20 November 2009

Danny Williams, Hydro Quebec and the Lower Churchill

For the record – via labradore – with full audio of natural resources minister Kathy Dunderdale's September 4 comments to randy Simms of VOCM Open Line to follow:

Y’know, the Premier has gone to Quebec, and gone to Premier Charest, and, y’know, we’ve had NALCO(R) visit y’know Hydro-Quebec, I’ve been meeting with Ministers and so on. And we say to them, okay, y’know, we’ll set the Upper Churchill to one side, but, y’know, let’s sit down and have a talk about this Lower Churchill piece.

Y’know, we know that we have to have a win-win situation here.

Because we, as I’ve said earlier this week, we know that if you don’t have win-win you have win and poison pill. Because that’s what we’ve got with the Upper Churchill. So we can have a win-win situation.

We know that if you come in here as an equity player that you have to have a good return on your investment. And we want you to have a good return on your investment.

But it also has to be a good deal for the people of Newfoundland and Labrador.

Now we have been with that message back and forth [i.e. to Hydro-Quebec] for five years. No, sir. No, sir. There is no takeup on that proposal.

That’s right folks. 

Danny Williams tried unsuccessfully and in secret for five years to sell a chunk of the Lower Churchill to Hydro Quebec with no redress on the Churchill Falls contract. Oddly enough that put Williams efforts at selling the Lower Churchill – without compensation for Churchill falls right back to around the time he said no deal was possible without compensation.

As CTV reported in April 2005:

Williams reiterated Monday that any deal with Quebec will have to include some kind of redress to the province for the unfair split of profits from the Upper Churchill.

But he offered no specifics on what redress could entail.

Update: In December 2002, Williams told a crowd gathered to protest a deal on the Lower Churchill that

“Our position here tonight … is that there should be no deal on the Lower Churchill until there’s redress on the Upper Churchill.”

That was reported in the Telegram on December 4, 2002 in a story titled “Tories rally – election style”.

-srbp-

30 comments:

pig said...

No redress in the Upper Churchill does not mean that the PCs would have accepted any deal HQ threw their way. Perhaps the PCs were naive enough to think that an equivalent benefit to redress on the Upper Churchill could be gotten out of a deal that dealt exclusively with the Lower Churchill. Negotiating for five years suggests they were open to possibilities but in the end didn't sign a deal - one way this could be read is that they were not willing to compromise on their expectations with or without redress on the Upper Churchill. Again, the statement doesn't mean much on its own.

Furthermore, the possibility of partial ownership of a single asset by HQ does not equate with the total selling off of NB Power. Your comparison doesn't work in any way at all.

WJM said...

Your comparison doesn't work in any way at all.

I'm looking for the comparison.

Where's the comparison?

Edward G. Hollett said...

No redress whatsoever means that Danny Williams stated firmly, unequivocally and repeatedly from 2001 until 2005 that there would be no deal without redress.

He said so as late as 2005 and then almost immediately began secret talks aimed at securing a deal with no redress.

As for the larger picture, though, you seem to be unwilling or unable to appreciate that what is occuring in New Brunswick is EXACTLY what Danny Williams has stated a spolicy in the House of Assembly: he is prepared to sell assets whole - and that includes all the energy assets of NALCOR - in order to do exactly what NB is doing with NB Power.

The ONLY differences are:

1. in NL there are now oil assets to go with the electricity assets that are pontentially up for sale.

2. in NL there is another stated government policy that equates energy resource companies/assets/equity with economic control and development. However, while Williams has claimed one cannot have a secure future without energy control, he has also committed to selling energy control.

In NB there is no such theoretical concept to ignore.

WJM said...

3. In NB, they are looking to use their energy company to halve the provincial public debt, while in NL, Danny is looking to use his energy company to double it.

Mark said...

