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EDITORIAL: Gall Island

The Lower Churchill Hydroelectric Project was not the first proposed development of a dam at the area of Gull Island, on the Churchill River between Churchill Falls and Muskrat Falls. This photo, taken in 2012, shows an area cleared for work at Gull Island. The plug was pulled on a previous plan for development there, but the provincial government says a development could happen, if there was a clear buyer.
The Lower Churchill Hydroelectric Project was not the first proposed development of a dam at the area of Gull Island, on the Churchill River between Churchill Falls and Muskrat Falls. This photo, taken in 2012, shows an area cleared for work at Gull Island. The plug was pulled on a previous plan for development there, but the provincial government says a development could happen, if there was a clear buyer. - Contributed

It really is a case of rubbing salt in an open wound.

Tuesday, The Telegram’s Ashley Fitzpatrick reported on an issue that has cropped up on and off at the Muskrat Falls inquiry: where the plans are now for another hydroelectric project, the even-larger-than-Muskrat proposed project at Gull Island.

Now, normally, when you’re deep in a hydroelectric hole, you stop digging. And we’re deep in a hole.

But that hasn’t stopped Gull Island from being discussed.

Asked about Gull Island at the inquiry, Premier Dwight Ball said, “As I’ve said so many times, there’s a development out there that will have long-lasting benefits for Newfoundlanders and Labradorians.”

There is, however, a big “but” — as Ball pointed out, “Right now, there’s no customer for the power.”

So, why is that all so galling?

Well, because, for a big block of Muskrat Falls’ power, there isn’t a fixed export customer either.

...the very reason Gull Island isn’t going ahead — the lack of guaranteed export customers — was one of the selling points for the project we did go ahead with.

At the time the project went ahead, we were told that we’d make more money if we didn’t have a fixed contract for export power: that would let us essentially garner the best possible prices for our available power in the marketplace. Hurray for speculating on electrical sales!

That led to the way electrical power customers in this province were railroaded into high electrical rates in the future by an inside deal that was aided and abetted by the provincial government.

A power purchase agreement was signed between Newfoundland and Labrador Hydro and Nalcor Energy — remember now, Nalcor was Hydro’s parent company, so Hydro certainly wasn’t in the driver’s seat. The deal locked Hydro into paying power rates that would cover all of the costs of building the Muskrat Falls project, whatever those costs ended up being — and as we’ve seen, they’ve ended up being really, really high. (If there had been fixed export contracts, the proceeds from those power sales would have helped to limit the exposure of customers here.)

The take-or-pay deal was struck in a way that meant it would apply even if Hydro didn’t need to take Muskrat Falls power — so that Hydro couldn’t possibly find a cheaper source. If, somehow, they found a cheaper source, they’d have to pay Nalcor for power that wasn’t being used.

Meanwhile, the provincial government was happily making Newfoundland and Labrador Hydro the only legal source for electrical power — even if you could buy it cheaper somewhere else, you couldn’t get it. Hydro was the only possible supplier.

And that’s what makes the lack of export customers for Gull Island so galling: the very reason Gull Island isn’t going ahead — the lack of guaranteed export customers — was one of the selling points for the project we did go ahead with.

Wonderful.


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