Year in, year out, Quebec’s vertically integrated state-owned power utility Hydro-Québec (HQ) exports approximately 33.5 TWh. In 2019, HQ exported 33.7 TWh — representing 16 per cent of all electricity sold by HQ but 22 per cent of its net income. Today, exports remain more profitable than domestic sales. About 75 per cent of HQ exports go to three American states: New York, Massachusetts, and Vermont. The rest is sold to Ontario and New Brunswick.

HQ and the Quebec government have been working for decades to increase electricity exports to the U.S., including by proposing new transmission lines. The electricity available for export is renewable and, thanks to HQ’s large reservoirs, is a secure and stable source of power. In light of this, it would be reasonable to think that these exports would be welcomed and that opposition would be limited.

History shows that this is not the case. Just as Canada’s oil industry has encountered difficulties with its pipelines, so have Quebec’s transmission projects engendered forceful and effective opposition abroad. Moreover, the arguments used against Quebec’s exports often overlap with those used against pipelines and, to the surprise of much of Quebec’s political class, the “green” credentials of Quebec’s hydropower are insufficient to ensure the success of export projects.

In this article, we examine Quebec’s five largest export projects of the last three decades and summarize lessons learned as well as how export projects may be configured in the future to increase their chances of success.

GREAT WHALE

It is 1986. Quebec’s newly elected premier, Robert Bourassa, has just announced his intention to build the Great Whale hydroelectric project in Quebec’s north. The project would add 3,090 MW to the more than 10,000 MW already at the La Grande complex.

Electricity generated at Great Whale is to be exported to New York and New England. In 1988, the New York Power Authority (NYPA) conditionally signed a 21-year $17 billion power purchase contract with Hydro-Québec. This contract is essential to make Great Whale bankable and is great news for the province’s economy.

By 1992, however, the contract with the NYPA is in tatters. Two years later, Great Whale is permanently beached.

So what went wrong? A crucial mistake made by the Quebec government was that it undertook the Great Whale project with little inclination to consult — and even less to involve — the Cree and Inuit most affected by the project. The Cree and Inuit pushed back, resulting in lengthy, acrimonious lawsuits and public debates that galvanized opposition to the project.

The Quebec government and HQ were caught flat-footed.

The Cree and Inuit advantageously used the courts and media. They accused Quebec of not only destroying a fragile environment but also of committing “cultural genocide” by flooding large swaths of their ancestral lands.

The high point of the Cree and Inuit campaign was the very telegenic arrival at New York City on Earth Day 1990 of a 24-foot craft carrying 60 Cree and Inuit paddling down the Hudson River at the end of a more than 1900 km, five-week journey. Advance notice ensured maximum media coverage. This in turn rallied American Non-Government Organizations and other pressure groups to gather behind the cause.

In 1991, the NYPA asked HQ for a one-year extension before confirming the previously signed power contract. A year later, the NYPA decided not to proceed. While economic factors were the main cause of the cancellation, environmental and other social considerations made the decision much easier to make and defend.

Great Whale was finally shelved by premier Jacques Parizeau in 1994 after a face-saving hiatus. Quebec had learned a valuable lesson from this episode: what happens at home resonates in export markets.

As a result, Quebec undertook to repair its relations with the Cree Nation. In 2002, premier Bernard Landry and Grand Chief Ted Moses of the Grand Council of the Crees signed the 50-year Paix des Braves. Paix des Braves is a comprehensive agreement providing, among other things, for joint jurisdiction over much of the territory occupied by the James Bay hydroelectric dams and reservoirs in northern Quebec.

Despite repeated demands from other First Nations, Quebec has refused to replicate the Paix des Braves, preferring to enter into more limited agreements.

NORTHERN PASS

In 2008, HQ and two American utilities, Northeast Utilities and NSTAR (these two companies later merged in 2012 to form Eversource Energy), agreed to develop the 1,200 MW Northern Pass project.

The project involved the U.S. project proponents financing, constructing, and operating approximately 290 km of new transmission line from the Quebec-New Hampshire border to Franklin, New Hampshire, where it would then connect to existing grid facilities. HQ was to be responsible for the Quebec portion of the project.

