The St. Lawrence Question FOUR: POWER

A clear-cut analysis of the factors entering into the all important question of power development arising out of the proposed deepening of the St. Lawrence

HON. E. C. DRURY April 1 1929

The St. Lawrence Question FOUR: POWER

A clear-cut analysis of the factors entering into the all important question of power development arising out of the proposed deepening of the St. Lawrence

HON. E. C. DRURY April 1 1929

The St. Lawrence Question FOUR: POWER

A clear-cut analysis of the factors entering into the all important question of power development arising out of the proposed deepening of the St. Lawrence

HON. E. C. DRURY

IT HAS been said that power is the greater factor in the St. Lawrence development. This, as I see the question, is not the case. The insistent demand of the immense commerce and industry of the Great Lakes and the regions tributary to them, for better connection with the sea-borne commerce of the world, must, and will be met, if not in one way, then in another. The economies to be brought about in the carriage of grain alone, as was shown in the last article of this series, are in themselves sufficient to warrant the work, even though grain is the most easily transhipped of all commodities, and consequently suffers less from present conditions than other articles of commerce. But new and better conditions of navigation, under which ocean tramps can come up into the lakes without breaking cargo, cannot fail to benefit other lines of commerce to an even greater extent. With the opening of the waterway it seems certain, not only that many commodities now carried to and from the seaboard by rail, will be carried by water, but that the new conditions will promote a new and larger commerce, the extent and nature of which no one can foresee.

The regions surrounding and tributary to the Great Lakes are by all odds the richest in natural resources of the whole continent. They have iron and coal in abundance, water-borne, and available in their raw state, to both sides of the international boundary. The Canadian pre-Cambrian shield touches the lakes on the north, ready to contribute not only who knows how much of the precious metals, but also, and in unmeasured quantities, the more important if commoner minerals so necessary to modern life and industry—copper and nickel and lead, and a dozen other less spectacular but equally useful products. There are forest resources in abundance to feed the great and growing group of industries which are founded on wood-fibre. The richest and best agricultural regions both of Canada and the United States contribute their varied products, providing not only food for an immense possible population, but raw materials for a dozen potential industries. The power of falling water, which, translated into electric energy by way of the turbine and dynamo, provides the most convenient and cheapest of all forms of modern power, attains, particularly on the Canadian side of the lakes, a volume and concentration possibly not equaled by any similar area of the earth’s surface. The one factor needed to set in motion the immense development made possible by this concentration of favorable circumstances is water-connection with the sea. Once this is provided, it seems certain that development of this region, both in Canada and the United States, will proceed at a rate now unthought of. For this reason, and looking to the future, transportation is, by all odds, the most important factor in the St. Lawrence development.

Power, however, while in my opinion not the most important feature of the development, is nevertheless an exceedingly important by-product of the work. Five million horsepower of hydro-electric energy, four for Canada and one for the United States, is a tremendous asset, not by any means to be lost sight of. So far as Canada is concerned, it is, in fact, an essential part of that development which improved navigation makes possible. The two factors, navigation and power, are supplementary to each other. Power alone, unassociated with improved transportation, cannot yield its full advantages, since transportation is necessary to the full growth of those industries which the presence of power makes possible. On the other hand, the improved navigation provided by the Deep Waterway cannot grow to its full measure of usefulness unless it serves the increased population and industry which will inevitably follow the provision of cheap and abundant power.

The power question, as it affects the whole development is, however, a very much tangled skein. It involves the much debated question of public versus private ownership. Provincial and Dominion rights enter into it.

The matter of the export of temporary surplus power from Canada to the United States is a factor. There is the rivalry of at least two great and powerful financial groups for the privilege of exploiting this tremendous natural resource. There is, as a matter of national policy, the question of whether power development should be asked to pay for navigation. And finally, there is to consider the effect of power development, destroying, as it must, the natural flow of the river, on the treaty rights which the United States has in the navigation of that section of the river lying within Canadian territory.

First, let us consider the question as to the ownership of the power—does it belong to the Provinces or to the Dominion? This question was within the year submitted to the Supreme Court of Canada for a decision. The decision recently handed down cannot be said to clarify the question to any appreciable extent.

