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11 April 2011

Former Hydro director points to another alternative

to costly Muskrat Falls scheme

Add Edward Hearn, a former director of Newfoundland and Labrador Hydro to the

growing list of people publicly questioning the proposed Muskrat Falls development.

In a letter to the editor of the Telegram, Hearn supports former Tory finance minister

Dr. John Collins’ criticisms of the project.

Hearn says the project is liable to huge cost over-runs and that the resulting energy

may be too costly to attract industrial development in the province.

Hearn suggests the province’s energy corporation should explore alternatives,

including exercising taxation powers under the constitution.

While he doesn’t state it explicitly, Hearn is referring to the potential use of the

public utilities board powers under the 1994 Electrical Power Control Act. That Act

was designed in part to allow the PUB to allocate power generated in the province for

domestic use in a way that would not violate the terms of the 1961 Churchill Falls

lease or the 1969 Churchill Falls power contract.

Under sections 8 and 9 of the EPCA, the public utilities board may order producers

and transmitters to meet a power allocation ordered by the board. The order would

have to come as a result of an inquiry ordered under section 7:

(1) Where a producer or a retailer believes that it may not be able to

supply power sufficient to satisfy the current or anticipated power

demands of its customers and prospective customers in accordance

with the power policy set out in section 3, it may request the public

utilities board to conduct an inquiry into the matter.

The Clyde Wells administration revised the Electrical Power Control Act in 1994.

The basis for the new Act was a report presented to the Brian Peckford

administration in 1986 by Wells and other officials of Newfoundland Power at the

time. The Act as it was originally laid out applied equally to all electricity producers

and transmitters in the province.

In answering a question from opposition leader Len Simms at the time, Wells said:

It authorizes the Public Utilities Board to redirect any power - any

power, no exceptions - to meet the needs of the people of this Province.

Not expropriating anything from anybody. It is to manage the power

that is generated in this Province in such a manner as to first and

foremost meet the needs of the people of this Province. It makes no

specific reference to Upper Churchill. It makes no specific reference to

power companies. It makes no specific reference to any individual

generator of power.

What it does is establish the principle that the Public Utilities Board has

to supervise the management of all hydroelectric power generated in

the Province in such a manner as to meet first and foremost the needs of

the people of this Province, and it sets guidelines as to what are the

principles under which they can do it.

Wells introduced the bill at second reading on March 3 when he described the Act in

detail.

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- srbp -

chiseled onto stone tablets by Edward Hollett at 07:30 0 comments

Tags: Clyde Wells, Electrical Power Control Act 1994, Muskrat Falls

07 April 2011

Getting their stories straight

According to Premier Kathy Dunderdale:

Now, Mr. Speaker, we have recall power from the Upper Churchill that

is now available for industrial use in Labrador.

That’s the power former finance minister John Collins suggested to bring to the island

to help displace Holyrood.

According to Nalcor boss Ed Martin on CBC Radio Noon the very same day

Dunderdale said that there is very little of that recall power that isn’t already used in

Labrador.

What is left over is sold to Emera.

At a loss.

He left out that last bit because it is a rather inconvenient truth.

Martin left out lots of inconvenient truths in his interview.

Like why Emera isn’t actually buying power from Nalcor at Muskrat Falls in a power

purchase deal.

He neglected to mention that when they talked about selling power, Nalcor couldn’t

get the power to Nova Scotia at a price Emera would pay.

Martin didn’t do much talking about how cheaply Americans can produce electricity

from natural gas either. That pretty much kills off any chance of selling that super

expensive Muskrat Falls power to the Yanks.

But just go back and think about that problem martin is having making a buck selling

Churchill falls power to Emera right now, today, as you read this.

Nalcor is losing money selling power to Emera that Nalcor got for next to nothing.

Churchill Falls is paid off so the only cost is what it takes to run the place.

That’s exactly the same thing Martin wants to do with power from Muskrat Falls that

the people of Newfoundland and Labrador will pay for in full and with a tidy profit for

Ed martin’s company. He wants to take that power and sell it to Emera or whoever

else will buy it at prices far far lower than what he will charge people in the province.

Yet somehow Martin wants us to believe that he will make money doing that at

Muskrat Falls with super-expensive power even though he is losing money right now

doing it with power from Churchill Falls.

Ed and Kathy need to get their stories straight on the recall power.

Among other things.

Maybe Ed needs to get his story on exporting power squared with the sorry

experience we already have of losing money on bone-headed power development

schemes.

After all, if this keeps up people might start to wonder what else Ed and Kathy aren’t

telling them.

- srbp -

VIEW MY COMPLETE PROFILE

In case you missed it...

Five years of secret talks with

Hydro-Quebec - 2009's biggest

story still ignored by conventional

media

Why I Write

Draft Whistleblower Protection Act

NB Power/Hydro-Quebec

Memorandum of Understanding

(Oct 29)

The 1969 Churchill Falls contract -

the text (Dec1)

The Docket

Supreme Court of Newfoundland

and Labrador, Trial Division

Provincial Court of Newfoundland

and Labrador

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- srbp -


Tags: credibility, Muskrat Falls

06 April 2011

Another cheaper, greener alternative to Muskrat

Falls

Former Progressive Conservative finance minister John Collins surprised a few people

this past weekend by publicly criticizing the plan to double domestic electricity rates

to build the Muskrat Falls megaproject.

Now while Premier Kathy Dunderdale may have blithely dismissed Collins on

Monday, for those who know him or know of him, his public comments carry great

weight.

CBC Radio Noon’s Ramona Deering interviewed Collins on Tuesday. His comments

are available as am mp3 file: click here.

Collins hits on the major flaw in the entire scheme: domestic ratepayers will

consume only 40% of the Muskrat Falls output and that’s the entire basis on which

the project will be made profitable.

The Dunderdale/Nalcor scheme is elegantly simple and chilling at the same time. It

doesn’t matter what actual demand is. It doesn’t matter if export power is given

away free. The public utilities board is compelled by provincial law to set power rates

that guarantee Nalcor’s financial stability and ensure it is profitable.

If electricity consumption goes down as a result of higher prices, Nalcor can simply

go to the board and get another rate increase. If demand increases they can keep

making money from higher rates. And if they happen to export power and make a

buck they can keep that as well and invest it in other projects.

Nalcor wins in every scenario and the only guaranteed losers in the scheme are the

poor schmucks who will be forced – by law – to pay for the entire project. This is, by

the way, exactly the opposite of the policy that built Hydro-Quebec and that guided

Newfoundland and Labrador Hydro before the current administration turned it into an

energy franken-corp.

Collins systematically demolishes every argument offered in favour of the government

scheme.

Then he adds a potential solution of his own: use the 300 megawatts of power

recalled from Churchill Falls and send it down a new line that connects the island to

Labrador.

That idea actually makes sense and it is one that Nalcor clearly hasn’t considered.

The provincial government could fund the line using the cash reserves it already has

on hand and which it plans to use on the Muskrat project anyway. The recall power

– currently sold to Emera at a loss – plus some additional wind power, plus small

hydro and the seized Abitibi assets would meet projected demand on the island.