Very early on, the siting of the future transmission line worried tourism, recreation and environmental groups concerned about the project’s impact on New Hampshire’s environment, including its large protected forests. But that was not the only criticism levelled against the project.

Opponents highlighted that much of the power would be consumed in Massachusetts and not in New Hampshire (this was important as the project needed to invoke eminent domain along many sections of its route). Among other considerations, they also questioned whether the project would reduce electricity rates, challenged the green credentials of HQ’s large reservoirs and Quebec’s treatment of the Innu First Nation, and worried about the project’s impact on local forestry practices and New Hampshire’s own renewable power industry.

Although the project was modified to assuage some of these concerns, including by promising to bury part of the line, in early 2018 the New Hampshire Site Evaluation Committee voted unanimously to deny Northern Pass. The decision was appealed to the Supreme Court of New Hampshire. When the appeal was rejected in July 2019, Governor Sununu of New Hampshire issued this terse press release:

“The Court has made it clear – it is time to move on. There are still many clean energy projects that lower electric rates to explore and develop for New Hampshire and the rest of New England.”^[1]

The press release is telling because it implies that large-scale power imports from Quebec are not indispensable to New England’s environmental aspirations. In other words: what was orthodoxy in Quebec in the early 2000s might no longer be true in New England a decade later. Eversource Energy abandoned Northern Pass shortly after the Governor’s press release.

NEW ENGLAND CLEAN ENERGY CONNECT

New England Clean Energy Connect (NECEC) is a 1,200 MW transmission project from Quebec to Massachusetts by way of Lewiston, Maine. The project is designed to transport electricity purchased from HQ pursuant to a 20-year 9.45 TWh per year power purchase agreement. Although most of the electricity will be consumed in Massachusetts, Maine is guaranteed 500,000 MWh per year for the same period as an inducement to allow the NECEC to traverse the state.

The project requires the construction of 233 km of high-voltage transmission lines mostly following existing power rights-of-way, with only about 85 km on a new right-of-way to be cut through working forest lands from Forks, Maine up to the Quebec border. Interestingly, the right-of-way is to be much narrower than what is usually provided, thus substantially reducing the environmental footprint of the line.

On January 15, 2021, NECEC’s sponsors, including HQ, publicly confirmed that after a lengthy process lasting nearly three years, the NECEC had secured all major state and federal permits and was now “shovel-ready.” Ordinarily, this milestone would mark the beginning of the project’s construction.

Not in Maine, however.

On the same day the project proponents issued their press release, the Federal Court of Appeals in Boston issued an injunction suspending work on the Forks-to-Quebec section of the project in the Upper Kennebec region. Environmental groups were challenging whether one of the federal permits was properly issued.

A week later, on January 21, 2021, a coalition of groups opposed to the NECEC delivered a petition with approximately 100,000 signatures to the Maine Secretary of State. The petition asked that the Secretary place on the November ballot a citizen’s initiative that would retroactively require state legislature approval for transmission lines over 50 miles and prohibit power line construction in the Upper Kennebec region. Thus, effectively preventing the NECEC from moving forward.

While the injunction was lifted on May 14, 2021, and construction can resume on the Fork-to-Quebec portion of the project, the Secretary of State has accepted the petition and placed the citizen’s initiative on the November 2, 2021, ballot. Accordingly, political risk continues to imperil the project. The question that the voters will be asked to vote on is as follows:

“Do you want to ban the construction of high-impact electric transmission lines in the Upper Kennebec Region and to require the Legislature to approve all other such projects anywhere in Maine, both retroactively to 2020, and to require the Legislature, retroactively to 2014, to approve by a two-thirds vote such projects using public land?”^[2]

Opposition to the NECEC appears to have a wider base on the ground compared to the Northern Pass project. It also appears better funded. Depending on the opponent, opposition is grounded in one of the following:

(i) The politics of rural resentment and grievance. The project traverses Maine’s second congressional district, one of the most rural in the U.S. and a district that delivered an electoral vote for President Trump. Maine — like Nebraska — attributes some of its electors by congressional districts. Not everyone in northern Maine believes that allowing high-voltage power lines to cross their forests to serve the city of Boston is a good thing, per se.