It is not clear that an appeal to the Privy Council, the court of final jurisdiction, would result in any better definition. The whole question of the legal rights of the provinces and the Dominion, resting as it does, on the interpretation of an act drafted at a time when modern conditions of water-power development were not, and could not be foreseen, is involved, difficult. Nothing could be gained by even attempting to discuss this phase of the question.

Meanwhile, some few points stand out clearly. In the first place, Quebec and Ontario, the two provinces involved, want the water-power. They have control of the other water-power within their boundaries, and have evolved policies to deal with them— public ownership and development, through the Ontario Hydro-Electric Power Commission in Ontario, except in the case of some few remote power-sites, mostly developed by paper companies for their own use—and in Quebec, private ownership and development. In the second place, it is not clear that the Dominion really wants the power, or that, if to-morrow it should be given a clear title to it, the Dominion could, in view of the diverse power policies of the two provinces, deal with it in a satisfactory or comprehensive manner. One thing is certain; no Government in power in Ottawa could deal with the power question without making for itself a great many more enemies than friends. It is a safe guess that no one in Ottawa would have been greatly worried if the recent inconclusive decision had given to the provinces a clear title to the water-powers involved. And besides all this, it is not clear that any real advantage to Canada as a whole, would be gained if it should finally be determined that the ownership of the water-power rested in the Dominion rather than in .ne provinces.

This being the state of affairs, a friendly conference of representatives of the Dominion and the two provinces, Quebec and Ontario, with the object of reaching an agreement, would appear to be more hopeful of good results than further appeal to the courts. At least an agreement so reached might be expected to fit present conditions much better than a strictly legal interpretation of an act passed more than sixty years ago; and since there is no real conflict of interest, it should not be difficult to reach. Premier King's recent move to call a conference of the three governments involved, presumably with the object of reaching just such an agreement, is to be commended as a direct and commonsense method of solving a difficult and unsatisfactory situation. It should result in a distinct and decisive step forward.

Public versus Private Ownership

M 7HEN we consider the supposed conflict between * * the principles of public and private ownership and development of the water-powers involved, it at once becomes apparent that the clash of interests is fictitious rather than real. In Ontario, the principle of public ownership, development, and operation of water-powers and hydro-electric projects is firmly established, and nothing seems likely to disturb it. In Quebec, private ownership and development is just as firmly entrenched. The advocates of both systems advance strong arguments in support of their positions. Nothing seems likely to disturb this condition.

Very well then, why should it be disturbed? If Ontario wants public ownership, why should she not have it? If Quebec prefers private development, why should not the power-works within her borders be carried out in this manner. It would perhaps be difficult, in view of the attitude of the two provinces, for the Dominion, if it should be decided that the powers belong to it, to formulate a policy acceptable to both provinces. That, perhaps, affords an additional reason why the ownership of the water-powers should be settled by agreement rather than by the uncertain and dilatory processes involved even in friendly litigation. Not only could it be assured that the wishes of the provinces would be met, and the development carried out in accordance with their respective power policies, but it should be possible for the Dominion to secure itself in having these works carried out in such a way as to harmonize most fully with the development of navigation.

Looking at the question from another angle, the existence of public and private power enterprises on the same river and under similar conditions seems likely to result in a better service of the public power requirements than were the whole river to be developed by either system existing alone. The advocates of public ownership and development point, and correctly enough, to the many instances where private monopoly has resulted in the exploitation of the consuming public, as well as the by no means unimportant, and equally noxious effects of such enterprises in debauching political and municipal life, an instance of which has lately been seen in Manitoba, but which, it is to be feared, exists in other quarters, too. On the other hand, the apologists for private development point, with equal truth, to the danger of extravagance, of inefficiency, of bureaucratic tyranny and demagogic dictatorship which have sometimes characterized public ownership projects. There is undoubtedly an unfortunately large measure of truth in both sets of assertions. It would be useless to try to apologize for the evil conditions which are an almost unavoidable condition of private exploitation of natural resources, particularly where it takes the form of a partial or complete monopoly. On the other hand, everyone, except of course those to whom public ownership is not merely a means for getting service, but a cult, almost religious in its character, will admit that the system does not necessarily bring in Utopia.