The gigantic bonus is that it would not double electricity rates in the province.

Indeed, if Nalcor used oil cash to pay for the project, they wouldn’t need to borrow

very much to get the job done. As a result the project could be profitable almost

instantly and at far lower cost to consumers than the Muskrat project.

If Emera and Nalcor still wanted to build the line to Nova Scotia, the transmission

infrastructure would allow development of new wind power projects primarily for

export during the summer months when the island doesn’t use all the power

produced here. Since the cost of those projects is far lower than Muskrat, the export

power would be competitive in the export market, something Dunderdale admitted

yesterday that her project definitely isn’t.

Collin’s idea is cheaper than the Muskrat scheme. Collin’s idea is also greener

since it relies on an existing megaproject. and could support development of new

$1000 extra per year for ...

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wind power that Nalcor simply isn’t interested in, at all.

And the two dams on the Lower Churchill?

Develop them when there is a demand either domestic or export for the power.

There are plenty of lower cost alternatives to Muskrat Falls.

You just have to want to see them.

- srbp -


Tags: Kathy Dunderdale, Muskrat Falls

05 April 2011

A new Sprung Greenhouse in the wilds of Labrador

Insecurity is not a good trait in leaders.

Among local politicians it tends to come across with boasting or, in the more recent

examples, with nasty personal digs at other people for supposedly having the faults

the politician readily displays.

You can see this, by the way in Kathy Dunderdale. She delights in telling everyone

else how stupid, ill-informed or lazy they are.

In the House of Assembly on Monday, Opposition leader Yvonne Jones asked

Dunderdale about comments made on the weekend by former Conservative finance

minister John Collins.

The octogenarian came out of a self-enforced silence just to point put that the

provincial government hasn’t really explained this Muskrat Falls thing to anyone in

the province. He also took pains to criticise the logic Dunderdale’s administration is

using.

Her reply?

In that article [former finance minister John Collins] also stated that he

did not have much information on the project. Like her, he decides to

speak and find out later.

And to Jones on one of the questions:

Therein lies the danger of going down this road, Mr. Speaker, because

her ignorance is so vast.

John Collins, incidentally, is no slouch. He and his colleagues at the time – including

Bill Marshall – understood very well the economics of Lower Churchill hydro-electric

power. They knew that the thing should only be developed if export markets paid for

the project. The smaller of the two dams – Muskrat Falls – would then come along

as a bit of a freebie to give power to the island or anywhere else it could be sold

profitably.

Collins also knows that the province already had the federal government on the hook

for the project through the Lower Churchill Development Corporation. That was the

provincial Crown corporation created in a deal between Frank Moores’ administration

provincially and Pierre Trudeau’s federally in 1978. Danny Williams and Kathy

Dunderdale scrapped it in 2008 only now to have to go cap-in-hand to Ottawa looking

for a promise of far less than what they would have done through LCDC.

Anyway, the funny thing is, of course, that whenever Dunderdale actually does

explain anything even in a very simplistic way, she usually confirms what Jones has

been saying. The project doesn’t make economic sense and taxpayers in the

province are going to be shafted with enormous electricity bills and public debt.

Some electricity might go off to other places but the sale of it will be subsidised by

local taxpayers. That’s the opposite of what every provincial administration since Joe

Smallwood wanted to do. They wanted to have the exports subsidise the costs for

people in Joe Batt’s Arm and Quirpon. Kathy wants the people of Grey River to pony

The Opposite of Sober Second

Thought (December 22, 2008)

Missing Bits (December 23, 2008)

Bareheaded Public Policy

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29, 2008)

No comment on process because

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based Fortis (April 30, 2009)

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year later (December 11, 2009)

Taxpayers shafted (February 5,

2010)

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(February 25, 2010)

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Introduction

1. The Changes

2. The Challenges

3. Charting the course

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(Part 1)


(Part 2)


(Part 3)


(Part 4)

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up so some people in far wealthier places have cheap power.

Do not simply believe that because it is written here.

Look at what Dunderdale said in the House on Monday. She admitted that the

Muskrat Falls project will produce power that is too costly for export:

Mr. Speaker, Nova Scotia needs power. They need power and they can

provide it to themselves for 10 cents or 11 cents a kilowatt hour. They

are not going to buy it from us, Mr. Speaker, for 14.3, so we have to go

into the market and sell at what the market can bear.

If that wasn’t bad enough, Dunderdale makes it clear she has no idea of basic

economics when she tries to claim that this export of discount power will actually

lower the cost of producing electricity and reduce the price paid by consumers in the

province:

Now, Mr. Speaker, we can let the excess water spill out over the dam

and not get anything for it, but we can sell it where there is a market

and we can decrease that 14.3 cents further for the people of

Newfoundland and Labrador.

Right off the bat, everyone will recall that Dunderdale has already stated that the

project is being paid for based on forcing domestic consumers to bear the full cost

and Nalcor’s profit on the project. That’s the basic premise of her statement and it is

something Dunderdale and others in her administration have said from the time

Danny Williams announced this deal; it works without a federal loan guarantee or

exports. Local ratepayers will carry the cost and, if need be, the provincial

government will drop oil money into the thing as well.

Then consider that the figure of 14.3 cents per kilowatt hour is actually the low-end

estimate for the cost of producing power at Muskrat Falls. It isn’t the price

consumers in the province will pay. It’s the cost.

And it is the lowest cost estimate.

In an interview with CBC Radio’s St. John’s Morning Show last fall, Dunderdale

figures of between $143 and $165 per megawatt hour to produce power at Muskrat

Falls. That translates to between 14.3 and 16.5 cents per kilowatt hour. If that’s

what it costs to produce power just at Muskrat Falls, then the cost to domestic

consumers will actually much higher than that.

But here’s the thing, if it costs 14.3 cents to produce the electricity, it will cost more

than that to ship it to market. Those power lines cost something to build so those

loans have to be paid back. At the same time there are maintenance costs and so

forth.

So right off the bat, just getting the power from Labrador to the border of the province

will likely cost more than 14.3 cents.

If it goes to Nova Scotia, that’s one thing but since they already get 35 years of free

power under this deal, then let’s push it a bit beyond.

Maine? New Brunswick? Ontario?

Take your pick.

Then start adding on the costs to send power down the lines to those places.

Wheeling power through Quebec already costs Nalcor something like $19 million

annually in wheeling fees under the April 2009 deal, for example.

Incidentally, on that deal, the provincial energy corporation is actually losing bags of

money because the price they get for the power is far less than the cost of making it

and shipping it.

So with Muskrat Falls, 14.3 cents per kilowatt hour to produce the juice becomes

the better part of 20 cents of cost just to get the power to some place like Ontario

by the time you whack on the handling charges. The farther you ship it, the more

expensive it becomes and the more the consumer will have to pay just for Nalcor to

break even.

