Darlington is a crucial issue for just about every speaker who will be presenting. It will be interesting to hear what they have to say.

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12 years ago

The cost of the ACR-1000’s at Darlington and at Peace River is $2.7B/Gw. The $26B is for 60 years of power all costs included including refurbs of old Candu’s.

The Muskrat Falls project provides power at $8B/Gw not including a transmission line to Nova Scotia.

12 years ago

One thing that is not mentioned is that Newfoundland DOES have the right to build power lines across Quebec under federal National Energy Board jurisdiction in fact Hydro Quebec has a transmission intertie with New York State that runs on the north side of the St Lawrence for several kilometers through Northeastern Ontario that has no connection with Hydro One and does not come under Ontario’s regulatory authority. What is really interesting about this line is despite it being a designated “International Power Line” by the National Energy Board connecting HQ with the NYISO controlled grid in the states it also provides through a special arrangement ultra low cost power to Cornwall Hydro. Cornwall Hydro does come under some OEB regulation but the Ontario government exempts Cornwall Hydro customers from paying all the debt recovery charges and global adjustments the rest of province pays because Cornwall historically and still to this day has never been connected to the rest of Ontario power grid. I have been trying to find out the whole history of this line because I know at the very least it dates back well before the NEB was created in 1959. My understanding is that prior to this essentially the few interprovincial and international pipelines and transmission lines came under the jurisdiction of what is now Transport Canada.

Now the next thing I am going to say sounds really radical but I believe to legally correct that in fact Hydro One along with all the other utilities in Canada are in fact interprovincial works and undertakings which under the Canadian constitution are considered to be under exclusive federal jurisdiction which is actually a pretty powerful thing. For example the Ontario government has almost nothing to say about how Bell Canada or Rogers Cable manages their business. If someone complains to Dalton McGuinty about their cable bill or phone bill McGuinty can quite rightfully refer them to Stephen Harper even if someone who works for Rogers or Bell doesn’t like their work conditions or wages unlike most industries McGuinty can also tell them to talk to Harper as they fall under the Canada Labour Code. This is different of course from the US where the states and the federal government both share authority over cable tv, telecommunications, and electricity.

I think the key thing from a constitutional perspective is that the Supreme Court ruled in the 1980s back when there were actually several provinces with crown owned telephone companies that up until that time were regulated provincially that even though networks and infrastruture existed only in a single province to the extent they physically interconnected with other phone companies at provincial boundaries they were effectively interprovincial undertakings. Now to be clear they were unique circumstances in how this cases came about. First they were not actually brought by the federal government in the begining which did not want to politically take on the provinces with their own telephone companies until it was obvious that the SCC was going to rule against them. Second there was already a federal regulatory scheme for telecommunications that Bell Canada and what was then BCTel fell under in fact the reason I believe what was then called CNCP Telecom brought the first case against Alberta Government Telephones is that the CRTC was ensuring CNCP of far more favorible interconnection rates from Bell and BCTel than the Alberta government was from AGT.

Now the parallel is of course Hydro One for example has many interconnections with Quebec, Michigan, NY State, and Manitoba and in many operates as a part of interconnected grid with all of the utilities in the Eastern Interconnection. The difference is though other than the short Hydro Quebec transmission line near Cornwall there is no part of transmission grid or power industry anywhere in Canada that the federal government controls or has primary oversight over(other than nuclear plants). What is interesting about this Churchill Falls project is the sheer scale of it involving underwater transmission lines from Labrador to Newfoundland and then Newfoundland to Nova Scotia makes it hard to see how the federal government does not have some type of regulatory role in it and whatever regulatory role it takes how that will not set a precedent for the rest of the country especially when legally the seabed between for example between Newfoundland and Nova Scotia is not part of either province.