But when the two systems are brought into close comparison, though not into actual competition as they will be in the St. Lawrence development, it can scarcely help but result in a better and more economical service to the power-users. Confronted with the comparison of “power at cost,” in the districts served by the publicly owned services, it will be impossible for the privately-owned concerns to exploit their consumers. On the other hand, the publicly owned systems, confronted with the efficiency and economy which usually characterize private developments will unquestionably be driven to emulate these qualities. In the end the benefit will go to the consumers, to the advantage of the whole country. The public need not greatly concern itself with this phase of the question.

Export of Power not Wise

ONE of the real questions connected with the development of the St. Lawrence power sites, is the matter of the possible export of surplus power to the United States. Navigation cannot be improved to the best advantage unless it is coupled with the production of power. As the result of the combined improvement, four million horsepower of electrical energy will become available for Canada. This is a vast amount of power. If the whole development is proceeded with at once, Canada may not be able to absorb the power as fast as it is produced. In that event, should we allow the export of surplus power to the United States, until such time as our own people can use it? Across the line there is a market for all the power we can spare, and at profitable rates. Should we allow our power to be so disposed of?

A good many people think that we should. It is argued that to wait until Canada can use this power will be to delay unduly the whole work. That by treaty we can arrange to have the power released at such times as we can use it. That by allowing it to be sold only to the present steam-electric systems of the New England states, we would find no difficulty in getting it released when we wanted it. That the power supplied to Canadian users would be cheaper because of the export of this surplus initial power.

But the export of power is not quite of the same nature as the export of other commodities. It cannot be taken here, there and everywhere as it may be needed to-day or to-morrow. It has a trick of building up permanent channels for itself, of making lasting connections, of attaching to itself whole tribes of dependents. In spite of treaties and regulations it is not by any means certain that, once we allowed its export, we could get it back when we needed it. To say this is not to doubt the good will or good faith of our neighbor to the south. It is simply to state an economic fact.

Canada needs this power for the great industrial development which is sure to come as the next stage of our growth. And because we need it, because it is so vital a factor in our progress and prosperity, we cannot, in my opinion, allow its export. This, I believe, is the feeling of the great majority of Canadians. It is well expressed in the report submitted to the Government in January, 1928, by the Canadian National Advisory Committee: “In consideration of the economic aspect, we have given some thought to the question of possible export of power. As to that, we would say that we are in complete accord with the feeling throughout Canada that the export of power should not be permitted.”

But if power is not to be exported, what then? Do we run more than a chance of facing years of partial load, years when only a fraction of the developed power is needed, and when the huge capital charges involved, unsupported by sufficient income from power sold, will of necessity go on adding interest to principal, increasing forever the capital charges of the project, and so, the cost of power to the consumers? Or do we face a condition where the whole development, including navigation, will be indefinitely held up, while the Canadian market for power slowly grows to a sufficient size to absorb the output? Either condition is not to be desired. Are they the inevitable alternatives to refusal to permit the export of power?

In attempting to answer this question we may as well confess that we have no worth-while data to guide us. One man’s guess is likely to be about as good as another. There are, however, certain things that may give us a line on the situation, certain lesser precedents, certain trends of population and industry which may help us at least to make an intelligent guess.

Power Creates its own Market

A PRECEDENT on a smaller scale, ^ of course, may be found in the great Queenston-Chippawa power development of the Ontario Hydro-Electric. This project was begun as a war measure— at a time when no one knew how long the great war would last, and when it seemed important that every source of energy should be made available. Long before it was completed, the war was over, and the post-war depression had set in—a time of closed factories, of unemployment, of bread-lines. With the completion of the project, a huge block of power—over half a million horsepower, approximately doubling the amount already used in the territory to be supplied—would be thrown on the market. Where would it find users? Moreover, the whole project was of a nature to be particularly hard hit if a market were not forthcoming. Of the total cost of some eighty million dollars by far the larger part had been used in digging the terribly expensive Chippawa canal which, taking the water from Chippawa Creek, above Niagara Falls and its rapids, led it down to drop

it over the precipice at Queenston, thus securing the advantage of the total drop. This canal had to be completed in full before a single turbine or generator could be installed. Its entire capital cost had to be carried whether much or little power was sold. It was apparently a serious situation.