Now go back and look at what Dunderdale said about export markets:

(First Report)

Introduction/Commission

The Elizabeth Towers Fire and Its

Investigation

The Release of the Reports of the

Investigation

The Question of Justification

Recommendations

The Equalization Wars

Which is to be master? Part 1

(2004)

WITBM? Part 2 (2004)



What Danny wants (January 2005)

He said yes to less - revised

(January 2005)

'I can't wait to see the day when we

don't get a dollar." (2008)

Equalization flips, flops and

fumbles (January 2009)

To Have and Have Not (December

2009)

Great Gambols with Public

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Missing company has half a

million in public cash (SAC Mfg)

As innovative as a 55 gallon oil

drum (SAC Mfg)

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Sprung Cukes

Sprung Cukes 2

Sprung Cukes 3

Sprung Cukes 4

The Stunnel, Part Deux

Kremlinology: The Series

Kremlinology

Kremlinology 02

Kremlinology 03: Gros Morne

Kremlinology 04: There and Not

There

Kremlinology 05: Hard to Swallow

That

Kremlinology 06: The Curious

Last Days of Paul Oram

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Straits

Kremlinology 08: Honestly, We're

so f*cking sorry

Kremlinology 09: By-elections

Kremlinology 10: Ah, to be a Tory

in Gander in October when the

dogs are fit to wag

Kremlinology 11; Words that start

with "p" and "o"

Kremlinology 12: Dead Caribou

Edition

Kremlinology 13: The Seat by the



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Le Devoir

La course à deux se cristallise

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tête d'un pays à la dérive

Les 150 ans de la guerre de

Sécession - «L'esclavage a pris

fin, pas l'injustice»

Éducation - Levée de boucliers

contre le projet Legault

Allégations d’espionnage: Québec

fera enquête sur la gestion de

Montréal

CNN

Obama calls for $4 trillion in deficit

reduction

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trauma

Tail of Air France jet found in

Atlantic

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ordered

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New York Times

Obama Urges Cuts and Taxes on

the Rich

Egyptian Prosecutors Order 15-

Day Detention of Mubarak

Delegates Meet in Support of

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Boy, 10, Escapes as Mother

Drives Her Family Into Hudson

DealBook: Quarterly Profit Surges

67% at JPMorgan

The Economist: News

Analysis

The coming days: The week

ahead

RIA Novosti

Putin, Medvedev may both run for

president in 2012 - PM

They are not going to buy it from us, Mr. Speaker, for 14.3, so we have

to go into the market and sell at what the market can bear.

Right.

Nalcor will sell power on export markets for less than it costs to produce it and get it

to market.

Talk about a recipe for disaster.

It’s essentially the problem Brian Peckford and his colleagues ran into with the

Sprung greenhouse. They spent about a buck and a half to produce each cucumber

which they then sold for about fifty cents in local grocery stores.

Some basic math and you can see pretty quickly that they lost a dollar on every

cuke.

Lucky for them and taxpayers in the province that the Sprung fiasco only cost about

$23 million before the government had to shut it down.

Muskrat Falls is supposed to cost at least $6.2 billion. That assumes that their

estimates are accurate and that they can build the power lines and the dam for less

than what they would have cost in 1998.

And that doesn’t allow for the fact that since 2003, this administration routinely

delivers projects that are years behind schedule and 70% or more over budget.

This could very well wind up being a gigantic Sprung greenhouse in the wilds of

Labrador.

And if it does, we won’t need Kathy Dunderdale to us all who was stupid.

- srbp -


Tags: Great Gambols with Public Money, Muskrat Falls, Sprung

01 April 2011

When the Mother Corp morphs

Even CBC News is now shifting its interpretation that the Muskrat Falls loan

guarantee is already in place.

In a story posted on Friday, the Mother Corp put it this way:

The federal Conservative leader told a rally in St. John's Thursday that

if re-elected a Conservative federal government would provide a loan

guarantee for the Lower Churchill project, contingent on three

conditions.

Check out those four important words: contingent on three conditions.

Compare that to a story they ran on Wednesday:

Multiple sources tell CBC News, though, that the federal and provincial

governments have reached a deal on the terms of a loan guarantee.

or even a radio reporter’s debrief on Friday morning.

- srbp -


Tags: Election 2011, Muskrat Falls

Words and meaning

In a debrief with the Morning Show’s Jeff Gilhooley Friday morning, CBC reporter

Brian Callahan told the audience that yesterday Stephen Harper committed to a loan

guarantee for the Lower Churchill project “at Muskrat Falls.”

Door

Kremlinology 14: Dead

Caterpillars

Kremlinology 15: as warm and

fuzzy as your old blankie

Kremlinology 16 (Update): Deep

T'roat

Kremlinology 16: Deep Throat

Kremlinology 17: Woof! Woof!

Kremlinology 18: And that was

W.A. Mozart with a little tune called

Lacrimosa...

Kremlinology 19: Ass-kissing has

its rewards

Kremlinology 20: Who will replace

Danny?

Kremlinology 21: Tells

Kremlinology 22: House sitting

and bills passed

Kremlinology 23: a little something

for everyone

Kremlinology 24: The Whine List

Kremlinology 26: Magma

Displacement

Kremlinology 27: Going negative

early has its risks

Kremlinology 28: How will he go?

Kremlinology 29: EasyBake Tories

Kremlinology 30: The Vanishing

'Stache

Kremlinology 31; Auditor General's

report on offshore board

mysteriously vanishes

Kremlinology 32: the St.

Valentine's Day Massacre

Kremlinology 33: getting the scoop

versus getting the story (Coming

Soon)

Ottawa Kremlinology 01 : Connie

Unease

Number 3 Iniquity Court

Rumpole and the Old Boy Net (Mar

2006)

When I good friends was called to

the bar... (Oct 2007)

Rumpole and... (Jan 2009)

Rumpole and the Heavy Heart

(Jan 2009)

Rumpole and the Minister's

Choice (Jan 2009)

Rumpole and the Minister's

Choice - Part 2 (Jan 2009)

Rumpole and the Nose Puller

(Jan 2009)

Rumpole and the Doddering Old

Man (Jan 2009)

Rumpole and the Summer of

Discontent (Aug 2009)

Rumpole and the Old, Old Story

(Aug 2009)

Rumpole and Justice Delayed

(Aug 2009)

Rumpole and Rorke's Drift (Aug

2009)



No plans to review gas prices for

Ukraine - Putin

Moscow ex-mayor says has no

plans to leave Russia

Putin identifies health care

problems, offers solutions

PACE co-rapporteurs present

Russia monitoring memo

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Europe takes note as Norway

smashes the glass ceiling

New plagiarism scandal unfolds

in Germany, this time among

liberals

Finance, security and privacy

collide in SWIFT controversy

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Opposition offers support as EU

rules out Portuguese bridge loan

Le Monde.fr

Nicolas Sarkozy le "sent bien pour

2012"

Au Swaziland, le roi Mswati III

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La majorité multiplie les petits

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Combien coûteront les jurés

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Mantashe: McBride ruling a blow

for unity

Shivambu files papers in hate

speech case

Sport transformation charter on

the cards

Progressive Bloggers

Supposedly these were harper’s exact words.

