by Charles Cirtwill
Well, the prognosticators on all sides were right. The agreement in principle to sell NB Power’s transmission grid and some of its generation capacity to Hydro-Québec was a bad deal, doomed to fail because it gave New Brunswick substantial value for assets that were overpriced and rife with short-, medium- and long-term risk.
Yes, you read that right. The deal was doomed from the start because New Brunswick was set to fleece Quebec, but Quebec isn’t in the business of being fleeced, by anyone.
How do I know this to be true and not just the ravings of a New Brunswick premier hell-bent to save face after being kicked around the province for almost a year?
Well, I don’t, but it has the ring of truth.
Point one in its favour: Quebec commentators, if anyone cared to listen, were blustering against the deal from almost the first day. The Montreal Economic Institute delivered an analysis by an energy expert that was clear and unequivocal: Quebec was offering too much in return for too little. It was only a matter of time before the Quebec government and the folks at Hydro-Québec either came to this same conclusion, or took advantage of it to ask for changes to account for this real or perceived “imbalance.”
Which brings me to point two in favour of the “Quebec was eventually going to ask for more than New Brunswick should give” argument. Quebec always asks for (and generally gets) more then its partners should give. Take equalization, take federal jobs, take industrial subsidies, take, take, take, and take them to Quebec City.
Now, for the record, this isn’t a knock on Quebec, it isn’t even a complaint. In a federation, where federal largesse, tax transfers and subsidies are there for the taking, a province that does not aggressively go after those things is not doing its job. Similarly, in a commercial arrangement, if you are not negotiating to maximize your return and minimize your costs, you should be fired.
Hence we come to point three in favour of the “New Brunswick laughing up its sleeve until Quebec caught on” scenario, that being Point Lepreau. Lepreau is a mess. It may or may not ever come back online and it may or may not ever perform at its previous peak level. If it does, it will be a testament to the skill and determination of the many hard-working people learning as they go with this innovative and, potentially ground-breaking work. Work that may open the door for future, more profitable, and more time sensitive refurbishments of other similar reactors. Problem being, no one can realistically estimate when that potential will be realized or, for that matter, if it ever will.
Getting Quebec to float the bill for that risk was just one of the big wins New Brunswick had negotiated into the original agreement-in-principle.
I recall vividly the day I knew the NB Power sale was dead. It happened just before Christmas in a meeting with several government officials. We were discussing Lepreau and, after lambasting me just 10 minutes before for having the temerity to suggest that it might not ever be finished, one official turned to me with his arms raised and his fingers crossed and said “when it comes back on line.”
I knew then such an argument was not likely to satisfy the folks from Quebec and Hydro-Québec. After all, they did not get a reputation as the big bad bullies in the hydro business by being sheep and taking people at their word that “everything would turn out alright.”
And so we have a dead deal. Dead because New Brunswick originally managed to get Quebec to offer far more then they should have. Dead because Quebec cottoned on before the final agreement was signed, and dead because the New Brunswick government, for all its hinting, couldn’t convince their fellow New Brunswickers that they really had outmaneuvered, at least for a few days, Quebec.
After all, how could you possibly get the better of the guys who had, at least in the popular view, fleeced Newfoundland and Labrador so thoroughly that the story is still front page news decades later?
Of course, as we now know, the answer to that question is you can’t, at least not this time.
Charles Cirtwill is the president and CEO of the Atlantic Institute for Market Studies (www.AIMS.ca), a non-partisan, independent public policy think tank based in Halifax.