Isn't the bigger issue here that New Brunswick, without some massive infusion of capital, is going to see its power company simply crumble?
The two most disturbing trends that are hitting all four Atlantic provinces like a freight train are that (a) the population, labour force and tax base is shrinking very quickly in relative terms to the debt and debt services charges associated with this albatross of infrastructure and (b) politicians of all stripes will bend to the political will of residents who refuse to pay market price for electricity or any other form of energy.
I don't like the deal that New Brunswick has on the table. As someone who believes strongly in the need for the federal government to regulate this kind of interprovincial arrangement, it makes me uncomfortable.

But if I were in Shawn Graham's shoes, looking at that massive debtload of crap that is NB Power, this is far and away the best option he has on the table.

He'll probably lose an election over this. It's admirable in a way that he recognizes that but proceeds anyway.

Despite my own misgivings about the deal with Hydro Quebec, there's something to be said for a leader who would rather do what he thinks is right than simply do what he thinks is popular.

Edward G. Hollett said...

Absolutely Mark.

I haven't heard a single one of the critics inside or outside New Brunswick offer a single ide has to how to avoid the financial and environmental problems of NB Power.

People forget, for example, that the sweetheart cheap oil deal with venezuela runs out in here as well, thereby making NB's diesel generation unsound.

pig said...

Nowhere has Williams said they were willing to sell the whole company - the possibility of selling single assets doesn't mean the whole company. It also doesn't limit a growing company from divesting some assets while simultaneously gaining others - it doesn't mean Nalcor could only shrink but rather change composition. Where did he commit to selling energy assets - didn't he just say it would be a possibility? How does that the same as a commitment?

As for the comment about debt I'd refer you to NB's auditor general who's said the debt is self-sustaining and NB Power is actually profitable - some $500 mill brought in in the past 5 years. NB will be trading in NB Power, probably at less than its value, for a 5 year discount on power and no guarantees after that.

You wondered why the media didn't pick up this story? Because it isn't one. Furthermore, there's zero comparison between NB selling 100% of NB Power, and surrendering its sovereignty over its utility regulations by conforming to Quebec's, - and NL's suggestion of possibly selling part of a single asset, or even a whole single asset.

Peace out.

Edward G. Hollett said...

He said it in 2005.

He said in 2008 as plain as day in the legislature. Hansard recorded it.

The direct quotes are there. All you've offered are rationalisations in an effort to make plain English into something it isn't.

Nb Power's debt may or may not be self-sustaining. Neither you nor the NB auditor general have assessed the long term consequences of the debt, plus the need to replace infrastructure plus the growing cost of production coupled with ability of NB ratepayers to continue to fork over cash at the highest rates in the country to make it fly.

You have grossly misrepresented the NB Power situation and the deal as it is presented.

That plus your attempts to deny plain English seem to give a good sense you are arguing from the ass end of things forwards.

pig said...

If QC is such a great source of cheap, reliable, green power why doesn't NB simply start purchasing power from HQ? Why do they need to sell NB Power to HQ in order to buy green power from HQ? Why can't they just be a consumer like the Americans are - the're supposedly getting lots of cheap and green right?

As for the self-sustaining debt I can think one plan which none of you have mentioned - put NB Power's profit towards it. $500 million in the past five years sounds reasonable to me so why not direct profits towards paying down the debt or split the profits between rate containment and debt repayment? If HQ is going to make it profitable why can't NB? Shawn Graham could show how courageous he is by resisting demands to continue funnelling NB Power profits into general coffers.

pig said...

Deny plain english? Bond, you're the one who's confused "asset" with "company" - go look those words up in a dictionary cause they're not the same.

Edward G. Hollett said...

Again, you have lifted out some numbers entirely out of context. There are other issues at play including that the profitability comes at the expense of ratepayers who bear the highest electricity rates in the country.

As for the rest, if you sell the assets - Hebron, Hibernia South, the Lower Churchill, CF(L)CO, and White Rose - you have effectively sold the company and all the bits that make it useful, profitable, valuable and - according to the current provincial government - the means of exercising control over the future.

And my name isn't Bond, BTW.

pig said...

