It is important for all of us to stay on top of this issue and have a say in the development.
I have been posting for over a year now on the policy of exporting Lower Churchill power. Most readers of Sue's Blog know that I support a policy which bans the export of hydro-electric power.
I will now review the conversation I had today with the Premier on CBC's Crosstalk - and hope to add more to discussion.
I began my conversation with the Premier by reminding him of statements he made when Leader of the Opposition.
The first is from the House of Assembly on March 19-2003:
...Iron ore is shipped to Quebec and other countries for processing. Our cheap hydro-electricity from the Churchill is sent to Quebec, where it is used as an enticement for economic development and job creation for Quebecers.
and in a speech on Voisey's Bay on June 12-2002
...I don't need to point out that that is exactly what people say about Churchill Falls and Hibernia and Terra Nova. Once the construction boom is over, that's it, the benefits and short-term jobs are gone. At some point we have to stand up and say "enough is enough". We have to stop the giveaways. We give away our fish to foreigners; our hydro-electricity to Quebec; our shrimp to PEI and Quebec; our iron ore to the United States and Quebec; and our bright energetic young people to all four corners of the world.
The Premier acknowledged the statements and added "bulk - bulk - bulk" to it.
I then expressed to the Premier that I agree with his stand in sending big business the proper message when wanting to exploit our natural resources. And added that I - like him believe that if industry is given the choice - they would rather bulk our resources out rather than build infrastructure in the province. He confirmed that position.
When the Premier walked from the table on Hebron - he said here are our terms if you want this development. He was also prepared to use legislation to help force negotiations - and was only stopped because that required Ottawa's participation. (oil and gas resources offshore - technically belong to Canada).
I further suggested to the Premier that I agree with his gamble on royalties and equity and believe that oil prices will remain high and continue to increase over the mid to long-terms. I then pointed out that if we are correct - then the value of hydro-power is that much greater.
My question was:
Will you send a message to industry - big industry - that if they want to use our hydro resources in Labrador they have to come here and use it and legislate it in a way where we can no longer export power but have infrastructure here to utilize the power. And then when you send that message to industry they know what the rules of the game are - the same way you gave it to the oil companies and I assume will continue to give it to CVRD.
Premiers answer:
It's a good point Sue - you understand this project as good as anybody in the province - and you know that in order to finance a project of that magnitude you have to have some guaranteed power sales. Now some of the things we can certainly look at here for starters that give us some of that guaranteed power purchase - is the removal - of course - of the fousty emissions - for want of a better term - that are coming out of Seal Cove. So we take 600 MW's and we get to the Island - then we have 600 MW's sold on a long-term basis that will be profitable to the province because oil by 2020 - 2022 will reach a cross-over whereby that will pay for itself. The other thing is of course because this a multi-billion dollar project and the numbers have been ranging anywhere from 6 - 10 billion dollars - you've got to have the guarantees in order to secure the financing. Now I've already said though this government will stand behind its financing because we want to make sure that this project is a Newfoundland and Labrador project.....
But I can tell you one thing that we're really actively looking at is bringing industry to Labrador - cause my priority if we're going to bring any major industry to this province - that it go to Labrador first - for all the good - for all the right reasons.
Then I asked:
The question still remains - if industry knows that it has to come here to use it - and they can't pick it up in Ontario when we're finished selling it - if they know they have to come here to use it - do you believe there's value in sending industry that message on this renewable provincially owned resource?
Premier's answer:
What I can tell you - what we are doing - we're looking at - as part of a package of doing this particular project - would be getting some major industry to this province. Now we need to understand that of course that we have to be producing competitive power - Quebec because of the volumes of power that they've got because of some new wind that they are putting on now - are offering cheap power - and I know British Columbia as you also know that there's some very cheap power that's been offered to Alcan or Alcoa or one of these companies out there as well. So you know we have to be in the competitive league in order to get it - but I can tell you I would certainly prefer - as you know - and I'm sure all Newfoundlanders and Labradorians would - I'd certainly prefer to have that industry here - that will be our goal. If we are able to get for some of our power - if we're able to get the spot-market power prices say 14 cents that Quebec might be getting on some of our power - that is very very lucrative and if we're able to get some of that with surplus power - I wouldn't turn a blind eye to that and have to sell it for three cents at home just to bring industry in. So there's a mix there. I think you understand that as good as or better than anybody.
Please read the Premier's comments again and consider the following:
The Premier says we need guaranteed power sales to finance - let's agree with him - why do those power sales have to be guaranteed by export? They don't! We can get guaranteed power sales in Labrador from industry.
The Premier says he would prefer to use the power for industry here. What's the likelihood of that happening when the Premier and his "energy team" is running around the country talking about our available power to export?