In the clip Callahan used of harper actually speaking, Harper did not say “at Muskrat

Falls.”

Those words aren’t in any of the Conservative media materials.

In fact, in his speech Harper did not say “will provide”. Harper said that based on the

three criteria he mentioned, a re-elected Harper government “would” provide a loan

guarantee.

That could prove to be a not so subtle distinction.

Words are important.

Meaning is important.

So where did those words “at Muskrat Falls” actually come from?

- srbp -


Tags: Election 2011, Lower Churchill, media trends, Muskrat Falls

31 March 2011

Torque Wars: Media, politicians and the Muskrat

Falls loan guarantee

Some people will tell you there the federal and provincial governments have a deal for

a federal loan guarantee on Muskrat Falls. The provincial government has already

met three criteria set by the federal government and Stephen Harper confirmed that

in a speech in St. John’s.

That’s what you could take out of some stories from different media outlets coming

out of Harper’s campaign stop in Newfoundland and Labrador.

Bear in mind though that the loan guarantee story took a couple of turns within the

past 24 hours even for one single news outlet.

On Wednesday, CBC reported the deal was done:

Multiple sources tell CBC News, though, that the federal and provincial

governments have reached a deal on the terms of a loan guarantee.

Multiple sources.

Multiple unidentified sources.

Not even a hint if they were highly placed in both the federal and provincial

governments.

Sometimes that happens. You don’t even give the slightest clue as to the

authenticity of the sources on which the story is based. Put it down to a judgment

call. Doesn’t mean that the comments are right or wrong, but it could put a question

mark over the accuracy of the information.

On Thursday afternoon, CBC reported Stephen Harper’s comments during a

campaign stop in Nova Scotia:

“The details still have to be worked out," said Harper speaking in

Halifax Thursday morning. "There is a lot of discussion still to come, but

it is obviously an important project."

Then there was Harper’s speech in St. John’s, impeccably timed to coincide with

super hour newscasts. and obligingly carried live by the province’s electronic news

media. It was like Brian Tobin’s 1999 provincial election campaign launch but this

time everyone gifted a political campaign with the kind of airtime they could never

afford to buy.

The Conservatives issued a news release headlined “Harper endorses Lower

Rumpole and the Piss Pot (Aug

2009)

Rumpole and the Christmas

Honours List (Dec 2009)

Rumpole and The Way Through

The Woods (January 2010)

The "Outside the Box"

Series

Experience Counts (January 2005)

The Stunnel (February 2005)

The Independents (March 2005)

The Politics of History (July 2005)

Time (October 2005)

Up the Harbour and Down the

Shore (June 2006)

he spoke. And rapidly drank a

glass of water. (September 2006)

Pols, polling and politics

Getting the deal: Danny Williams

and Atlantic Accord polling (July

2005)

Find. Fix. Fire. [campaigning]

(November 2005)

The Orchestra Pit Theory

[campaigning] (January 2006)

Poll Goosing 1. Playing the

numbers (August 2006)

Poll Goosing 2; The media and

the message (August 2006)

Poll Goosing 3: The perils of

polling (August 2006)

The Danny Brand [campaigning]

(September 2006)

Logistics: a dismal science

[campaigning] (October 2007)

Something's off; Newfoundland

and Labrador political polls

(December 2007)

The secret of their success: Roger

Grimes (December 2007)

Shaping political attitudes

(September 2008)

Williams shifts ABC position in

wake of polls (September 2008)

Now that's really suspicious

(November 2009)

How the Tories get 28% more

votes thanks to CRA (November

2009)

Toward a future that

works

We live in a fiscal house of cards

What goes up must come down...

Hebron and Old People

15 ideas for a stronger

Newfoundland and Labrador

(Part1): Strengthening the

Treasury

The SRBP Video Collection



(Canada)

Contempt leader is a Cylon.

(DAMMIT JANET!)

Embracing music, not ideology

(DAMMIT JANET!)

QUAIA Gets Go Ahead (BigCityLib

Strikes Back)

Suck on it Rob Ford and Sue Ann

Levy! (The "What Do I Know Grit")

Ekos of the Week - That's a tight

race? (Blunt Objects)

The Political Lists

Blogging Connies

Blogging Dippers

Blogging Grits

Churchill Project”:

Prime Minister Harper noted that, with these criteria in mind, his

Government will provide a loan guarantee or other financial support

for the Lower Churchill hydro-electric project. The project will provide

Atlantic Canada with a major new source of clean energy. Support for

clean energy projects will be based on the principles of respect and

equitable treatment for all regions of the country.

The criteria are:

National or regional significance.

Economic and financial feasibility and merit.

Significantly reduces carbon emissions.

The backgrounder with the news release included this comment:

A re-elected Conservative Government will provide a loan guarantee or

other financial support to the Lower Churchill hydro-electric project on

the basis of these criteria.

Not everyone accepted the deal is done, though. The Toronto Star reported that

Harper said the federal government has been discussing the Lower

Churchill project for “some time” but suggested more negotiations were

needed to cement Ottawa’s backing.

“There’s a lot of discussion yet to go but I think the opportunities of the

project for this country are evident,” he said.

CTV said that Harper remained “vague” about details:

However, when it comes to federal funding for the project, Harper

remained vague.

"In terms of specifics, those things still have to be discussed," he said.

Even CBC couldn’t agree on what happened within its own story on the speech. A

cutline for a photo illustration said: “Stephen Harper says his government will provide

a loan guarantee to the Lower Churchill project, if it meets three criteria.” The body of

the story said Harper had already committed to the guarantee.

For all the stories that have run talking about a loan guarantee, you have to note the

appearance of something new in the actual Harper statement: “equivalent financial

support.”

Conservative briefers travelling with Harper reportedly told reporters that the loan

guarantee would have “zero” cost. If it really had no cost then it would be hard to

imagine why the federal government would want to provide a cash injection.

The Toronto Sun referred to unnamed party officials who said that the federal

government would “co-sign” any loans with the provincial government. What isn’t

clear at this point is how much of the project would be financed with loans and how

much would be funded through bond issues or equity stakes with other investors.

What’s really in behind these media reports is a torque war among the politicians

involved.

pow ered by

The Sir Robert Bond Papers

is licensed under a Creative

Commons Attribution-No Derivative

Works 2.5 Canada License.



For Kathy Dunderdale, Muskrat Falls is the key to her election campaign in October.

She’s working hard to distinguish herself from Danny Williams. Delivering a loan

guarantee for Williams’ retirement project with a prime minister Williams could never

deal with would be exactly what she wants.

No one should be surprised to find out that Dunderdale’s people have been pushing

hard to convince reporters that the thing is really in the bag. After all, this wouldn’t

be the first time in the last seven or eight years that the provincial government

claimed they had something, like a loan guarantee from Harper in 2006, that local

reporters dutifully reported only to have the thing disappear into nothingness.