He referred to a future, undetermined possibility of selling asset(s) - NOT "all assets at the same time." Big difference. The point is you're wrong in comparing that future possibility of selling asset(s) with the current, planned sale of a an entire company. Different language, different terms, different concepts, different times, different circumstances = not the same no matter how hard you try to push it. Again go have a look at the definitions of asset and company in any dictionary not written by you or Labrador cause the meanings aren't the same.

Wouldn't you say that NL and QC's view of energy assets control as the future is the same? Why is it ok for QC but not for NL, or more importantly for NB?

You're right of course - there are other considerations at play besides the fact that NB Power is a profitable company that sustains its debt. For instance, what will New Brunswickers do in 5 years when the discount has come to an end and QC decides it no longer wishes NB companies to be as competitive as QC companies? What happens to householders who have no guarantee of power rates remaining reasonable? What happens to a government that owns no assets of its own and more importantly, finds that its legislative capacity is determined by the fact that its regulations must mirror those in QC? How does that government meet the needs of people and businesses in regards to energy if it owns nothing and has no say about what the regulations are? What will it do then?

WJM said...

Why is it ok for QC but not for NL, or more importantly for NB?

If NB can't choose to sell a state-owned asset, then it doesn't very well control it, does it?

Peter said...

Ooo, I like this "Pig" guy/gal. Not the usual Fan Klub stuff that Ed talks about. (Dare I call it, Straw Man Club?)

At any rate, isn't this all a case of big fish swallowing little fish? Of course this was a deal Graham couldn't refuse. It was sweet all around.

Except it grates against the country's federal foundations. The big fish aren't supposed to swallow up the small fish. We're supposed to be all together in this fish bowl. And yes, I realize Williams is like a rogue pirahna most of the time.

Ed, I can understand how you crave vindication after the failed bid to sell hydro, but you are bordering on Orwellian in your refusal to distinguish between selling milk and relinguishing the whole cow.

There's nothing black-and-white about it. Privatization is good somethimes and bad somethimes. If you;re selling the whole shop, it's double plus bad.

Anyway, enough from me. I await your smackdown.

PJ

WJM said...

Except it grates against the country's federal foundations.

How so?

Part of the federal foundation is the right of provinces to do stuff.

Edward G. Hollett said...

The only thing Orwellian, Peter is your ability to redefine words and concepts as it suits your purpose. Or is that Carrolian?

In any event:

1. He referred to fattening up and selling. It doesn't matter if it is one at a time or all together. Selling is selling, especially when one builds in front of it an elaborate theory about control and destiny in order to justify the accumulation of assets in the first place. you are trying to split hairs but the head you are working on is bald.

2. "Wouldn't you say that NL and QC's view of energy assets control as the future is the same?"

On the face of it there is a superficial similarity, but on closer examination, that's where it ends.

In Quebec, the traditional political view about HQ connects state ownership with its legally mandated role to deliver very cheap power to residents. No Nl government has ever mandated that and certainly the current one doesn't.

In Quebec, there is no contemplation of selling HQ in whole or in part by the same people who advocate acquiring it for a public policy goal of cheap power.

I could list the fairly obvious and very significant differnces all day. Those seem to be the most glaring. Check your electricity rates and tell me if you are paying less than 3 cents a KWH for power. If you are then HQ and NLH/NALCOR are the same idea.

3. "Why is it ok for QC but not for NL, or more importantly for NB?"

I think in part your question is based on a false premise in that I am not arguing it is okay for one and not for the others. I make no such argument.

4. "For instance, what will New Brunswickers do in 5 years when the discount has come to an end and QC decides it no longer wishes NB companies to be as competitive as QC companies."

That is a huge assumption which suggestions that HQ is merely a department of government as NALCOR is here. On top of that you also assume that there is nothing in between HQ and the NB ratepayers.

Arguments like yours conveniently ignore the fact that electricity is a regulated industry.

5. "What happens to householders who have no guarantee of power rates remaining reasonable?"

