Kevin Libin: B.C., Alberta pipeline bartering is nothing more than shoddy protectionism

This economy isn’t a lunchroom where provinces can swap like children their baloney for goodies

There was a time when Canada was referred to as a nation of traders. Perhaps we are still, somewhere. At home we might as well call ourselves a nation of garish wheeler-dealers, with provinces brashly bartering support for economic pet projects as if the whole federation was nothing more than a shabby bazaar – instead of, say, a significant G7 economy.

Alberta and B.C. are feverishly haggling out a pipelines-for-power arrangement, with Christy Clark’s government attempting to interest Alberta in buying B.C.’s excess hydro-electricity. Alberta says it’s possible, as long as B.C. would like to purchase into its West Coast oilsands pipelines. Meanwhile, Saskatchewan Premier Brad Wall is working his own pipeline angle, linking a federal bailout for Quebec’s sickly Bombardier to approval for the Energy East pipeline.

Marketplaces, from commodity exchanges to local flea markets, are wonderfully efficient things for clearing inventory and maximizing social benefit, of course. But markets only work well if they are free. There is nothing like this here. These are sellers offering fraudulent goods to largely captive buyers. There aren’t any possible substitutes available as there is whenever a buyer can at any rate turn to a Ford when she can’t find the right price on the Lexus, or perhaps a firm can buy iron ore from Brazil if it’s less expensive than Australia’s. British Columbia may be the only province that stands between Alberta and the Pacific Coast. Any route to the Atlantic must cross Quebec.

B.C. is sensible to peddle its hydro power to Alberta. Being lucky enough to get have vastly more tributaries than its eastern neighbour, it’s its eye on becoming a “clean energy superpower” – partly by “supplying hydroelectric power to Alberta” as B.C.’s lieutenant-governor Judith Guichon explained in her own throne speech recently. B.C. is really a motivated seller: the province is neck deep in the $8.8 billion Site C dam project and it has been desperately looking for buyers for that 5,100 gigawatt hours of annual energy it’ll produce by 2024, based on the province’s former NDP leader, Adrian Dix. “Suddenly, the idea of Alberta came up,” Dix said, calling the Site C dam “a caravan in search of an oasis.”

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And Clark sees a hydro deal as “great for us,” because it means “profit for BC Hydro, which means it is good for (B.C.) ratepayers.” That doesn’t necessarily turn it into a great deal for Alberta, that Alberta would want it, or that Albertans ought to be compelled to purchase it. Yes, Alberta’s NDP government will quickly shut down all coal-fired generators, which produce 38 per cent of the province’s energy. But Alberta also sits on the lake of cheap natural gas, and borders three U.S. states. One of these, Idaho, includes a power grid that, like B.C.’s, is covered with “clean” hydro electricity. Idaho is also perched atop a payload of geothermal potential. And contains some of the lowest electricity rates in the usa, with prices for industrial users well below what B.C. companies pay.



But Alberta quickly found a corner around the B.C. electricity deal. It would consider taking some of Clark’s hydro surplus off her hands. But, Premier Rachel Notley said, sales will have to be “tied to inter-jurisdictional product distribution infrastructure” – meaning, B.C. would have to stop trying to carry up plans for oilsands pipelines, as Clark has tried doing in imposing several “conditions” on supporting Northern Gateway, one of these naturally features a juicy kickback to her province. “We won’t be buying more power if we can’t get our resources to market,” Alberta’s energy minister Marg McCuaig-Boyd said last week. And hey, B.C.’s available to that. B.C.’s energy minister, Bill Bennett, says he has “no problem with – Alberta linking the two,” and that he thinks they “can find a way to do business together.”

Lost in all this spirited bargaining is that B.C. brings nothing real to the table  – and, of course, that Alberta’s government should make power deals based on what’s best for Alberta electricity’s grid, and never leave ratepayers paying for interprovincial pipeline politics. B.C. doesn’t have veto over federally regulated pipelines. And yet here it is offering to throw into the negotiations a sanction that it doesn’t really have which Alberta does not need to buy (but Alberta ratepayers will finish up funding). This is also true, as Wall himself has stated, of Quebec’s jurisdiction over the Energy East pipeline. But, he was initially to point out when Ottawa were to write a $1 billion cheque to bail out Bombardier, it ought to “be made in the context of also what’s happening towards the energy sector-,” indicating that any handout Ottawa sends to Montreal ought to have a guarantee that Energy East will be presented passage through Quebec.

Forget that. There isn’t any fair pact to be struck here. Energy East is really a private project with economic merit, Quebec has zero say around the matter, and Bombardier has been and will continue being a bonfire that politicians use to incinerate taxpayers’ money. This economy isn’t a lunchroom where provinces can swap like children their baloney for goodies. And when it’s arrived at that, it is because the top minister has failed to behave like an adult and fully stand up as firmly for vital pipelines because he ought to be standing against bailouts for billionaires who screw up their aerospace companies.

Absent any leadership in the Trudeau government, it’s hard to blame Alberta, B.C. and Saskatchewan for relying on such absurd dickering. But it’s worth remembering that those same three provinces pioneered between them the interprovincial-barrier-smashing New West Partnership Trade Agreement. The provinces were once national leaders on provincial free trade. But, what all this bartering comes down to is nothing a lot more than shoddy protectionism, as each province holds hostage the interests of another, unless and until each one of these has got the ransom it relates to.