Who’s Looking After The National Interest In The Quebec-New Brunswick Hydro Deal? (January 2010)

Canada enters this new decade in dangerous territory.  Our national government is missing in action – preferring partisan political calculations to governing in the national interest.  A popular protest against the lengthy parliamentary shut-down is an encouraging sign of citizen engagement, but too many others remain on the sidelines.

The challenge for 2010 is to go beyond protesting the proroguing of Parliament.  Canadians must engage in a serious debate on where we should be going as a nation, and why it is wrong to settle for incremental progress and mere tinkering at the edges of serious issues.

One important area that demands our urgent attention and action is a greater coherence in national energy and environmental policy, particularly in light of Canada’s less-than-inspiring performance at Copenhagen in December.  Strong national leadership in energy and environmental matters does not mean creating new intrusions into provincial jurisdiction.  It means  a clear articulation of what the federal government will do within its already established jurisdiction and competency, to set Canada on a more credible and cost-effective clean energy path.

Indeed a more attentive federal government would notice that leaders in energy-intensive industries are on much the same page as the environment community – and most Canadians – in realizing the value of national standards to ameliorate the patchwork of federal and provincial initiatives, and allow for more constructive long-term planning of clean energy development.

The national interest in guaranteeing all Canadians equitable access to long-term supplies of clean energy is certainly engaged by the proposed $3.6 billion Hydro-Québec takeover of New Brunswick Power.  There can be no doubt that New Brunswick faces a serious energy security crisis, and that obtaining cheaper hydro-electricity from Quebec makes sense.   But the bilateral Quebec-New Brunswick deal works against Canada’s responsibility to promote inter-provincial equity in the transmission of electricity across Canada and to the U.S., and to ensure that Canadians work together cooperatively to expand clean energy options. The federal government should be involved in helping New Brunswick address its clean energy challenges.

By strengthening Hydro-Québec’s monopoly on transmission access to the U.S., the Quebec-NB hydro deal (together with expected parallel hydro deals with Nova Scotia and Prince Edward Island) will cement Quebec’s control of Eastern Canada’s power grid and increase Hydro-Québec’s ability to extract a greater share of Newfoundland‘s profit from Churchill Falls.

Newfoundland has a huge new hydroelectricity project on the Lower Churchill in Labrador, including electricity from large-scale wind projects, which will eventually be available for transmission to Ontario or to the eastern U.S.  Quebec has its own hydro projects competing with Newfoundland for the same American markets (La Romaine and expansion of James Bay capacity) and has already delayed Newfoundland’s application to use Quebec transmission lines to export to the U.S. for almost 4 years.  Newfoundland, in turn, had been examining ways to transmit electricity from Labrador through Nova Scotia and New Brunswick (via underwater cables), bypassing Quebec.

To assuage Newfoundland’s concerns, New Brunswick has argued that the American Federal Energy Regulatory Commission is Newfoundland’s guarantee of access to the U.S. market, since the FERC requires owners of power lines (whether Quebec or New Brunswick) to give equal access to competing power suppliers.  Canadians should be shocked and dismayed that our national government is so missing in action that we now rely on American authorities to maintain the bare minimum of a Canadian economic union.

As opposition intensifies among residents of Atlantic Canada, questions will also be raised elsewhere in Canada about the equity of our complex equalization program and massive transfers of money between Ottawa and the provinces that are intended to discharge our collective commitment to ensure comparable public services across Canada.  Fiscal arrangements under which a province receives billions in equalization payments while its hydro utility spends and borrows billions to control Eastern Canada’s power grid, rather than engaging in more profitable investments that could increase provincial government revenues, are problematic and divisive to say the least.

Canadians must realize that this is not just a central/eastern Canadian issue. The Quebec-New Brunswick hydro deal unquestionably engages the national interest in establishing a strong economy and a clean energy future, for the benefit of all Canadians. Our national government, not foreign authorities, is responsible for matters of interprovincial trade.  Our national government, not just the provinces, is responsible for strengthening the national economic union and ensuring national equity.   It is time our national government stopped “going prorogue” and spoke up for Canada.