Well that would be exactly the scenario if NB Power stays as it is. Since opponents of the deal - like you - offer no alternative to NB ratepayers, I think they have the choice between frozen rate and then a predictable formula or continuousally higher prices. You are most generous with NBers money.

6. "What happens to a government that owns no assets of its own and more importantly, finds that its legislative capacity is determined by the fact that its regulations must mirror those in QC?"

The New Brunswick legislature doesn't lose any of its capacity to pass laws. If you have to resort to wild-eyed hysterical, fear-mongering claims like that I think you've pretty much conceded the bankruptcy of your argument.

7. "How does that government meet the needs of people and businesses in regards to energy if it owns nothing and has no say about what the regulations are? What will it do then?"

It must surely amaze you that there are places where electricity is generated by anything but a state-owned actor and they manage to survive and thrive.

The utility regulator is an effective means of accomplishing the policy purpose of controlling costs.

You ultimately - though - resort to complete fabrication with the bit about no say in regulations. As I said earlier, one you start resprting to complete fantasy and hysteria, you've pretty much conceded the bankruptcy of your position.

8. Peter, you seem to imagine all sorts of things, including the notion that one province is eating another. I think that's what you are driving at in your fish analogy. Perhaps you'd like to explain that a bit more clearly since whatever you were driving at got lost somewhere in your ongoing zeal to strike back after that Duplessism column of yours.

Peter said...

WJM: "Part of the federal foundation is the right of provinces to do stuff."

By "do stuff" I assume you would include he right to develop and prosper from their resources. It's front and centre in the Constitution, after all. So, would you say it's constitutionally sound for one province to stonewall and even usurp another province's ability to do so?

(Hint: The answer is no.)

WJM said...

By "do stuff" I assume you would include he right to develop and prosper from their resources.

Yip. If NB thinks its route to prosperity is to sell its government-owned electrical utility to someone else, then — radical thought alert — that is entirely New Brunswick's business.

So, would you say it's constitutionally sound for one province to stonewall and even usurp another province's ability to do so?

Which province is doing that to which other province, and how?

Edward G. Hollett said...

Peter, there are a couple fairly obvious assumptions you make which are not well founded at all.

First of all, provincial governments control resources but there is nothing that requires those resources be developed by a Crown corporation. That's merely your own ideological predisposition.

Resources in this province could be developed very well and with provincial government control with the development being done by the private sector.

Second of all, when you say "one province to stonewall and even usurp another province's ability to do so" I take it you are speaking in entirely hypothetical terms.

You see, if you actually believe this to be the case and have seen no evidence for it other than the Premier's unproven assertions, I think we could have another really interesting discussion about the evident lack of objectivity in the local news rooms.

spb said...

I often read this blog hoping that some day Hollett will take off his hatred blinders for once and stop twisting every word and detail to prove his points. I have yet to see that happen and therefore walk around most days feeling nauseated after reading this crap.

I also often wonder where you find the time in the day to post so damn much. But then it hits me. Pure hatred is a great but sad motivator. This blog is nothing but a constant attack on Williams (sometimes Martin/Dunderdale). It lacks any form of sensible debate. You refuse to listen to the opinions of others or to read and accept pure fact. And no I am not going to take the time to list examples of this because you will manipulate whatever example I have to suit your own needs. And what 'working' man has the time anyway?

Your angst and personal vendetta are remarkable. I would love to know what event occurred to produce them.

Edward G. Hollett said...

Gee, spb, what can one say after such a bilious spew of pure personal hatred except: thank God we live in a democracy.

Peter said...

Ed, I'm stunned. (Wally, not a word!) What, pray tell, do you think is holding up Loower Churchill? Markets? That hasn't stopped HQ from forging ahead on its own developments.

Whether it's a Crown initiative or not is irrelevant. Upper Churchill wasn't Crown-owned when it was signed. Oil developments now have small equity stakes. That's hardly ownership.

Is the go-it-alone-stance on Churchill wise? Probably not. But that's not the point. The point is, you can't deal with HQ without selling out.

