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John Crosbie never met a hyperbole he couldn’t top. But the former Tory cabinet minister, whose colourful metaphors kept the House of Commons entertained during his stints in the governments of Joe Clark and Brian Mulroney, was barely exaggerating when he recently called the 1969 Churchill Falls hydro contract between Quebec and Newfoundland “one of the greatest public policy disasters entered into by any province or government in the history of Canada.”
More than four decades later, the deal signed by the legendary (and first) Newfoundland premier Joey Smallwood remains the source of such bitterness on the Rock that it’s a miracle Ottawa hasn’t had to send troops to patrol the still-disputed Quebec-Labrador border. Hydro-Québec has the right to purchase all but a fraction of the 5,400 megawatts from the massive Churchill Falls project in Labrador for next to nothing until 2041.
In 1969, the deal didn’t seem so lopsided. Nuclear power was all the rage and many analysts predicted that Quebec, which had no need for power it could only transport by building hundreds of kilometres of never-attempted transmission lines, would end up losing its shirt.
Boy, were they ever wrong. If Quebec is the electricity oasis it is today, it’s because the windfall profits from Churchill Falls allow it to sell cheap, emissions-free power to industrial users. Countless billions of investment dollars in the province have been based on this singular premise.
Naturally, this sticks in the craw of Newfoundlanders. Short of renegotiating the original deal, which Quebec has refused to do, the path to reconciliation involved the joint development of the the remaining 3,000 MW of hydro potential on the lower Churchill River.
Instead, Newfoundland is going it alone with a $7.7-billion project to build a 824-MW hydro generating station at Muskrat Falls on the lower Churchill. Stonewalled by Quebec’s refusal to transport the energy on its transmission lines on acceptable terms, Newfoundland aims to get the power to customers on the Rock, in Nova Scotia and (maybe) beyond, via costly underwater cables. The federal government has provided a loan guarantee to backstop project.
For Mr. Crosbie, Muskrat Falls is “the last and best chance we have to overcome the disastrously unfair provisions of the original Upper Churchill agreement.” For Newfoundland Premier Kathy Dunderdale, “the agenda won’t be set by Quebec in terms of how we do our work, how we develop our resources and how we access markets.”
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