Maine voters reject $10 billion Hydro-Quebec deal; Quebec vows to fight

Montreal -

Maine voters rejected an enormous Hydro-Quebec project Tuesday, delivering a blow to the energy giant, and to Quebec, to the tune of $10 billion.

A proposed power line would carry Quebec-made hydropower to Massachusetts for 20 years, with that multi-billion-dollar price tag attached, but it needs to pass through Maine to get there.

The line is already under construction -- it already has all the necessary regulatory approvals -- but non-governmental groups in Maine gathered the signatures needed to force a referendum.

Overall, 59 per cent of voters responded "no" and 41 per cent voted "yes," according to results published by the Bangor Daily News.

One environmental group, the Natural Resources Council of Maine, called that a decisive victory and "a strong majority" on Tuesday evening, demanding an immediate halt to the project.

"[The hydropower question] appears to have passed by a larger margin than Senator Susan Collins’ election results in 2020 and a larger margin than any candidate for Maine governor has received in more than 20 years," the group wrote in a statement.

But Hydro-Quebec said that only "a little over a third of Maine voters" participated in voting at all, meaning about 500,000 people in a state with a population of 1.34 million.

HYDRO-QUEBEC, LEGAULT VOW TO FIGHT

Hydro-Quebec will take the "necessary actions to have its rights recognized and ensure the continued construction of the NECEC project, which will make a significant contribution to the fight against climate change."

They added that they believe strongly in the climate benefits of the project, callng it a "regional collaborative effort" to fighting carbon emissions.

Speaking from Edinburgh, where he's attending the COP26 climate summit, Quebec Premier François Legault said Wednesday that he's still confident the contract will be carried out.

Hydro-Quebec's big export plans are near and dear to Legault, who has repeatedly spoken of his dream to make Quebec the "green battery of North America."

"Nothing is certain in life, but I am confident it will happen," Legault said at a press conference in Edinburgh.

"We knew that the referendum was going to be tight. We had a plan B," he said, adding that the governor of Massachusetts is also determined to see the agreement implemented.

"There are different scenarios -- at the moment I cannot give more details," he said. "There are different routes you can take to get to Massachusetts."

Hydro-Quebec has had some good luck this fall, finally getting an agreement on principle on a different export deal to New York, its biggest so far, worth somewhere around $20 billion over 25 years.

But a lot was at stake in Maine, where the energy giant has already spent many tens of millions, including over $20 million in public relations alone, trying to sway voters -- while the other side did the same, funded largely by energy competitors with stakes in natural gas.

Hydro-Quebec CEO Sophie Brochu said last month that if anything, she felt the Crown corporation hadn't been aggressive enough at fighting those opponents and making their case in Maine.

“I told my team, we are not getting into this mud fight, and I regret it,” she told Bloomberg News. “And while we were too nice, they made inroads.”

The stakes are also high because Hydro-Quebec already lost out in a first attempt to find a home for the same line. An initial plan to run electricity through New Hampshire in 2019 was abandoned due to public opposition.

MAINE VOTERS TORN APART

Though Quebec's hydropower deals in New England have been embraced by state governments in order to lower the states' emissions, quickly, environmental groups are also part of the Maine opposition, as well as locals worried about the destruction of a strip of forest.

Some environmentalists say that hydropower isn't as low-carbon as it seems, between the building of dams and the decomposition of vegetation underwater in flooded areas, which creates some greenhouse gases. They'd prefer a turn to other clean energy sources, like wind.

Those in favour said the project has valuable sweeteners for Maine and wouldn't be a win-lose proposition.

Elizabeth Caruso, an elected official from Caratunk, which has a population of less than 80, is among the first people in Maine to have mobilized against the project.

She said last week that the interconnection line would disrupt the lives of residents and allow Hydro-Quebec and Central Maine Power (CMP), the partner that would build the portion of the line in the United States, to rake in "billions."

She was concerned about the consequences of the construction of the line on the Northwoods Forest in the north of the state.

"CMP and Hydro-Quebec are trying to place a scar across a sector that is very sensitive to the environment," she said. "It will change the landscape."

She also feared the project will harm the tourism industry, on which the region's economy depends.

But CMP rejected those fears.

"There's been really a lot of effort to reduce the visual impact," said Katie Yates, community relations manager for New England Clean Energy Connect (NECEC), the name of the line.

She said CMP has focused on not disrupting the activities of hiking and recreational vehicle enthusiasts. The presence of open land around the lines could even facilitate the movement of animal species and be good for hunters, she said.

Despite these steps, opposition to the project was said to be strong among hunters and fishermen. In 2018, the Sportman's Alliance of Maine, a lobby that represents them, withdrew its support after a survey of its members showed "overwhelming" opposition.

Not all entrepreneurs in northern Maine were opposed to the project.

In Lewiston, where the line ends to the south, the city strongly supports the project. The possibility of reducing three million tonnes of greenhouse gas emissions by using Hydro-Quebec surpluses, alone, was enough to convince Lincoln Jeffers, director of the economic development department of state's second largest city.

"It's good for New England, it's good for Maine," he said.

Nearly half of the US$1 billion invested in the project would be deployed in Lewiston, where the infrastructure would be built to bring electricity from Hydro-Quebec to Massachusetts, said the municipal official.

He estimated that the project would increase municipal tax revenues by US$6 million to US$7 million out of a total budget of approximately US$50 million.

"Our economy is diversified, but we have some poorer areas downtown," he said.

"Raising property values will help us lower municipal taxes and make cities more attractive to businesses."

The project was a golden opportunity for Maine's economy, said Dana Connors, president of the Maine Chamber of Commerce, located in the state capital of Augusta, where the line does not cross.

He said he feared that by cancelling the project, companies will fear investing in Maine.

"It's not every day that you can have an investment of US$1 billion that will be fully paid for by residents of another state (Massachusetts)."

Peter Dostie, a collection agent, said last week he believed voters would reject the Hydro-Quebec project.

"There are certain things that are sacred in Maine: the lobster industry, the elk population and the Northwoods Forest."

--With files from The Canadian Press