You contend, apparently, that this is all biased speculation. I'm not sure if you mean party stripe or not. But you've tallied a lot of key clicks speculating otherwise. Any bias there?

And stop it with the hatred already. You're so hateful. Hateful, hateful, hateful. You should be more like me.

PJ

Edward G. Hollett said...

Peter, I am not sure if that last part was supposed to be mocking but as it turned out you and spb are self-mocking in that respect.

Well, at least spb is.

You assume a conspiracy as the only explanation, I would suggest and then assume all the facts (and assume dismissing others) in order to sustain the original assumption.

Whether you believed in the conspiracy before the Premier said it or because he said it is more a curiosity than anythign else since the really crucial part is the central role assumption plays in your version of events and in your writing (if the Duplessisme column is a good indicator). The conclusion is assumed and then things are assembled, modifed or invented to fit the previously determined conclusion.

1. "What, pray tell, do you think is holding up Loower [sic] Churchill? Markets?"

In a word: yes.

You evidently missed a huge story last year in the gigantic recession that struck North America. Markets are down. Prices are down. HQ export revenues are off 30% from last year. Capital - cash - is really tight.

As with any megaproject of this size in this province proposed by the provincial government with its financial circumstances the project comes down to three things: mass, money and markets.

Basically you need a mass of money ($10 billion at least at last count) to build the project to get pwoer to market. The mas sof money in NALCOR's case has to come from borrowings shored up by markets. Guaranteed power sales tend to make lenders a bit more free with their cash. When was the last tiem you tried to borrow a half million to buy a house in this town where both you and your spouse didn't have a steady income or other unencumbered assets to backstop the loan?

If you read this corner regularly you should have already been well used to that ltitle bit of information and the links to other places where the information is found.

2. "That hasn't stopped HQ from forging ahead on its own developments."

Well, if NALCOR was the largest or one of the largest energy utilities in North America, with guaranteed markets already in palce and bag-loads of cash it wouldn't stop them either.

Just like it doesn't stop a major oil company which has, in some cases, a reserve of cash of its own the size of Fort Knox (he said speaking metaphorically but only just) to fund stuff.

HQ can afford to invest in the down times and buy up assets in the weak markets because it is that big and overall that successful.

You scoff, evidently, but in the scoffing your reveal much.

3. "The point is, you can't deal with HQ without selling out."

That's pretty much the pre-conceived conclusion which - as we have just seen - isn't supported by anything, including your scoffing.

What's really curious about this, of course, is that the Premier evidently doesn't believe HQ is duch a demon after all. yes he says it on the one hand and feeds into people's fantasies, fears and prejudices, but, as we know from kathy Dunderdale, he doesn't believe it himself.

In fact, he is actually angry that HQ is NOT interested in the LC. it's not that they are conspiring against the project; it's just that they don't even give a damn about it in the first place.

nd remeber, he didn't walk away. They did.

I'd be curious to know how you fit that stunning Dunderdale revelation (still not covered by the Telly or any of the other conventionals, incidentally) into the view that you can't deal with HQ without "selling out".

Mark said...

"What, pray tell, do you think is holding up Lower Churchill?"

The same thing keeping Ireland away from the World Cup.

Evil cheating Frenchmen.

Quick - let's stage a rally.

Peter said...

Mark:
Actually, that's pretty funny. 'Though at least Henry fessed up once he knew the decision was final.

Ed: Please don't highlight my typos. Just fix them. I'm not playing editor here, and I don't do it to you.

It's clear that Quebec doesn't really need to do any deal if it doesn't want. Of course it's NL that wants to do a deal. In such a situation, with Quebec holding all the cards, is it unreasonable to assume Quebec is knocking down reasonable proposals? You call that notion a conspiracy theory. So, the other option is that DW is making untenable propositions. That, I assume, you would call a a reasonable deduction.

There's no arguing around that. Your presumptions are well-founded. Mine are empty, biased or "relling" of something.

The proverbial head against the wall.

Got dogs to walk, stuff to do. Over and out.


