Newfoundland feels left out in sale of electricity to US
The Province of Quebec is buying cheap electricity from the Province of Newfoundland and selling it to utilities in the northeastern United States for 10 times the price.Skip to next paragraph
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Newfoundland doesn't like it, but the Supreme Court of Canada has ruled nothing can be done about it.
The power comes from the Churchill Falls hydroelectric site, a huge power facility built in the wilderness of Labrador. It is owned by the Newfoundland
government, and the contract to sell the power was signed in 1969, long before anyone had heard the words ''energy crisis'' and long before the Organization of Petroleum Exporting Countries made oil-fired electricity prohibitively expensive.
The contract says power will be sold at $3 a megawatt hour and the agreement runs for 65 years or until 2035. That means billions of dollars in profits for Hydro-Quebec, the provincially owned utility, and peanuts for Newfoundland, the poorest province in Canada.
Last month the Supreme Court of Canada ruled that a deal is a deal and Newfoundland will have to continue to sell power at the contracted rate.
You have to look at a map to understand all this. Newfoundland is an island. But its territory includes Labrador, which Quebec has always claimed and shows on its maps as part of its territory.
The only way to ship electricity is by cable over land. Quebec has the transmission system running into the United States. The reluctance of American utilities to build nuclear facilities means a secure market for electricity.
By 1987 it is expected that Hydro-Quebec will be earning $1 billion Canadian a year from exports to the United States, shipping 22 billion kilowatt hours south of the border. In simple terms a kilowatt hour is the amount of energy needed to run ten 100-watt light bulbs for an hour.
The bulk of Hydro-Quebec's excess energy comes from the giant James Bay project, but the gravy comes from its Churchill Falls contract with Newfoundland. At hearings of the National Energy Board last week Hydro-Quebec said it buys 29.9 billion kilowatt hours from Churchill Falls a year. Although it will not release the exact figure on how much it currently makes from the Newfoundland deal, it did have to do a projection as part of the exercise of getting a permit to export power to the United States.
In 1990, the Quebec utility says, it will be paying $3 Canadian a megawatt hour for the power from Churchill Falls and selling it to US utilities for $93 Canadian a megawatt hour. That means it will be paying $90 million to get $2.8 billion.
Newfoundland is outraged and wants a piece of the profit.
Hydro - Quebec says it is not power from Churchill Falls that it sells to the US, but power from its expensive project at James Bay.
''How can you say whose energy it is,'' asks an official of Hydro-Quebec in Montreal. ''Newfoundland says it's their energy but we say we use their energy and sell our own.''
Newfoundland is appearing before the National Energy Board trying to get more money. It is unlikely it will, since the Supreme Court has already ruled on the matter.
Quebec is building a new power line through the eastern part of the province to connect with the grids in Vermont and New Hampshire. It has made offers to Newfoundland but the Newfoundland energy minister, termed them ''a cynical gesture.''
There is more power in Labrador, and Newfoundland would like to develop it. One engineering study said the 3,000 megawatts at Churchill Falls could be upgraded to 8,000. But Newfoundland would have to ship it through Quebec and that province would demand a price, the Newfoundlanders say too high a price, to get it to markets in the United States.
As a last resort Newfoundland is studying whether it can build under the Strait of Belle Isle between Newfoundland and Labrador. That might work, but it still doesn't get power to hungry American markets and dollars into a hungry Newfoundland treasury.