Some Things Just Aren’t Chewable

We in NH would do well to take a close look at the Churchill Falls Hydro Electric Project where Hydro Quebec entered into a joint venture with the Province of Newfoundland Labrador (NL). HQ’s tactics in NH are chillingly similar.

 A concerned reader sent me a site in which James Feehan, Professor of Economics at Memorial University in Newfoundland, delineated the HQ scam of the Churchill Falls HydroElectric Project in Newfoundland-Labrador. Feehan exposed HQ’s strategy (through NL Premier Smallwood’s blindsight), to essentially rob the NL Province of profits from the Churchill Falls generator.

 Through political wrangling and conflict of interest, Hydro Quebec was able to draw up a 44 year contract to buy power for $2./MWh, which was far below any alternative prices. In our terms, this translates to 0.2 cents/kwh, which HQ then sold for 7-8 cents/kwh. HQ therefore reaps profits of $1.7 billion/yr. NL reaps $63 million/yr. If HQ paid market prices for the low-cost power from Churchill Falls, their 2007 profit would be 75 percent lower. Churchill Falls Labrador Corp.(CFLCo) says profitability was “stripped to the underwear.”

 Newfoundland-Labrador is supposed to get back all water rights in 2041 when the contract expires. Initially, HQ owned 34.2 percent and NL Provincial Government owned 65.8 percent of the shares in Churchill Falls Labrador Corp (CFLCo).

 However, HQ also had a clause in their 1967 contract that if they loaned the project money, they would increase their number of shares in the project. Once they own 50.1 percent of the shares, they can pick their own board members and effectively take over the company. The real winners are supposedly the people of Quebec, who have cheap energy.

 In 1974, Bill Mitchell, CBS reporter, quoted the then NL Premier Frank Moores as calling the project “the biggest giveaway in history.” The project was completed 18 months early, within the budget. NL has been unsuccessful in re-negotiating the obviously outrageous 0.2 cents/kwh agreed to in the 1967 contract by asleep at the switch legislators.

 Is any of this hitting closer to home? The people of Quebec have also been assured by HQ that Project Nord will be continuing cheap energy for them. Perhaps HQ’s intent is to assuage the Quebec people for physically and culturally ruining their Province, despite public outcry. Bottom line is that even if HQ succeeds in sending power through NH (where Canada also owns every NH dam on the Connecticut River), does anyone really believe they have kinder motives for the US than for their fellow Canadians in Newfoundland-Labrador?

 This is messy stuff, messy enough that most people wouldn’t want to wade through hours on the internet comparing the above reports and checking figures. In fact, that would suit HQ just fine, maybe even snow our legislators into agreeing to contracts that will later horrify NH. Here’s a video for those who want to see for themselves.

http://www.mun.ca/harriscentre/policy/memorialpresents/2008c/churchill_falls_video.php

 Who would have thought that keeping well would get so complicated, so fast? That we might be blindsided into providing a channel for HQ that would put us in an equally raw deal. We now know how HQ gains millions to perpetuate themselves. Hopefully, we won’t be gullible enough to do business with them in their projected NH scam.

 

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