PJ

P.S. What's this I hear about an economic meltdown? Was that five years ago already?

WJM said...

Is the go-it-alone-stance on Churchill wise? Probably not.

We'll never know, since Danny's Go It Alone stance is actually Go It Alone — Together. It's always been contingent on shifting as much of the risk as possible onto other parties.

But that's not the point. The point is, you can't deal with HQ without selling out.

So, in trying for five years to get Hydro-Quebec to buy a minority ownership stake in Our Dear Lower Churchill... Danny Williams and Kathy Blunderdale must have been selling out.





Right?

Edward G. Hollett said...

Peter:

I marked the typo so that nobody would go off on some tangent about misspelling and not correcting them or something else equally irrelevant to the core of the discussion. If you are senitive to it, that's fine, I won't mark them at all for you.

Now to get to your comments:

"It's clear that Quebec doesn't really need to do any deal if it doesn't want. Of course it's NL that wants to do a deal. In such a situation, with Quebec holding all the cards, is it unreasonable to assume Quebec is knocking down reasonable proposals?"

As you should recall, Peter, Danny Williams not only rejected Quebec's intiial proposal along with Ontario in response to the 2004 RFP, he also declared the policy here was to go it alone.

Well, at least that's what he said publicly so let's deal with that first.

As such, there would be neither reasonable nor unreasonable proposals for Quebec to "knock down" as you put it. HQ didn't walk away from talks, this province apparently did but that was supposedly irrelevent since we would "go it alone."

And there would be also no way in which Quebec would be "holding all the cards."

And, on top of that, as demonstrated in April 2009, the power isn't stranded because you can wheel through Quebec and anywhere else.

Now we have a situation in which the Premier is accusing Hydro Quebec of doing exactly what his go it alone approach was supposed to avoid. You have supplied us with an excellent summary of that view.

Unfortunately it doesn't conform to what he was supposedly up to and what he still will insist on when asked; in other words, after the long tirade about HQ and dastardly deeds, he goes back to insisting this project will happen and Charest won't stop him and HQ will only win over his dead body.

Now this is not my conspiracy theory. The Hickey gambit didn't work for him and it really is a usually idea to put DW's words in someone else's mouth. ;-)

The conspiracy or plot is the Premier's claim. He's the one claiming that one the one hand, HQ is shagging everything up, blocking access, and frustrating this that or the other.

I don't claim he is making reasonable or unreasonable demands or making untenable or tenable propositions. These are all your assumptions, suppositions and whatevers in lieu of actually addressing earlier points.

But since you raised it, let's dismiss your efforts to attribute either arguments to me I did not make.

For starters, I have no idea what the Premier proposed since he won't tell anyone. I only note what he has said over time and how the various versions lack in coherence and consistency. They don't hang together, in other words.

Nor do I suggest for a moment that DW ought to be doing this that or the other with respect to the Lower Churchill. I simply note that what he is saying and doing now runs directly contrary to what he said before. Again, his version this time doesn't really match his stuff from before.

But to go back to the point you avoid this time: the simple problem the provincial government is facing is that the project is not viable in a tight money, weak market scenario. Things will change at some point.

The delays in the project do not need the Premier's conspiracy theory. They are perfectly understandable without any such wild-eyed claims.

The whole thing is also perfectly understandable if you simple look at what is said and done as opposed to filling in 90% of things - as you just did - with invention.

You start with one assumption, pile on several others, end up somewhere in the trees and then criticise the people who yell to show you the way back to the road.

Go figure.

WJM said...

Quick - let's stage a rally.

And take wide-angle pictures this time, because I still can't find the 3,000 — or was it 30,000? — who attended the last one.

Restore my trust and confidence in crowd estimates!

Mark said...

Ed - that last quote you posted in the "update" to this post is quite unfair to the Premier.

He quite clearly stated at the beginning of his sentence that it was his position "here, tonight". How dare you hold the man to that position the next morning, let alone years later.

You should be ashamed.

WJM said...

You should be ashamed.

At least he shouldn't be shot over there.