For Harper, it’s a matter of picking up seats in Newfoundland and Labrador while at

the same time not creating a political meltdown in Quebec or other provinces. He

will also have to be very sensitive to the financial implications of committing the

federal government to billions of dollars of new public debt. After all, that is what loan

guarantees really mean.

They don’t come with “zero cost”. Until the debts are paid off, they show up on the

federal books as liabilities. The federal government can negotiate a fee for providing

the guarantee but that can’t be high enough to basically wipe out the advantage to

the provincial government of having the guarantee in the first place.

No one should be surprised that Harper’s people are trying to make this look like

Harper is willing to support the project while at the same time giving him plenty of

language he can use later on to justify it if the federal government doesn’t deliver a

loan guarantee or other financial support.

Dunderdale’s crowd will have some sympathy, incidentally, from Harper’s local

team. After all, they want to grab as many seats in the province as they can.

Playing to the local expectations are one way of helping that cause. At the same

time, though, the federal Conservative organizers have to be sensitive to the larger

issues.

As for the debts showing up on balance sheets, the same thing will happen for the

provincial government as a result of any debt Nalcor takes on to build the Muskrat

Falls project.

And when it comes to one of the key Harper criteria – economic and financial

feasibility and merit – that could be one of the points on which the whole thing will

hinge.

But is there a done deal?

Absolutely not.

If there was, Stephen Harper wouldn’t be saying otherwise.

- srbp -

Related: “Undisclosed risk: financing the Lower Churchill”


Tags: Election 2011, Lower Churchill, media trends, Muskrat Falls

10 March 2011

Labrador hydro: That 70s Show reruns

Listening to Leo Abbass on CBC radio Wednesday afternoon, you could almost

imagine you were back in the 1970s.

Harry Hibbs.

Banana seat bicycles.

Joan Morrissey.

All around the circle.

John Crosbie with muttonchops.



The whole shooting match.

Radio Noon had Abbass, the mayor of Happy Valley-Goose Bay, as the guest for its

hour-long call-in show. He was talking up Muskrat Falls, the economic disaster doing

business as Danny Williams’ memorial to Hisself.

Some guy called in to point out that after construction ended, there’d only be a

handful of jobs left keeping an eye on the gauges as all the power streamed off

somewhere other than Labrador. Abbass disagreed. After all, he reasoned, there’d

be all that cheap power available to lure some industry or other and hundreds of jobs

to boot.

Flick your mind back 40 years - if it goes back that far - and you probably remember

another bunch of politicians who said exactly the same thing. That was the big idea

for Churchill Falls back to the 1950s when Joe Smallwood supposedly first dreamed

his first dream of immortality: cheap power for aluminum plants and lumber mills.

Ditto Baie d’Espoir on the island. That one was supposed to support not one, not

two, not even three or four major new industries. By the time Joe Smallwood and his

crew got around to that one, their cheap power was supposed to sustain seven new

industries.

Seven.

With one blow.

Paper mill.

Refinery.

Petrochemical plant.

Hockey stick factory. Betcha never heard that one before.

Phosphorus plant.

A couple of others the old brain can’t recall.

A bunch of new industries.

Hundreds of new jobs.

All with cheap power.

2 mills, even less than at Churchill Falls.

Not even the pretext of trying to make the thing break even.

Just like the aluminum smelter in Labrador. That old chestnut is still good for all

sorts of mileage even from the most highly educated members of our population.

What do the hydroqueen, at least one recent premier, the odd economist and now

maybe a mayor have in common?

Your first two guesses don’t count but if you get it right, you could win the chance to

cut the ribbon at the Grand Opening of the latest Great Unnamed Industry to Save

Labrador.

The gigantic load of horse manure is that much a part of our culture that when they

get done with the 60th anniversary of the Fisheries Broadcast, CBC should celebrate

60 years of aluminum smelter rumours in Newfoundland and Labrador.

Oh dear. Was that sarcasm? There’ll probably be a Telegram column now

defending the honour of this particular myth. If two university professors get a quote

in the paper pointing to its turd-like aroma, you can bet there’ll be at least two

columns, one of which will point out that the two learneds are – whispers – you

know.

That way.

What way?

You know:



Different.

You mean mainlanders?

YES! For Gawd’s sake.

And as such, they are unfit to comment at all on our revered customs and venerated

observances.

Like Screech-ins and gravel-pit camping, both of which have been practiced in the

province (and maybe even Labrador) since John Cabot’s time at least.

Surely, that long.

And they are definitely not – respectively – a cheesy 1970s marketing gimmick by

the liquor corporation and a relic of the post-war era when the government actually

had enough money to build roads for people to drive cars on.

And it isn’t just this Labrador hydro power stuff.

Take a look at municipal politics. Some poor sod who went into a coma around the

time of the Canada Summer Games in 1977 and who sprang back to life this week

would look at the TV and wonder what the frig was going on. Some woman from city

council with a hat on then talking about being verbally beaten up by her fellow

councillors went his lights went out. Now that the lights are back on, he sees some

woman from city council with a hat on…

You get the idea.

Then there’s the fishery.

Only difference is that this cartoon today would have the one guy with four hands

covering ears and eyes and with both feet in his mouth.

Since 2003, it’s like the province – and Labrador - is one giant trip back to the 70s.

- srbp -


Tags: Muskrat Falls, Muskrat Love

02 March 2011

A cheaper, green alternative to Muskrat Falls

Natural resources minister Shawn Skinner has hit on a cheaper, less risky green



alternative to the Muskrat Falls megaproject.

He didn’t mean to do that, of course. he was actually trying to justify Muskrat Falls

by claiming the project will give the province energy security by allowing the island

portion of the province to import power from the mainland in the event of an

emergency.

The major way of doing that would be through the tie to Nova Scotia, according to

Skinner. As the Telegram quotes Skinner:

“We’re anticipating to mostly use it to export excess capacity, excess

electricity into the Atlantic provinces and the northeast United States,

but in the event of a catastrophe … it would be possible for us to import

electricity,” Skinner said in a recent interview.

That’s certainly true, but that isn’t a rationale for building a very expensive dam in

Labrador and a very expensive power line from that dam to St. John’s especially

when the island portion of the province doesn’t need the juice.

But let’s just allow for a second that the island needs power. Skinner has actually

given Newfoundlanders and Labradorians a far better option to meet the province’s

energy needs that building Muskrat Falls.

At $1.2 billion, the line to Nova Scotia would actually meet the island’s energy needs

and give the energy security Skinner is talking about. Nalcor or Newfoundland Power

could import power from the mainland if it is needed.

But more importantly the line from Nova Scotia and an upgrade to the line across the

Isthmus of Avalon would help bring to market all that stranded central Newfoundland

hydro seized by government in the botched expropriation. In addition, it would allow

for wind and new small hydro projects on the island. Right now, there’s no place for

that extra power to go when it isn’t needed on the island. A link to Nova Scotia

would take care of that.

