Recently there’s been a lot of talk about Newfoundland and Labrador’s plans for the Lower Churchill hydro project. Newfoundlanders and Labradorians are eagerly awaiting what they see as a way to finally benefit from Churchill Falls power after decades of being fleeced on the Upper Churchill development by Quebec.
Most Newfoundlanders and Labradorians will tell you they want things done differently this time. They believe this is as a chance to finally control their own destiny without Ottawa or Quebec pulling the rug out from under them.
They may need to think again.
While all eyes are focused on the new Newfoundland and Labrador Energy Corporation as the lead on the project what hasn’t been widely discussed is the existence of the Lower Churchill Development Corporation or the impact it could have.
Incorporated in 1979, under then Premier Frank Moores, the Lower Churchill Development Corporation is the legal entity actually tasked with moving this development forward. It also controls all of the water rights on the lower Churchill
The new NL Energy Corporation, on behalf of government, will act as the parent company of the Lower Churchill Development Corporation but that doesn’t mean it fully controls the actions of this subsidiary.
The Lower Churchill Development Corporation, not the new Energy Corporation, controls the development, distribution and sale of power on the Lower Churchill (NL Hydro would actually purchase power from its “sister” company) What’s more, the Development Corporation is only partly owned by the people of Newfoundland and Labrador.
According to the Lower Churchill Development Act, by which the corporation came into existence in ‘79, the company’s shares are owned jointly by Newfoundland and Labrador and, here it comes… the federal government.
Newfoundland and Labrador has a controlling interest, 51% to 49%, however this arrangement does not give the people of Newfoundland and Labrador a final say in the decisions made by the company.
Neither the Energy Corporation nor the government of Newfoundland and Labrador can make any major decision about the Lower Churchill development without the agreement of Ottawa’s representatives on the board.
The following are excerpts from the incorporation legislation relating to this:
The general policy for the operation of the Corporation shall be determined by its board of directors consisting of 12 persons of whom 6 shall be nominees of Newfoundland, 5 shall be nominees of Canada and 1 shall be the chief executive officer…
(the following) shall require the consent of a majority of the nominees of Canada and a majority of the nominees of Newfoundland…
…any agreement with the Province of Quebec relative to water flow in the Churchill River, any arrangements with respect of the transmission of electricity from the Project, the sale of electricity from the Project…
In other words the government of Newfoundland and Labrador does not actually have the final say on Lower Churchill development and isn’t the only government that stands to profit from it. It also means, among other things, that the decision on whether or not Hydro Quebec’s grid is used to access export markets depends on the agreement of representatives for the federal government.
Under these circumstances, and given the political clout Quebec has with Ottawa, how likely is it bypassing Quebec will be acceptable to the board. How likely is it that once again Quebec will attempt to profit as much as possible from the Churchill River?
Because of the existence of the Lower Churchill Development Corporation and the 49% stake held by the federal government, Newfoundland and Labrador may once again be at the mercy of Ottawa and Quebec over Churchill power.
Rather than simply dreaming of the day the Lower Churchill is developed, the people of Newfoundland and Labrador might be better served to ensure that their government is focused on regaining full control of the project for the owners of the resource. If they don’t, Newfoundland and Labrador’s aspirations of becoming “Masters of our Own House” will only come to pass if it’s acceptable to Ottawa and, by extension, Quebec.
IMPORTANT UPDATE:
Hello Mr. Higgins,
The answers to the questions you posed to Minister Dunderdale regarding Bill 36 are below. I hope the following explanation is sufficient. If you require anything else, please let me know.
Thanks,
Q: Does the Lower Churchill Development Corporation still have a role to play in this potential development and if so, what is that role?
A: The Premier announced in May 2006 that the province, through the energy corporation, would lead the development of the Lower Churchill Project.
The Lower Churchill Development Corporation was formed in 1978 as a means to develop the Lower Churchill. You are correct that the corporation, which is now inactive, is co-owned by the Government of Newfoundland and Labrador (51 per cent) and the Government of Canada (49 per cent). An option to obtain water rights on the Lower Churchill is currently held by the Lower Churchill Development Corporation, however, the Provincial Government will not be exercising this option.
Instead, Bill 36, which recently passed the House of Assembly, provides the authority to Cabinet to grant water rights to the Lower Churchill to the energy corporation, when requested.
Q: If the project moves forward, who controls the water rights and electrical capacity generated (who would capture the revenues from the development). NL Hydro or the Lower Churchill Development Corporation?
A: The water rights and electricity generated will be controlled by the energy corporation. Revenues from the development will be returned to the energy corporation and ultimately the Government of Newfoundland and Labrador .
Q: Is the Lower Churchill Development corporation still owned 51% by the Province and 49% by the federal government?
A: Yes, however, this corporation is inactive and not involved in the development of the Lower Churchill Project.