It is an open secret that one of the reasons behind the very extensive hydroradial programme put forward by the Hydro-Electric Commission at this period was the desire to help out the market for Chippawa power. This is not the place or the time to discuss this question, or the controversy that raged around it. It is enough to say that in itself it was unsound, and in the interest of the province at large it had to be killed, a course the wisdom of which has since been abundantly established. This, however, did not solve the question of a market for Chippawa power. Would this huge block of power be absorbed quickly enough to avoid serious pyramiding of capital charges?

Experience has proved that all fears as to the rapid absorption of this power were groundless. It was used, as a matter of fact, almost as quickly as it could be made available, and by the time the installation was completed, the province was again facing a power famine, which had to be met by the purchase of power from the Gatineau.

Hydro-electric power seems to have a fashion of creating its own market. It is so clean, so convenient, so adaptable to a hundred uses, big and little, industrial and domestic, where other sources of power cannot be used to advantage, that it sells itself in an almost miraculous manner. There is little doubt that this will apply to the four million horsepower of the St. Lawrence development. After all, the development, even if it should be gone on with at once, and prosecuted vigorously with the utmost despatch, will take ten or fifteen years. During this period the power market in Ontario and Quebec, having in mind the experience of Chippawa, and remembering also the great industrial possibilities of the region to be served and the development which is to be expected in this field, should prove ample to absorb the power available. There is no question as to the wisdom of forbidding the export of power. There is little fear that a market in Canada will not be available as soon as the power is ready.

The Holt-Jones Struggle

ANOTHER phase of the power question must at least be mentioned, not that it is important to the public, but because it occupies a considerable space in the newspapers, having certain more or less dramatic qualities. This is the struggle of two great financial groups for the private development of the Canadian section, situated inside the boundaries of the Province of Quebec—the Holt-Gundy group and the powerful and influential group behind the Beauharnois application. There is no doubt of the intensity of this struggle. There is no doubt of the power of the contestants. They have political influence, newspaper alliances, and all the money in the world behind them. But the outcome of the struggle, it seems to me, is really of very little importance to the country as a whole. Their developments will be in Quebec, where private development is the policy anyway. They cannot, as I have shown, unduly exploit their market, because of comparison with the publicly-owned Ontario development operating in the adjacent territory, to which it is altogether likely they will be selling power. Our alert Board of Engineers, to say nothing of the International Joint Commission, may be trusted to see that their projects do not interfere with navigation. Their struggles may cause considerable fluttering in political dovecotes, and may even upset a political apple-cart or two, but really, so far as I can see, the outcome is not of very great importance to the country as a whole.

Finally, should power be made to pay for navigation, or should each part of the development be made to stand on its own feet? This is somewhat important, but is a matter of expediency pure and simple. If, as the Advisory Board suggests, a condition of granting the privilege of power development in the Canadian section is that the developing companies should provide navigation free of charge, the Dominion would be in the happy position of getting an exceedingly important service, which will undoubtedly be of great benefit to a large section of the country, without a corresponding drain on the national treasury. On the other hand, if such a requirement is made, it is to be presumed that the electric companies will expect to pass the cost on to the consumers in increased charges. This might conceivably be a check to industrial development, where cheap power is so great an advantage. It is merely a matter of balancing one advantage against another.

In this discussion I have purposely avoided any mention of the strictly technical features of the question. These have been discussed ad nauseam. For the most part the layman is not in a position to understand or appreciate them. For us, it is enough to know that the whole question has been most thoroughly examined by a thoroughly competent board of engineers whose findings have been checked in every possible way, that these engineers have satisfied themselves that the work is feasible and profitable, and that it can be carried out without damage to the water-levels in the lower river or danger to the communities along its shores. The matters with which the public are concerned, the matters which may be settled finally in the broad forum of public opinion, are found in the field of economics and politics. These I have endeavored to make clear, so far as they affect conditions in our own country. The broader and equally important question of how the development bears on our relations with our neighbor, the United States, I shall discuss in the next, and final article.

Editor's Note: Mr. Drury’s fifth article will appear in an early issue.