Newfoundlanders (and Labradorians) who weren’t around or of age during the concocting of the Upper Churchill hydroelectric project in the 1960s can only wonder, “Was there any debate?”
So much has been said, denounced and litigated since that disastrous deal was made, you have to ask — in amazed hindsight — “Wasn’t all that discussed before the deal was signed?”
Obviously, it either wasn’t discussed, or was ignored by the people in power.
Here is an open question to anyone who was around back then and paying attention: did anybody publicly ask, “What about inflation?”
That simple, three-word phrase should have had the power to prevent disaster. There could be only two responses: either put a clause in the Upper Churchill contract to deal with rising prices and costs, or ignore the question. The latter won out, and thus Newfoundlanders await 2041 for redress of their own mistake.
Perhaps a sessional lecturer or an assistant professor in Memorial University’s economics department did dare to ask, “What about inflation?” Even though the Upper Churchill deal was negotiated and signed before the inflationary era began in the 1970s, inflation was a well-known concept long before that.
Surely, in the 1960s, somebody must have asked about it. Maybe someone did, but had their reputation and credibility maligned. That tactic has been put to energetic use by Premier Kathy Dunderdale and Natural Resources Minister Jerome Kennedy the past few weeks.
In 2012, it is almost inconceivable that in the 1960s the possibility of inflation did not set off alarm bells loud enough to prevent the disastrous Upper Churchill deal.
In 2012, alarm bells have been ringing for months about the Muskrat Falls deal, but Dunderdale, Kennedy and the crowd at Nalcor have thrown their heads under pillows to muffle the sound.
Here is an alarm worth attention: whatever happened to “the Quebec corridor”?
When Danny Williams was in his first few years as premier, one of his primary goals was to develop the Lower Churchill and negotiate a deal to run Lower Churchill power through “the Quebec corridor” to markets in the northeastern U.S.
New England and New York were hungry for power, and the Lower Churchill would bring long-awaited hydroelectric riches to Newfoundland.
Even as late as autumn 2010, the energy needs of the northeastern U.S. were the primary focus.
When the Muskrat Falls deal was announced, much was made of the fact that power would be delivered to the U.S. via the island of Newfoundland and Nova Scotia using subsea routes — bypassing Quebec altogether.
Somewhere along the line — no pun intended — the rationale shifted. Suddenly, Williams, Dunderdale, Kennedy, Nalcor, et al, stopped talking about the Quebec corridor and the lucrative energy market in the northeastern U.S.
Seemingly in an instant, and utterly inexplicably, the rationale became local demand. Apparently, Newfoundlanders (and Labradorians, and their mines) were going to need more and more and more power.
Nobody talked anymore about selling electricity to the U.S. for big profits.
It stopped.
Dead.
This should signal a loud alarm bell, for anyone who wants to wake up.
Here’s another significant alarm: the Mackenzie gas pipeline project in the N.W.T., which has been planned since the 1970s, is being scaled back.
The consortium planning to build the pipeline has closed several offices in the North, has cut spending and expects the project to be delayed.
According to a Reuters news report, “The economic viability of the 1,196-kilometre pipeline has become increasingly questionable due to steadily rising costs and depressed natural gas prices as vast new shale gas supplies have been developed much closer to major markets.”
Ignore these alarm bells, and we’ll have another Churchill disaster.
Brian Jones is a desk editor at The Telegram. He can be reached by email at bjones@thetelegram.com.
.jpg){kind=small}
.jpg){kind=small}
.jpg){kind=small}
John, This data is widely provided on the internet. http://www.iso-ne.com/ As I write this comment wholesale electricity in New England is 1.3 cents a kwh (Sunday morning non peak). However a review of the reports will show that natural gas is driving down electricity costs. See excerpt below: The February 2012 New England ‘all hours’ total cost fell by 18% to $35.75 /MWh from its January value of $43.46 /MWh. Lower RT LMPs resulting from decreased input gas prices and lower load levels in February were responsible for this decrease. For the year to-date, the New England average total wholesale load cost averaged $39.74 /MWh, or 3.97¢/kWh No matter which way you want to spin it, numbers do not lie. This is 20% of what Muskrat Falls Power will cost delivered to St. Johns. Check out the RFI-KPL-27 Rev. 1 which shows that MF energy to St. Johns will be 210 $ per MWh or 21 cents a kw hr. This is roughly half transmission and half generation. We may not be able to do Natural Gas more cheaply in Newfoundland. But it should be looked at. This should have been done for Nalcors DG2 decision, in accordance with their own process. If Nalcor did the work when they were supposed to... these questions would not be asked now because the answers would exist.