US embassy cable - 03HALIFAX394

UNCLAS SECTION 01 OF 03 HALIFAX 000394 
 
SIPDIS 
 
DEPT FOR EB/ESC/IEC/EPC AND WHA/CAN 
DOE FOR PI (DEUTSCH) 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ENRG, EPET, PGOV, CA, Energy, Elections 
SUBJECT: PROVINCIAL ELECTIONS PRODUCE NEW LINEUP OF ENERGY MINISTERS 
AND ISSUES 
 
REF: (A) HALIFAX 0356 (B) HALIFAX 0309 (C) HALIFAX 0238 
 
 
SENSITIVE BUT UNCLASSIFIED -- PROTECT ACCORDINGLY. 
 
1. (SBU)  SUMMARY:  Canada's four Atlantic Provinces have all 
held provincial elections this year: Newfoundland-Labrador 
(October 21), Prince Edward Island (September 29), Nova Scotia 
(August 5), and New Brunswick (June 9).  With the exception of 
Newfoundland-Labrador, the incumbent governments were all 
re-elected, but there have been some changes in the lineup of 
energy ministers and energy priorities.  Of the four provinces, 
Newfoundland-Labrador will see the most profound changes where 
political veteran Ed Byrne is the new minister.  Byrne will be 
working with his boss, new Progressive Conservative Premier 
Danny Williams, in pushing Ottawa on their key energy priority 
-- enhanced benefits from offshore resource development.  Cecil 
Clarke is Nova Scotia's newly named energy minister, and like 
Byrne will focus on greater revenue flows from offshore 
developments.  New Brunswick's new energy minister is a rookie 
provincial politician, Bruce Fitch, who will have primarily 
electricity issues on his plate, including the negotiations to 
build a second transmission line to the State of Maine. 
Meanwhile it will be business as usual in Prince Edward Island 
where Minister Michael Currie will continue to oversee issues 
such as access to natural gas and wind energy.  END SUMMARY 
 
2.(U) Newfoundland-Labrador 
--------------------------- 
A.  Political Background:  In the October 21 provincial 
election, the Progressive Conservatives under Leader Danny 
Williams captured 34 of the 48 seats in the House of Assembly. 
The Conservatives' win overturned a 14-year long reign by the 
Liberals, who were left with 14 seats, and the third place New 
Democrats with their same two seats.  With his comfortable 
majority, Williams and his Conservative party have a solid 
mandate to lead the province for the next four to five years. 
 
B.  Energy Portfolio/Minister: Premier Williams has maintained 
the same ministry structure as the previous Liberal 
administration -- energy matters are in a dual portfolio with 
the mining sector.  The new minister is a political veteran, Ed 
Byrne, and a former leader of the party.  First elected to the 
Newfoundland House of Assembly in 1993, Byrne was re-elected in 
1996, 1999 and in the October election.  While in Opposition, he 
served in several shadow portfolios, and followed energy issues 
closely during the time he was the Leader of the Official 
Opposition.  The 40-year old minister is a skilled, affable 
politician and dedicated to the Premier. 
 
C.  Substantive Energy Issues:  The new Williams government has 
several energy items on its political agenda with the most 
significant the pledge to seek jurisdictional control over 
offshore energy resources.  The government also wants an 
improved revenue sharing agreement from the federal government. 
Further, the government wants to restructure its provincially 
owned utility, Newfoundland and Labrador Hydro, either as an 
energy company or alternatively, turn it into a new energy 
corporation to participate in all areas of the offshore oil and 
gas sector.  On the electricity side, the Williams government 
also wants federal help in facilitating negotiations with the 
Province of Quebec over hydroelectricity development in the 
Labrador region and transmission rights across Quebec. 
 
3. (U) Prince Edward Island 
--------------------------- 
A.  Political Background:  Prince Edward Island voters 
re-elected the incumbent Progressive Conservative party in a 
September 29 provincial election.  With Premier Pat Binns at the 
helm, the Conservatives took 23 of the 27 seats in the 
Legislative Assembly, leaving the Opposition Liberals with just 
four seats and the New Democratic party with none.  Like his 
Newfoundland counterpart, Premier Binns has a solid hold on the 
Island political scene for the next four-five years. 
 
B.  Energy Portfolio/Minister/Issues:  Premier Binns has made no 
changes in how his government handles energy matters -- 
responsibility for the sector is a unit within the province's 
ministry of Development and Technology.  The Premier also kept 
the same minister in the Department, Michael F. Currie. 
Minister Currie was first elected in 1998 and was re-elected in 
2000 and 2003.  His energy priorities continue to be pursing 
access to Nova Scotia offshore natural gas and further 
development of wind power facilities. 
 