Further - I can tell you the advice the Premier is getting must be weak - if he does not understand and believe that not only is Lower Churchill power competitive - it is one of the best remaining hydro developments in North America.
One must consider the Premier demanded and says he has received what he preferred for Hebron development. This despite Exxon and Chevron's multitude of oil and gas resources globally some of which are much more competitive than Hebron - therefore what's preventing our Premier in setting down the rules for hydro power?
Hydro is owned and controlled by the province - unlike the oil and gas offshore and our fishery. We can legislate and negotiate whatever terms we want for our power.
When the Premier references the spot-market - we cannot bank on those sales as they do not constitute long-term power contracts - which is what the Premier says is required to finance the project. So then we get to selling the power to Quebec - Ontario - or the Maritimes for 5 or 6 cents (4 - 5 net after marketing - and transmission costs) versus selling it to industry here for 4 to 5 cents. Compare the two potentials and understand that only one of them will employ the thousands of young graduates and skilled tradespeople on a long-term basis. Industry!
I will be commenting further over the next few posts on specific industry information. I leave you with this to think about. In my opinion the Premier should employ people who are able to deliver to him his preference - industry for Labrador - because right now the best team is not in place.
When the Premier first talks about taking 600 MW's and removing the thermal generation in Holyrood as one power contract - without first being able to provide a significant potential contract with an industry for Labrador - something is flawed with the policy - and it's best to fix that right now.
Why won't this Premier set the rules for industry relative to hydro development?
His comment on energy in Quebec and BC - is some form of admission to being inferior to these provinces in our relative potentials. We are not. The comment on wind in Quebec - no basis for it - incorrect. Yes they have wind installed - it is supplementary not additional and is not as cheap as hydro-power - that's why they continue to develop their hydro potentials.
Be back soon with more info and questions...
2 comments:
Interesting Sue.
The following is a piece I wrote for the Current Magazine a while back. If you can figure out what Minister Dunderdale was talking about that would be wonderful. I certainly couldn't get anything out of her.
Myles
Our province’s position on the Lower Churchill has me baffled, befuddled and totally bewildered.
Ever since the announcement that we'd develop the project Danny has promoted the dream of an east/west power grid as a way to ensure Ottawa's support. He's talked of the hunger for clean power in Ontario and the U.S. and he's said he wants to export electricity through Quebec or, if necessary, the so called Anglo Saxon route.
Some have gleefully patted our Premier on the back for threatening to bypass Quebec. Not me. Not that I dislike the idea, in fact I’d do it on principle alone. What bothers me is why our Premier hasn’t once said he plans to use that power to diversify our economy here at home.
What’s wrong with using OUR resources to attract industry to OUR province?
A few months ago I asked Natural Resources Minister, Kathy Dunderdale, if the province intended to court industrial giants like Alcoa or Alcan into setting up shop in Labrador, once an abundant supply of power was available of course.
She told me a study proved it wasn’t feasible. In fact she said it would cost us $1 billion dollars to make that happen.
Not exactly what I expected to hear, so I followed up with the obvious question:
What study and what needs to be done that could possibly cost that much?
I figured she’d at least give me a hint. I was wrong.
I mean who in their right mind throws out a number like $1 billion dollars, quotes an unnamed study and expects a pain in the butt like me to just walk away?
After pushing a little harder I was told she couldn’t release any details because the study had actually been done by a publicly traded company, not the province itself, and it had only been “shown” to government.
Can’t these people do anything for themselves? First Wade Locke has to tell them what the new equalization formula means and now the Minister of Natural Resources is deciding our future based on a study supposedly “shown” to her by some unnamed industry player.
My walk down the garden path with Ms. Dunderdale started over six months ago, leaving me with a lovely collection of letters that tell me absolutely nothing.
If something is truly needed to attract industry to the province it has to be discussed instead of swept under the rug and since you and I pay the taxes around here I figure Ms. Dunderdale owes us a better explanation than the one she’s offered so far.
Companies like Alcoa are scouring the planet for clean, stable and inexpensive power. According to Ms. Dunderdale the Lower Churchill doesn’t fit their bill. That’s a situation we all need worry about.
Thanks for that Patriot - great info...
I can tell you why these companies are not looking here - or demanding more - because the stated policy of the government is that we are willing to export. Therefore they will pick up the power in Ontario.
If the policy was that if you want the power - you must come here and use it - they would come.
Dunderdale is of no help in the portfolio and I cannot see a single advantage to having here there. Further and for the record - I have left 4 messages for her over a three year period - with no return call. She knows who her boss is - and it's not the people who elected her or her government. She and Minister Clyde Jackman are the only 2 who did not return calls.
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