One of the hallmarks by which we measure democracy is by the
openness and free flow of information by the government and
about the government in power. It can be said that we have a
general right to know about the activities of government so
that they can be held accountable at the ballot box. There
are certain very limited instances where the electorate's
right to know is overridden by the need for secrecy.
Historically in Canada these instances have been limited to
matters of national security, (and even then, eventual
disclosure takes place as cabinet minutes are released after
a certain period) and a certain amount of political oversight
by opposition parliamentarians protects the public interest
and trust. Secret matters of state should be few in number
and far between, otherwise we risk losing the open nature of
our democracy. Which brings me to the Hydro Quebec affair.
The real issue that bothers me here is not the below cost
pricing (which is economically short sighted and I will deal
with that later) but the government's reaction to the
disclosure of the contractual terms and their attempt to
suppress dissemination of the information using injunctions
of the courts.
I would be the first to jump to the defense of the principle
of privacy of contracts between private parties. The big
difference in this case is that Hydro Quebec is a public
utility owned by the people of Quebec. There is a
longstanding tradition of open and public bidding for public
contracts. The reasons for this are to prevent favoritism and
patronage to political supporters and to eliminate as much as
possible the possibility of graft, corruption, and kickbacks.
Clearly, for Hydro to validate the integrity of its business
dealings, it is essential for the utility to disclose the
terms of all of its contractual relationships. Purchases are
put to public tender. There is a published tariff of charges.
Integrity is what is at stake here. Not national security.
Minister Bacon's original defense of secrecy and privacy of
the contracts in order to protect the competitiveness of the
parties involved is just obfuscation of the issue. It is
precisely because the utility is a public company that no
special contracts should be made with anyone without full
disclosure of all terms. The opportunity for massive graft is
obvious. If customers know that electricity can be bought at
secret negotiated rates, there is nothing to prevent the
purchaser from attempting to buy the politician or the
utility's management in order to get a good deal. Swiss bank
accounts are full of money from governments, corporations and
individuals from all over the world who engage in this
practice.
Furthermore, once the word gets around that Hydro makes
special deals, reputable companies run by management with
high regard for integrity of business dealings may just steer
clear of investing here as they will never be able to know if
they are on an equal footing cost wise with other companies
purchasing electricity here. Honest people tend to associate
with other honest people and dishonest people tend to
attract dishonest people.
As I have said, what is at stake here is integrity. Not only
has the integrity of Hydro Quebec been severely diminished
but the integrity of the government is also called into
question. The government's reaction to the international
disclosure of the contracts and their attempt to use the
courts to prevent the domestic disclosure of the terms was
absurd. The fact that it took Mr. Libman using the principle
of parliamentary immunity to finally bring the government to
heel is something that we should all thank him for. To hear
that the companies have threatened to sue him says much about
the type of business people we are dealing with here.
I am not sure whether Hydro Quebec has a formal corporate
mandate or statement of purpose, but I would assume that if
one does exist, it would be fair to say that it's prime
mission should be to provide for the people of Quebec, since
it is a public monopoly, electricity at the lowest cost
possible and plan for the future hydro needs of Quebeckers,
and make reasonably sure that those needs can be met. It has
assumed a much broader mandate over the years to become an
exporter of electricity and as such has focussed on the
potential development for hydro use large areas of the
province. It has, as far as I am aware, no mandate to create
jobs in the industrial sector.
As a result of being controlled by the government and its
inevitable close ties, it is not only a monopoly generator of
electricity, it has become an instrument of state policy in
an attempt to attract industry and create jobs. In view of
the contract fiasco and the obvious public discomfort over
the environmental implications of James Bay II, it is time we
had a full and public debate of exactly what exactly Hydro
Quebec's mandate is. Mr. Libman pierced the sacred cow and it
was about time.
Attracting energy inefficient and polluting industries with
contractual subsidies is a matter for vigorous public
discussion. Mr. Bourassa, in assuming that all Quebeckers
favour and need these types of investors to create a few
jobs, is displaying a level of arrogance that we can hold him
accountable for. If indeed, hydro is to be an instrument of
job creation, should not Quebeckers and those that have been
paying for the electricity be first and foremost in line for
discounts? It has been written elsewhere that greenhouse
growers are upset now that the secret pricing arrangements
are out in the open. They should be. I am. I and a lot of
others-native Quebecois-would make capital investments if
Hydro offered electricity openly at 1.5 or 2 cents a KWH. As
it is a few foreign companies have received sweetheart deals.
Selling electricity below cost just does not make any sense
at all. There is no economic justification. The political
justification, ostensibly, is to create jobs. Creating
temporary competitive advantages to attract industry does not
keep them here long term. Just look at General Motors in Ste.
Therese. Long term growth can only be sustained on a firm
foundation. Cheap electricity, not below cost, but at
marginal costs of production, could give native Quebec
industry a competitive advantage.
As a public monopoly, would it not be more fair, if Hydro has
a surplus, to openly offer it on the market for competitive
bidding? In other words, open it up so that all of us can
have a chance at getting the best rate possible. In this way,
it would definitely eliminate any possibility of backroom
dealing.
Another point to raise in public debate is the necessity of
having Hydro remain as a public monopoly. A case can be made
for breaking up the hydro monopoly. The corporate mentality
of Hydro has been oriented towards big project development
and sales to export markets. Perhaps it would be better to
have it broken up. Private companies would be eager to
develop much of the smaller hydro site potential across the
province and thus create more jobs and diversify the power
grid at the same time. Hundreds of profitable and well run
small producers have developed sites throughout New England.
This type of development usually has to pass stringent
environmental impact requirements. It creates lots of local
jobs and encourages trying out new technology. The cumulative
potential for hydro development in southern Quebec is
enormous and exceeds James Bay II. Private developers have
now begun to open the door with some projects but Hydro
remains their only potential customer. Hydro maintain their
monopoly rights over distribution thus effectively stifling
price competition.
The concentrated power grid that we now
have is open to international and domestic sabotage, and
disruption by natural causes, and could be potentially
catastrophic in the middle of winter. No sane business ever
relies on one or two suppliers. It is an accident waiting to
happen and we all know it.
Hydro Quebec and the government have no recourse to the
defense of privacy in public contracts. The public has a
right to know and it has a need to know. There is no case for
national security here. Hydro Quebec's management should be
on notice that Quebeckers expect integrity first and
foremost. We expect the truth. We expect clear and
unequivocal pricing arrangements open to all.
Hydro Quebec and the government have embarrassed all Quebeckers with their
maneuvering in this affair and they should be held
accountable for it.We should also
remember that we, the people of Quebec, reserve the ultimate
right to de-monopolize Hydro and create other producers
through the power of the ballot box which after all in a
democracy is our own private megawatt.
Christopher Goodfellow
Arundel Quebec
May 6 1991
