Analysis

Winnipeg Free Press - PRINT EDITION

East Coast mixes oil and water

By: Dean Jobb

Posted: 02/9/2013 1:00 AM | Comments: 0

HALIFAX -- One looks west, the other east. One talks pipelines and crude, the other undersea cables and hydroelectricity.

New Brunswick and Nova Scotia share a narrow strip of borderland, but their political leaders have radically different visions of their province's energy future -- visions as incompatible as oil and water.

New Brunswick Premier David Alward travelled to Alberta recently to tour the oilsands with his counterpart Alison Redford, kick starting a campaign to extend a proposed cross-country pipeline to his province.

Delivering western Canadian crude to the port of Saint John for refining and export would be "a game-changer" for New Brunswick and for the country, Alward declared, with the potential to transform his have-not province into "Canada's next energy power house."

In Halifax, meanwhile, promoters unveiled details of a proposed $1.5-billion, 180-kilometre subsea cable to import electricity from Labrador's Muskrat Falls power development by 2017, supplying up to a third of Nova Scotia's energy needs.

Premier Darrell Dexter, one-upping Alward's rhetoric as well as his neighbour's energy policy, touts Muskrat Falls as a modern-day version of the Canadian Pacific Railway.

Despite the lofty, nation-building goals, each premier has down-to-earth, political reasons for backing his energy initiative.

Alward may have the most to gain if his pipe dream becomes reality. His Progressive Conservative government is struggling to rein in a ballooning $350-million deficit and the best bet for increasing revenues -- raising the sales tax -- would require a referendum. With a fixed-date election looming in September 2014 and his Liberal and NDP opponents rising in the polls, he needs some good news.

The west-to-east pipeline makes economic as well as political sense. Alberta needs new outlets for its production and proposed lines to carry oilsands crude across British Columbia and into the United States face opposition and red tape. The East Coast needs to break its dependence on higher-priced imported oil.

Converting a natural gas pipeline and reversing the flow of an existing section of oil line in central Canada would bring Alberta crude as far as Montreal. Building an extension to the port of Saint John, site of the giant Irving Oil refinery, would mean jobs and an economic boost for New Brunswick. And it could prompt Irving to dust off plans to double the 300,000-barrel-a-day capacity of what is already Canada's largest refinery, creating more jobs.

The federal government signalled its support last week. Natural Resources Minister Joe Oliver offered Ottawa's approval in principle and pointed out that converting existing pipelines means fewer environmental and regulatory hurdles.

The Harper government is helping to make Nova Scotia's energy dreams a reality, too. Last fall the prime minister came through with a loan guarantee that has enabled work to begin on the $7.7-billion Muskrat Falls project on the Lower Churchill River.

The chief beneficiary of the project is Newfoundland and Labrador, which will be able to cash in on Labrador hydro after losing tens of billions of dollars in revenue to Quebec under the disastrous 1969 deal to harness Churchill Falls.

What's in it for Nova Scotia is access to the clean energy it needs to reduce its dependence on coal-burning power plants. The Dexter government has ordered the province's privately owned utility, Nova Scotia Power Corp., to produce 40 per cent of its electricity from renewable sources by 2020. Federal greenhouse gas emission limits will require further reductions in coal generation by 2030.

Enter Muskrat Falls. Emera Inc., Nova Scotia Power's parent company, is covering a fifth of the cost of the project in return for enough power to supply 10 per cent of the utility's needs for 35 years. It has an option to take up to 30 per cent of its requirements.

This should be a coup for Dexter and his NDP government, but power rates are a hot-button political issue in Nova Scotia. Electric bills are among the highest in the country and residential rates will increase six per cent over the next two years.

That makes Muskrat Falls a magnet for critics, who question whether it's the best option for Nova Scotia and warn that consumers could wind up paying a heavy price.

Emera has applied to a regulatory board for further rate hikes, to pay for the cable to Newfoundland. By its calculations, the average household would pay $1.50 more a month for five years.

Will this estimate stand up to scrutiny when the regulator holds hearings in the coming months? The NDP, which trails the opposition Liberals in the polls and could call an election later this year, can ill afford more bad news on power rates.

So as one province falls back on fossil fuel, another is looking to a greener future. And both are rolling the dice on a bold energy strategy.

Dean Jobb, a professor of journalism at the University of King's College in Halifax, is the Winnipeg Free Press East Coast correspondent.

Republished from the Winnipeg Free Press print edition February 9, 2013 A15

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