4. (U) Nova Scotia 
------------------ 
A.  Political Background:  The Progressive Conservative party, 
led by Premier John Hamm, is a precarious situation following 
the August 5 provincial election.  The Conservatives won the 
election with their securing 25 seats in the 52-seat Legislative 
Assembly.  However, the combined total of the seats held by the 
second-place New Democrats and third-place Liberals outnumber 
the Conservatives.  (The NDP have formed the Official Opposition 
with their 15 seats and the Liberals have 12.)  Given that 
configuration, the Hamm government is relying on the support of 
the opposition members to get legislation passed in the 
Assembly.  Pundits predict that the support is probably 
short-lived, meaning another election will likely take place 
within two years. 
 
B.  Energy Portfolio/Minister:  Nova Scotia energy matters are 
in a separate and new ministry of energy which Premier Hamm 
created in 2002 from the remnants of the old Nova Scotia 
Petroleum Directorate and from a section of the Natural 
Resources department.  Premier Hamm has picked a relatively 
inexperienced cabinet minister to head up the portfolio, 35-year 
old Cecil Clarke.  Clarke first entered provincial politics in 
2001 and was re-elected in August.  He had one previous cabinet 
posting as minister of economic development. 
 
C.  Substantive Issues: Like Newfoundland-Labrador, Nova Scotia 
is looking to the federal government to give the province more 
revenue from offshore development.  This was the chief item on 
the Premier's energy agenda during his first mandate and will 
continue to do so in this second.  Also of importance to the 
Hamm government is supporting future exploration and 
development, protection of offshore workers, and facilitating 
partnerships with foreign companies. 
 
5. (U) New Brunswick 
-------------------- 
A. Political Background:  The incumbent government of 
Progressive Conservative Premier Bernard Lord made a successful 
re-election bid on June 9, 2003.  However, the party emerged 
barely hanging onto enough seats to form a slim majority 
government.  The Conservatives took 28 of the legislature's 55 
seats, the Liberals 26 and the New Democratic Party one.  The 
scant majority is making for an uncertain political situation in 
the province, made even more speculative by rumors that Premier 
Lord may resign and move to federal politics.  Lord is touted as 
a top contender to head up the newly proposed Conservative party 
of Canada.  Should Lord decide to go for the party's top job, it 
would force a by-election, a contest that ultimately could end 
the Conservatives' majority. 
 
B.  Energy Portfolio/Minister:  Despite his government's 
uncertain future, it is business as usual in the province.  When 
picking his post-election cabinet, Premier Lord decided to 
increase the profile of energy matters in the province by 
creating a separate energy department.  The Premier named rookie 
politician Bruce Fitch to head up the new portfolio that was 
formerly part of the Natural Resources Department.  Elected to 
the Legislature for the first time in the June election, Fitch 
has no legislative experience and was a professional financial 
planner and the mayor of a small town near Moncton before 
entering provincial politics. 
 
C. Substantive issues:  Minister Fitch has a long list of energy 
matters on his plate, mainly those associated with the 
provincially-owned utility, New Brunswick Power (NBP).  The 
utility has continuing financial problems, including a debt that 
has now reached the $3 billion mark.  Fitch is also overseeing 
the opening of the province's electrical market to outside 
competition, a development that will remove NBP's competitive 
advantage and produce additional fiscal concerns.  Other issues 
are ongoing negotiations to build a second high voltage 
transmission line to the state of Maine, the future of the 
debt-ridden Point Lepreau nuclear power plant, unreliable 
Orimulsion fuel imports from Venezuela, and a possible deal with 
Quebec to expand a power plant in northern New Brunswick.  On 
the oil and gas side, the province's chief priority remains 
gaining further access to natural gas, either from offshore Nova 
Scotia or through a proposed LNG plant in the Saint John area. 
 
6. (SBU) COMMENT:  Of the four provinces, Newfoundland-Labrador 
has the heaviest energy agenda, primarily focused on cutting a 
new deal with the federal government on offshore management and 
revenue sharing.  In a 2001 meeting post had with Danny Williams 
and Ed Byrne, both vehemently asserted what they perceived to be 
the province's right to get more benefits from their natural 
resources, primarily in the oil and gas and fisheries sectors. 
Now with Williams as the new Premier and Byrne as his energy 
minister they are poised to start laying the groundwork for this 
new, politically charged campaign. 
 
7.  (SBU) Just how intense or confrontational this new campaign 
becomes will undoubtedly depend more on what changes occur in 
Ottawa after Paul Martin assumes the Prime Minister's job. 
Premier Williams has been quite vocal in expressing his optimism 
that Martin's ascension to the Prime Minister's office will bode 
well for his province.  Williams sees the future prime minister 
as being more open to working with Newfoundland-Labrador and the 
other provinces, with Williams going as far as predicting that 
there would be a new spirit of "cooperative federalism" in the 
country.  Given that it will take some time for the dust to 
settle around Ottawa, Williams appears to be taking a 
wait-and-see approach, a stance he called "rational and 
logical".  At the same time, he made it clear on the election 
campaign trail that he is prepared  "to go to war with them" if 
there is no political will in Ottawa to give his province a 
greater share of the offshore riches.  END COMMENT 
 
HILL