(ii) Dissatisfaction with, and distrust of, the local power company, Central Maine Power, a major proponent of the NECEC. Promises of lower rates and better service have not had the expected effect.

(iii) Competition with large incumbent electricity producers, including renewable electricity producers.

Some NECEC proponents have responded by attacking the bona fide intentions of their opponents and deep-pocketed backers. By doing so, however, they are attacking the way politics is played in the U.S. — a complaint that, when uttered by foreigners, usually falls on deaf ears. But, more importantly, by doing so the proponents are not directly addressing the concerns of their opponents, including voters in Maine’s second congressional district.

Because of the stakes involved, it is unclear whether the outcome of this November’s vote in Maine will settle the issue. The matter may continue to drag on for quite some time before the courts.

CHAMPLAIN-HUDSON POWER EXPRESS

New York State has ambitious plans to move to 70 per cent renewable electricity by 2030.

On October 15, 2020, the New York Department of Public Service confirmed that existing hydropower is eligible for renewable energy credits when it is delivered into New York City. This is a first in that state and allows HQ hydropower to be competitive.

In pursuit of the state’s objective, in January 2021 New York launched a request for proposals for the supply of 1,500 MW of renewable electricity into New York City. HQ has responded with the U.S. proponent of the Champlain-Hudson Power Express (CHPE), namely Transmission Developers, a Blackstone portfolio company.

CHPE is a “shovel-ready” project to build a 1,250 MW transmission line from the Quebec-New York border all the way down to the New York City borough of Queens.

CHPE is structured so as to put into effect many of the lessons learned from previous proposals. Firstly, CHPE traverses a single jurisdiction, New York State, to reach its intended customers. This greatly diminishes opposition based on whether local benefits are sufficient. Secondly, CHPE will either be submerged under Lake Champlain and the Hudson and Harlem Rivers, or buried along existing rights of way. This will greatly reduce visual and other environmental impacts usually encountered with high-voltage transmission infrastructure. Thirdly, it was recently announced that the project’s transmission line on the Quebec side of the border would be a joint venture between HQ and the Mohawk Council of Kahnawà:ke. HQ does not enter into transmission joint ventures in Quebec and this joint venture should increase the chances of First Nation support for CHPE and HQ electricity exports in general. Fourthly, CHPE has spent more than 8 years on an extensive communication effort with communities along the route and has considerable municipal support.

NEW ENGLAND CLEAN POWER LINK

This project is similar to the CHPE and has the same proponent, Transmission Developers. It involves building a 1,000 MW transmission line in Vermont. The line would start from the Quebec-Vermont border and proceed to Ludlow, Vermont where it would link up with existing transmission facilities. Like CHPE, the line is planned to be submerged under Lake Champlain or buried along existing rights of way. The project does not currently have an off-taker but could be used by HQ to pursue future opportunities in the New England market should NECEC be abandoned.

LESSONS LEARNED

There are numerous lessons that can be drawn from Hydro-Québec’s travails in the U.S.

Local Communities: Consultations with local communities along the path of a project are now a given but they must be meaningful and, just as importantly, be seen as such. As Tip O’Neill, the influential Speaker of the House of Representatives from 1977 to 1987, was famous for saying: “All politics is local.” Mobilized constituents can place a lot of pressure on their elected officials and derail projects, even ones whose benefits are advantageous in the long term.

