30 March 2005

First Lower Churchill proposal unveiled

In a proposal unveiled today, Ontario and Quebec have partnered with the private sector engineering firm SNC-Lavalin to develop the Lower Churchill.

Actually Ontario and Quebec are making two proposals:

Option 1 would see the two provinces funding development of Gull Island and Muskrat Falls and lease the sites from Newfoundland and Labrador Hydro for 50 years. Both provinces would split ownership of a new joint venture company based on one-third for Ontario and two-thirds for Hydro Quebec.

Option 2 would involve Ontario and Quebec signing a power purchase agreement with Newfoundland and Labrador Hydro. In this version NL Hydro and the Government of Newfoundland and Labrador would have to raise the capital necessary to build the project and the distribution system to the Quebec border.

Under both versions, Ontario would purchase one third of the total power output (945 megawatts out of a total of 2, 824 megawatts) produced by the two sites.

Hydro Quebec will also build a new distribution connection to Ontario.

Short-listed proposals will have to undergo feasibility studies before the provincial government chooses one or any of the proposals expected to be received. As CBC is reporting, the Ontario/Quebec options would see construction start in 2006 with expected completion by 2011.

The news from Ontario and Quebec is of such importance that Premier Williams has issued a statement welcoming the proposal despite the fact he has been out of the country on vacation since last Thursday.

The only other interest in the Lower Churchill thus far has been the so-called Sino-Energy consortium which signed an agreement with the provincial government last year to gain access to all information on the Lower Churchill held by Newfoundland and Labrador Hydro and the provincial government. Signed in late May 2004, the existence of the disclosure agreement was kept secret until late July when Premier Williams revealed it in a media briefing. Details - like which companies were involved - were not made public until September.

Last October, the Telegram revealed that one of the partners in the consortium - CMEC from the People's Republic of China - was under sanction from the US government for arms sales to countries like Pakistan. The information - obtained through a simple google search - was apparently unknown to the provincial government; Premier Williams accused unnamed competitors from leaking the information despite the fact it was contained on US government websites.

The provincial government hired a Montreal-based legal firm to look into the sanctions but its report has not be released by the province.

The US will not import from a sanctioned company, thereby preventing from the Sino-Energy consortium from being involved in the production of Lower Churchill electricity that might be sold to US customers.

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