Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.

Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Sunday, June 13, 2010

Upper Churchill Falls End Game

In 1969, when the Power Contract was finalized between Brinco and Hydro Quebec, Newfoundland's fate was sealed. "Have Not" status was to be a permanent state of affairs with Quebec gaining wealth and independance. Quebec saw this as an opportunity to massively expand Hydro Quebec, as the foundation of it's nationalistic drive towards being " masters in their own house". Newfoundland has suffered ever since, and continues to do so to this day.

Many Premiers have since tried to right the wrong done by this deal, but with no success. Legal avenues have been tried. Minor, or ill advised, political pressure has been tried. Most recently the Newfoundland government's attempt to have the Quebec utilities regulator rule against Hydro Quebec in favour of Newfoundland - like that would ever happen! It has to be considered an absolute act of futility, and honestly not well thought out. The lawyers for Hydro Quebec in 1969 made sure they had Newfoundland painted into a corner with no way out - that is, according to the law at that time. They did not forsee any change in civil law that could in any way alter the Power Contract, and in this sense they were right.

However, with the repatriation of the Constitution in the 80's an answer to Newfoundland's prayers actually emerged. As a compromise with the provinces Mr Trudeau allowed the creation and insertion into the Constitution of the "notwithstanding clause". A clause that would allow the federal government or a provincial government to override certain rights within the Constitution that fell under their respective jurisdictions. Therein lies the key for Newfoundland.

In order to make this work we must first tie one of these rights to the hydro electric business. The one obvious area would be language. Quebec has made French it's primary language, including in the business sector, and utilized the notwithstanding clause to do so. It could do that, because language, business, education, etc are provincial jurisdictions. It is in effect a game that Quebec has perfected. The game has never been used against Quebec. Now it must be.

Newfoundland's House of Assembly must pass legislation forbidding the sale of hydro electric power to any jurisdiction that does not have English as it's primary language. The legislation must have the notwithstanding clause inserted in it to shield Newfoundland from any legal action from either the Quebec or Federal governments. It is within our rights to do so as language and natural resources are both within provincial jurisdiction. The language of the legislation should include a provisio that the Newfoundland government retains the right to allow exceptions to this law should it be in the interest of the Newfoundland people to do so. A 60-day implementation period should be included. This would give Quebec and likely the Federal government 60 days to renegotiate the 1969 contract with Newfoundland.

The repurcussions for Hydro Quebec would be serious. Should it fail to renegotiate the contract, power would be cut from the Upper Churchill. The United States and other customers that Hydro Quebec services would be facing immediate power losses. Hydro Quebec as a corporate entity, and certainly as a supplier of power, would be crippled. The Americans would demand that Hydro Quebec immediately negotiate with Newfoundland. Suddenly, history will be reversing itself as Hydro Quebec will now be the one that is in the poor bargaining position and the province of Newfoundland will hold all the chips and be dictating terms. One would seriously expect those terms to include compensation for revenues lost from 1969 to present and atleast a 50% share in ongoing profits. Likely, the Americans would then look to Newfoundland as future suppliers of hydro power as we own the resources. In other words, cut out the middle man.

Newfoundland does not have the funds to proceed with the Lower Churchill, let alone the underwater sea lines to the maritimes, without the revenues from the Upper Churchill. Newfoundland is already paralyzed, in reality, with an 11 billion dollar debt. For a province with less than 500,000 people that is crippling. No lender, nationally or internationally, is going to invest with that kind of debt load, and few revenues. For those that expect the Federal government to help out, well, that is being naive. Quebec and Newfoundland will be competing power giants, and the federal government is not likely to side with the province of 500,000 vs the province of 9,000,000. Politically, the cost would be suicidal.

No folks, this one we have to do on our own. This one we have to use the tools this Country has given us, and make them work for us. It is the only option now left for us. Don't be fooled by pie in the sky promises. Especially in these days after the massive debt collapse around the world. Newfoundland won't be taken seriously when looking for investment. I can hear some say: "but we've got the oil". Oil is not exactly a reliable source of income, as we have seen in the last 15 months, and it does run out. Hydro is forever. All that is required is the courage of conviction to do the right thing for the people of Newfoundland and Labrador.

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