“Get your house in order”: Opponents will level all manner of criticism against a project and their search for arguments will extend far beyond their jurisdiction. It is therefore important for a proponent to control what it can control. The following recent example will illustrate this point. For decades, a number of Quebec First Nations have asked to negotiate an arrangement similar to the Paix des Braves with the Cree. Quebec has refused. On August 5, 2020, the Innu First Nation of Pessamit and the Atikamekw First Nation of Wemotaci issued a press release, asking among other things that Quebec and HQ compensate them for the hydroelectricity produced on their territory. HQ responded, by way of a spokesperson, that it was surprised and found the public statement unhelpful to the export of electricity to New England and New York State, i.e., the NECEC and CHPE projects. Shortly thereafter, the Penobscot Nation of Maine issued a press release opposing NECEC and supporting the Innu and Atikamekw First Nations, thereby increasing local public pressure against NECEC.

Demonstrable Short and Long-Term Economic Benefits: Northern Pass and NECEC have eloquently demonstrated how “not in my backyard” (NIMBY) sentiment is particularly strong when a transmission line project is primarily for out-of-state purposes. Projects must provide demonstrable direct benefits to the localities along their route.

Visibility: Transmission lines and their corridors are not without environmental impact. Unless buried or submerged, they are highly visible and can have a splintering effect on the landscape as well as adversely affect wildlife. To maximize success of future projects, it is preferable to use existing rights of way or be as visually discreet as possible.

“Time Is Not a Friend”: High-voltage transmission lines are long gestation projects that can take a decade or more to be commissioned. During that time their economic and technological advantages may erode. During the last decade, costs associated with renewable energy from wind and solar have dramatically fallen and reliability has increased. As a result, new means of production are competitive, even in the crowded Northeast United States. The May 2021, U.S. federal approval of the country’s first offshore wind farm, the 800 MW Vineyard Wind 1 offshore wind power project off the coast of Massachusetts, eloquently illustrates this point.

Two-Way Trade: Power transmission projects such as NECEC are mercantilist by nature and the time for traditional one-way export projects may be drawing to an end.

A February 2020 working paper from the MIT Center for Energy and Environmental Policy Research titled “Two-Way Trade in Green Electrons: Deep Decarbonization of the Northeastern U.S. and the role of Canadian Hydropower” concluded that the best use of HQ’s hydro-electrical facilities and reservoirs is when they are used to balance intermittent renewable electricity producers. Under this scheme, HQ sells electricity to a state when the wind or solar resources of that state are insufficient and in turn purchase electricity when there is surplus renewable electricity. By conserving water in its reservoirs, HQ would in practice “store” energy for later use and become the battery for the Northeastern United States.

This complementary way of doing business not only reduces utility costs but also has the advantage of being an easier political sell, as “two-way electrical flows” do not displace local renewable energy producers nor the jobs and investments they engender.

Interestingly, two-way trade is specifically mentioned as a future opportunity in the CHPE proposal.

ATLANTIC LOOP

In its September 24, 2020 Throne Speech, the Government of Canada announced its support for the Atlantic Loop, a project which aims to “connect surplus clean power to regions transitioning away from coal.”

Simply stated, the Atlantic Loop as currently envisaged would interconnect the electrical systems of New Brunswick and Nova Scotia with those of Quebec and Newfoundland and Labrador. This would enable New Brunswick and Nova Scotia to transition to cleaner sources of electricity while at the same time furthering their local renewable energy sectors, with Quebec and Newfoundland and Labrador acting in two capacities: base-load power suppliers as well as providers of “battery” services when local wind or solar resources are insufficient.

The Atlantic Loop could of course be extended to the U.S. Northeast to form an even larger integrated grid. Perhaps Quebec’s best export opportunities lie in the east rather than to the south.

Greater grid integration in Eastern Canada — and hopefully in the Northeastern U.S. — would also serve as a model for Manitoba and British Columbia, two provinces with considerable hydro capacity and fossil fuel consuming neighbours.

* Erik Richer La Flèche is a partner at Stikeman Elliott in Montréal.

1. New Hampshire Governor, Press Release, “Governor Sununu Statement on Northern Pass” (19 July 2019), online: <www.governor.nh.gov/news-and-media/governor-sununu-statement-northern-pass>.
2. Department of the Secretary of State – State of Maine, Press Release, “Secretary Bellows announces final wording of referendum question” (24 May 2021), online: <www.maine.gov/sos/news/2021/referendumquestionwording.html>.