And all that wind generation and small hydro – far cheaper than Muskrat Falls -

would help displace the thermal generator at Holyrood with green energy that is far

cheaper than the $5.0 billion dam and power line project that is at the heart of Danny

Williams’ legacy project.

The line would cost $1.2 billion compared to $5.0 billion for the dam and line to

St.John’s. Emera is already committed to the Nova Scotia line. If Nalcor split the

bill 50/50, then the actual cost of Nalcor would be a mere $600 million plus annual

operating costs. Nalcor and Emera wouldn’t need a federal loan guarantee or any

federal financial help at all in that scenario. Nalcor could fund its share from offshore

oil revenues. Heck, the provincial government could build it’s share of the line right

now for cash since it has billions on hand in temporary investments. Talk about the

perfect go-it-alone, stand-on-your-own-two-feet, “have province” option.

On top of that, there are plenty of private operators ready to build wind projects on

the island; the only thing stopping them right now is Nalcor and government policy.

In other words, there’s no practical reason not to pursue the cheaper, green options.

Private sector companies could build the projects either alone or in partnership with

Nalcor.

Unfortunately, the tie to Nova Scotia is the last thing on the list of things to be built

for the current version of the Lower Churchill. And right now Skinner and his

colleagues are obsessed with a very expensive very risky project that could wind up

going way over budget.

Given the soft markets for electricity in the near-term, it would actually make

economic sense to wait a while to build the entire Lower Churchill until the markets

will buy the power with long-term deals. That’s much better for consumers in the

province who, right now, are staring at a government hell-bent on doubling their

electricity rates by 2017 and saddling them with $5.0 billion in debt on top of the $12

billion they currently owe.

There’d be an added bonus in building the Nova Scotia line first: Nalcor would have

export infrastructure plus it would have a megaproject to its credit to prove to

investors it can deliver complex engineering work on-time and at or under budget.



On top of that, a policy that encouraged private sector investment for wind

development would go a long way to reversing the image the province has gained

since 2003 of a banana republic where the government is closed for business.

Cheap, green energy to meet the needs on the most populous part of the province at

a low cost and with the potential to bring new revenue from exports?

Job done.


Tags: Muskrat Falls, NALCOR Energy, wind energy, wind power

24 February 2011

Whiff and poof #nlpoli #cdnpoli

Labrador member of parliament Todd Russell is not popular among Conservatives in

the province. The reason has more to do with Russell’s unwillingness to kiss the Old

Man’s derriere since 2003 more so than the fact Russell is a Liberal.

Russell made the news in Newfoundland and Labrador on Thursday as a result a

virtual town hall he held. Basically it was an opportunity for Russell’s constituents to

discuss the proposed Muskrat Falls project using a giant conference call. This was

a big call, according to Russell’s office, with dozens of people who got a chance to

speak, dozens left on the line when time ran out and a couple or so thousand people

participating overall.

Here’s how Russell summarised the views he’s been hearing to a reporter at the

Telegram:

“They have expressed their opinions around environmental issues,

about economic issues, social issues and cultural issues. The overriding

concern that’s come to light is that no thought has been given to meet

the needs and aspirations of the people who own this resource, the

people of Labrador,” he said.

Not surprisingly, one-time Conservative party executive director Mark Whiffen took

some time on Thursday to explain to CBC’s Peter Cowan what he thought of Russell

and Russell’s concern to ensure the people of Labrador benefit from the project:

“if Todd Russell doesn't see the overall benefit then he isn't a good MP.”

and “there will be long-term benefits to Labrador. They all may not be

direct, but they'll be there.” and “also, Lab is benefiting from offshore oil

- not off Lab's coast, but no one cares. It's 1 province. Shame an MP

can't see that.”

Yadda, yadda, yadda.

It is so easy to spew out a bunch of talking points and Whiffen’s tweets are a fine

example of the enthusiastic but decidedly insubstantial nature of the partisan talking

point. Someone else joined in the exchange at one point but the general thrust

didn’t change much.

But just notice that not just accepting those benefits, especially the indirect and

undefined ones, makes one a bad member of parliament. Asking for more,

presumably, would be naughty.

Naughty, naughty, Todd.

Makes you wonder what a Conservative might say. Well, a Conservative other than

Whiffen who is not, quite evidently, either from Labrador or very familiar with the

issues as seen from the perspective of someone who lives in the Big Land.

Why what about someone like John Hickey, currently drawing a cabinet minister’s

pay and rumoured to be organizing a run for the federal Conservatives in the next

federal election?

Back in 2002, Hickey took part in a massive anti-Lower Churchill rally organized by

the guy who would one day deliver the starting bits for the Muskrat Falls project.

Here’s how the Telegram (December 4, 2002) reported Hickey’s comments at the



rally:

He said they want to see a development fund set up for Labrador and a

plan for long-term sustainable development attached to the project

that will bring new industries to the region.

Hickey was even more forthright in his insistence – back then, of course – that not

one megawatt of power should leave Labrador until local were met. As the Globe

reported 9December 10, 2002:

Mr. Hickey said the community of Happy Valley-Goose Bay can only

acquire 55 megawatts from Churchill Falls and has been stymied in its

attempts to bring in industries such as an aluminum smelter because of

uncertainty about the electrical supply.

Mr. Hickey was one of several Labrador business and political leaders

who met with Mr. Grimes two weeks ago and demanded that any

Lower Churchill agreement contain a clause that would allow

Labrador communities to obtain 500 megawatts of power for future

industrial development.

"I've got a message for Mr. Landry: 'you aren't going to get a

megawatt of power out of Labrador until our needs are looked after,' "

Mr. Hickey said.

That was then, of course. Hickey’s been notoriously silent on the project and

whether or not the existing proposal meets the standards Hickey set back in 2002.

(Hint: it doesn’t). But if you look at Hickey’s view you can see it is pretty much

along the same lines that Todd Russell is talking about today. There’s none of the

vagueness of Whiffen’s comments.

So is the former Conservative party executive director going to be supporting John

Hickey in the next federal election or is John already branded as a naughty boy in

Conservative circles for expecting more for Labradorians than the island

Conservatives are willing to cough up?

Hard to say at this point but this little exchange does go to show the problems that

come when you only know the TPs and not the wider context.

- srbp -


Tags: John Hickey, Twitter, twittering

22 February 2011

Atlantic energy co-operation: where Lower is higher

Natural resources minister Shawn Skinner is in Halifax talking energy co-operation

with his counterparts in the Maritime provinces.

Odd that the provincial government didn’t play it up more than issuing a few lines in a

media advisory on Monday, the day the meetings started.

After all, New Brunswick energy minister Craig Leonard is interested in some of

Skinner’s Lower Churchill electricity. As Leonard told the Telegraph Journal:

"There will be a considerable amount of energy that's moving through

the province," Leonard says.

"That's an opportunity for us. That's clean, renewable power that will

be moving through our transmission system, whether it's en route to

New England or we could utilize it ourselves."

Now as regular readers of these scribbles know, the Muskrat Falls proposal is a

hugely expensive proposition that Premier Kathy Dunderdale and her Conservatives

expect Newfoundland and Labrador residents to pay for. The cost to produce the

power, according to Dunderdale back before Christmas will be at least 14.3 cents per

kilowatt hour.

Now that is interesting given that the old NB Power deal with Hydro-Quebec was

supposed to lower electricity rates in the near term. When the New Brunswick

government unveiled the deal, consumer electricity rates were around 11 cents per

kilowatt hour. Hydro-Quebec had oodles of electricity, some of it from very low-cost



operations and could have made a tidy sum off New Brunswick customers even at

reduced current rates.

Leonard and his colleagues campaigned against the deal and if they now buy

Muskrat Falls power, they’d be doing exactly the opposite from what the Shawn

Graham deal would have delivered.

Maybe the crowd in Fredericton will just settle for making some cash off the power

that Nalcor will wheel through to the United States.

Oh.

That’s right.

There’s a power glut south of the border.

- srbp -


Tags: Kathy Dunderdale, Muskrat Falls, Muskrat Love, NB Power, Shawn Graham,

Shawn Skinner

19 February 2011

Never heard that before

Memorial University’s political science department is undergoing a reinvigoration of

the kind not seen in the department in nearly 40 years.

You can credit it to a crop of bright, aggressive and curious professors like Alex

Marland and Matthew Kerby.

In the second part of a series on the department, the Telegram’s Dave Bartlett

interviews Kerby and Marland and the pair discuss three myths that affect

Newfoundland and Labrador politics.

Marland and Kerby also discussed some of the accepted — but not

necessarily factual — beliefs in this province’s political culture, which

they’ve discovered through their research and by observing local

politics.

“What bothers me about Newfoundland politics is, the more I research

… the more I realize that things (are) repeated, and it’s not necessarily

always for good reasons,” said Marland.

And the three myths?

One, that the pro �vince would be better off if it didn’t join Canada in

1949. Two, the reason for the collapse of the fishery, and three, that it’s

not the pro �vince’s fault it was ripped off by the Upper Churchill

agreement.

Bond Papers readers will find this discussion fascinating if not just a wee frickin’ bit

familiar.

Don’t expect some of this corner’s regular commenters to take too kindly to the

professors’ ideas.

- srbp -


Tags: Alex Marland, Matthew Kerby, political culture, political mythology

09 February 2011

The road not taken

Feast your eyes on labradore’s latest offering about public debt in Newfoundland and

Labrador.

The only people left who think the current administration (since 2003) acted and are

acting in a fiscally responsible manner are those who just refuse to see the obvious.



Labradore offers this projection of the provincial net debt if a quarter of oil revenues

had gone to actually paying off debt over the past few years. The light coloured bits

are what would have disappeared. The dark green are what would have

remained. The two together are what the Conservatives actual record looks like from

basically doing nothing except paying off what came due.

Never Read Stuff Late at Night Update and Correction: The charts are based

on the assumption of taking 25% of the windfall oil revenues for spending and 75%

for debt reduction. That's what happens sometimes when you read things late at

night.

It actually doesn't change the overall thrust of this post or labradore's original, though

since the charts illustrate what an aggressive debt reduction approach could have

achieved while at the same time fueling significant increases in public spending.

Consider this to be the complete opposite of the Williams and Marshall approach in

which they basically did shag all to reduce the province's debt burden to any

meaningful degree.

*original continues*

And the share of the public debt borne by each man, woman and child in the

province?

In the cleverly colour-coded chart you can see the blue line – what the Tories did –

and the red line representing what might have been, had the current administration

done as labradore and a few other brave souls recommended.



Odds are pretty good that a government with the fiscal track record shown in this

chart could actually raise the cash on its own to build a viable Lower Churchill

project. On its own, that is, which would be in contrast to going cap in hand to

Uncle Ottawa looking for a gigantic multi-billion dollar handout. Like say both Danny

Williams and his hand-picked successor have been doing.

There’s a provincial government that is genuine in its aspirations and one that can be

legitimately proud of the efforts it has made to ensure Newfoundlanders and

Labradorians live in a province that is strong and fiscally sound.

And then there are the people who talk about legitimate aspirations but who fail

repeatedly to embody them, let alone achieve them.

Just for good measure, let’s give labradore the final words on this. They are all too

accurate:

There was, of course, nothing responsible or prudent about Danny

Williams’ tenure as Premier, and nothing, other than name, that was

conservative about it. He chose a different track.

That is why a government that collected over $9-billion in oil revenues

during its tenure still presides over a $9-billion net provincial debt.

And that is why the provincial net debt per capita this fiscal year was

over $17 ,000 and rising, when in the alternative universe it would

have been $7 ,000 and falling, and falling fast.

- srbp -


Tags: Irresponsible Government League, public debt, unsound fiscal management,

unsustainable

07 February 2011

Feds and province release Lower Churchill

transmission line EIS document

The federal and provincial governments released the environmental impact study

scoping document on Monday for the proposed transmission line that will carry

electricity from the Lower Churchill to St. John’s.

The draft environmental impact study guidelines and scoping document identify the

information that Nalcor will be required to address in order to prepare the

environmental impact study.

Members of the public now have until March 21 to submit comments on the

document. The Canadian Environmental Assessment Agency has up to $200,000 to



assist groups and individuals to participate in the project review.

- srbp -


Tags: Lower Churchill

02 February 2011

Financials key to Lower Churchill

From 2006, an article by Craig Westcott that appeared originally in the now defunct

Independent.

Premier Kathy Dunderdale went to Ottawa today with her hand out looking for some

federal financial aid to get the Danny Williams retirement project off the ground.

The key is still in the financials.

Let’s see what, if anything, she gets.

And then let’s see what that will cost us.

Growing interest: Solving interest rate riddle critical to Lower Churchill

project

At a Memorial University lecture hall one evening last week, Gilbert Bennett stood

and gave a 45 minute talk on the challenges and opportunities of the Lower Churchill

River hydroelectric project.

Then his real work began. For the next 45 minutes, people in the crowded lecture

hall peppered the vice president of Newfoundland and Labrador Hydro with questions.

They asked him about everything from the chances of getting redress on the

infamous Upper Churchill deal to what kinds of benefits the Innu Nation members can

expect from the project.

Then came one of the toughest questions to answer, but one that is critical to the

viability of the $6-billion to $9-billion project that Hydro is hoping to have on stream

by 2015.

“The surprise for me tonight,” said one man, “was that this project, to get off the

ground, is going to take as much as 10 years. Interest rates are starting to rise. Isn’t

there a risk in taking this project so far out?”

Bennett allowed there is. “I’m with you in that interest rates are going to be

essential,” he admitted.

And that was putting it mildly.

<Growing interest>

As Bennett himself pointed out, there are a number of key factors that have to be

resolved before the Lower Churchill hydro project can get sanctioned for construction.

A land claim and impact benefits agreements must be negotiated with the Innu

Nation. The federal and provincial governments have to agree on the form the

environmental impact statement will take and who will head the review. And the

province must decide who will develop the power plants at Gull Island and Muskrat

Falls, who will get the power from them, how they will get it and how the whole thing

will be financed.

“As you can see, we have a lot of work to do,” Bennett told the gathering.

But among all the challenges and risks, perhaps none is more important than the

matter of interest rates. If the Upper Churchill was a boondoggle because of

BRINCO's inability to negotiate a re-opener clause to cover inflation, the killer for any

Lower Churchill project could be interest rates. And that’s because just like the man

in the lecture room observed, this project is going to take a long time to develop.

“If you had the right contract, it doesn’t matter,” says Cyril Abery. “You’d have to



build into the contract that the price you’re agreeing to (sell the power for) is based

on certain interest rates and you’d have to have a clause that if interest rates went

up, the price gets adjusted. Otherwise you could get screwed. There has to be re-

openers in there. If they do that, there‘s no problem. But if they don‘t do that, yes, it

is a problem, especially since today interest rates are low and they‘re probably going

to go up.”

When it comes to interest rates and the Lower Churchill project, Abery knows what

he’s talking about. From 1985 to 1991, he was the president and CEO of

Newfoundland Hydro. He helped negotiate a Lower Churchill deal with Hydro Quebec

in 1991 that Premier Clyde Wells ultimately rejected.

“He was nuts in my opinion,” says Abery. “It’s a long story, but the long and short of

it is I thought he was nuts. I’m not so sure we haven’t got another one now.”

Abery wasn’t at Bennett’s lecture, but he well understands how interest rates could

cripple the development.

So does another former Hydro president and CEO, Bill Wells. He headed the

provincial Crown Corporation from 1995 until about a year and a half ago. Like Abery,

he too tried hard to reach a development deal on the Lower Churchill.

The problem is that while interest rates may be low now, nobody knows what they

will be in 15 years time, if the project is even completed by then. Nobody even knows

what they will be next year. And once the project is sanctioned, the developer will be

borrowing money every year until it gets built.

“You’re borrowing, borrowing, borrowing, spending, spending, spending (until 2015),”

explains Wells. “Somebody’s got to lend you that and that interest cost during the

period of construction, that just adds on to the principle because you’re not paying

anything back. So at the end of the day you’ve got this lump sum of money that you

owe and when you close out your financial agreement going forward for 30 years or

40 years financing, what you’re going to pay in interest is determined at that time,

it’s not determined now. So interest rates in 2016, who knows? They may be up,

they may be down. And one of the things is, who takes the risk on interest? That

used to come up in previous negotiations. It‘s a critical factor.”

Wells says the province, or Hydro, could try at the outset of the construction project

to get a lender to agree to a range of future interest rates, as some measure of

protection, but that would cost a lot of money.

“Interest is a big factor and then it depends on how you’re financing it,” Wells says.

<Quebec again>

One of the ways the province is looking at raising money to build the project is on

the strength of a power purchase agreement with a future customer of the power.

That’s how BRINCO financed the Upper Churchill deal in the 1960s. Back then, the

only customer BRINCO could get to sign a guarantee that it would buy the electricity

was Hydro Quebec. With Ontario and some United States utilities facing the

prospect of energy shortages, it may be easier to find other buyers this time around.

There will be enough electricity from Lower Churchill to power 1.5 million homes.

But the power will still have to go through Quebec.

“You can’t get the power out of Labrador without going through Quebec,” says Abery.

Williams has raised the prospect of building a transmission line through the

Maritimes.

Abery is sceptical.

“We always put that out there to make it sound like we had options,” Abery says.

“But everybody in the business knows that’s foolishness. It sounds good in the

newspaper. Joe Smallwood started that back in the 1960s calling it the Anglo-Saxon

route. It was crazy then and it’s crazy now.”

Abery says any talk of a Maritimes route doesn’t fool Hydro Quebec.

“They just smile,” he says. “I mean you’re in the middle of Labrador. The only border

we’ve got is with Quebec. So you’ve either got to sell it to Quebec, or go through



Quebec. And there’s no reason you wouldn’t sell it to Quebec. Their money is just

as good as anybody else’s money as long as you got enough of it.”

Abery says Newfoundland could sell the power to another customer, in Ontario say,

and simply pay Hydro Quebec to wheel it across its transmission lines. The fee for

doing it wouldn’t be unreasonable, he notes.

“But the farther you sell it, the more transmission lines you’ve got to build and the

costlier it is,” he points out. “The simpler thing is to just sell it to Quebec and let

them deal with it. But if you’re getting enough money out of Ontario, then sell it to

them. If you’re getting enough money out of Manitoba, I suppose you’d sell it to

them. But it would be expensive power. The further you go, the more expensive it is.

Transmission lines are not cheap. And you lose energy on the transmission line.

That’s why you can only go so far with the transmission line, otherwise there’s no

energy at the end of it.”

Wells, meanwhile, sees one way around a purchase power contract with Hydro

Quebec or any other customer as the main way of financing the project. But it’s one

that didn’t get anywhere in the past.

“If the federal government said ‘We’ll back the project,’ well nobody is going to argue

the federal government is going to go broke over (it),” says Wells.

Bennett says obtaining federal backing is an area the utility is going to explore very

carefully. He notes Premier Williams raised the idea with all three parties during the

last federal election. Stephen Harper, then the Conservative Party Leader, now the

Prime Minister, said his party supported the idea of a project “in principle.”

Whether that includes a financial commitment remains to be seen.

- srbp -


Tags: Kathy Dunderdale, Lower Churchill

23 January 2011

No wind, please. We’re Nalcor.

The Telegram reported on Saturday that the provincial government’s energy company

isn’t really interested in developing wind energy until after they get the hugely

expensive Lower Churchill up and running.

Oh yes, and they also want to sell power to Ontario some day in the misty future

despite the crowd up along having a bit of a glut of power.

Regulars readers of these e-scribblers will find the first one to be a gobsmacking

revelation of the magnitude of finding out that Liberace was gay.

The second one’s just funny because it really a case of Nalcor putting a very brave

face on a very badly bungled job. After all, they rejected flatly Ontario’s interest in

building the project five years ago.

Then after another five years of trying desperately to interest Ontario, Quebec and

anyone in northeastern North America with a electric socket in the power they came

up with nothing other than this brilliant plan:

make the people of Newfoundland and Labrador bear the entire cost of the

project and,

let Nova Scotians get 35 terawatt years of electricity for free.

And it is funny.

Your humble e-scribbler doesn’t relish the thought of the New Brunswick- like

electricity prices that are headed to consumers on the island – guaranteed to at

least double within the decade – and the extra burden of hauling around all that

public debt but what else can you do but laugh?

If you didn’t laugh at the sheer stupidity of the idea, you go completely off your nut.



Newer Posts Older Posts

Heck, you might even believe that the Conservatives were seriously interested in

sound management of the province’s finances.

Right.

Laughter it is, then.

- srbp -


Tags: NALCOR Energy, wind energy, wind power

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