20 November 2009

The Tempest Tick-Tock: key events in the Hydro Quebec and NB Power tirades


It helps to put a timeline on things sometimes.


May:  While a bill that is supposed to create the energy corporation is introduced as the first bill of the session, the text of the bill doesn’t show up until near the end of the spring 2006 session. The record for the bill is bizarre.  It shows the bill passed through second reading and committee stage four days before it passed first reading.


June 4 and 5:   In a couple of short sessions and with very little public debate and discussion, the legislature passes two bills revamping the hydro corporation and creating the energy corporation.  This amounts to a massive  reworking of the province’s energy corporation, originally created in 2006.   Newfoundland and Labrador Hydro forms the initial core of the company but internal structure  creates series of interlocking directorates of subsidiaries.

NL Hydro retains exemption given in 2006  to EPCA restriction that electricity producers in province delivering to customers in province may only be engaged in electricity activities.  PUB must still set Hydro rates to ensure profitability.

At some point in the re-organization, CF(L)Co becomes a subsidiary of NALCOR instead of CFLCo.  This makes NLH – the Lower Churchill proponent – equal within the internal corporate structure  to the company that was once its subsidiary.

June 13 and 14: In a high-speed process and with very little debate or public scrutiny, the  House of Assembly amends the Electrical Power Control Act 1994 (EPCA) to lay out method for making water management agreement where two projects exist on same watercourse.   Amendments to take effect on date set by cabinet. 


June 3 and 4:   At high speed and with very little debate, the legislature approves major changes to the energy corporation legislation. Includes significant changes to the rules governing creation of subsidiaries, as well as massive changes to the province’s Access to Information laws to shield the company activities from scrutiny.  Cabinet retains the ability to transfer any function to the energy corporation it wishes to transfer, regardless of what it is about. 

June 3 and 4:  At high speed and with very little debate, the legislature passes a water rights management bill later revealed to strip CF(L)Co of its lease to Churchill Falls.

December 16:  Surprise seizure of hydroelectricity generation and transmission assets of three private sector companies on the island of Newfoundland (AbitibiBowater, Fortis and ENEL).  Assets assigned to NL Hydro.  NALCOR given responsibility for all government negotiations with Abitibi on compensation.


January 16:  EPCA  amendments made in 2007 come into force.  Amendments are gazetted along with regulations but there is no news release or other public notice.

April:  Talks start on water management agreement between Newfoundland and Labrador Hydro and CF(L(Co) .

August 31:  Ed Martin (CEO of provincial energy corporation) tells Toronto Star that he :

… doesn't see the Quebec issue as a major stumbling block, as regulation requires the province to allow access to its grid in return for a set tariff. Hydro Quebec and Nalcor are just working out the details.

Any costs to Ontario would build in the price of that tariff, but what's most important is how that final cost would compare to the next-best alternative. [Emphasis added]

01 Sep:  Emergency session of the legislature called for September 8 to deal with amendments to 2008 water rights legislation. 

Amendments and session are given rather benign description initially:

"This amendment is necessary in order to facilitate an agreement between Nalcor Energy or its subsidiary and CF(L)Co," said Minister Dunderdale. "As these negotiations are currently underway, we wanted to get into the House early and make this amendment to avoid any uncertainty to the parties involved. We thank the opposition for their cooperation on this matter and we look forward to further discussion on the amendment when the House reconvenes next week."

03 Sep:  In a speech to a national audience, Premier attacks Hydro Quebec for supposedly throwing up roadblocks to lower Churchill development.

04 SepDunderdale reveals the full  - the real - story.  (Locals media have not covered Dunderdale’s comments two and a half months later)

09 Sep:   Amendments pass in House emergency session.  True nature of story is revealed in comments during the debate:

“They [Churchill Falls (Labrador) Corporation lawyers and directors] felt that we had extinguished their rights to the whole watershed area that they require to produce electricity in the Upper Churchill and that would cause them some concern,” said [natural resources minister Kathy] Dunderdale.

Unspecified time in September:  Deal reached with CF(L)Co on water management.

October 23:  According to NALCOR, this is the date the CF(L)Co board met and rejected the deal agreement.

October 29:  NB Power deal.



Lonenewfwolf said...

so what does all this mean ed? how much will it cost to get what they've done reversed in court?

assuming that the real interest for 'da byes' is hidden somewhere in all this meandering, how do we get a reversal on the legislative changes put in place to keep all this out of the public eye?

everything from 2003 on (the bishops falls legislation bill 75i think) has been done to get them what they want for this power company, and nobody seems to want to see that.

energy is our provinces collective future and its got 'the Williams dynasty' written all over it.

seems illegal to me, but hey...I'm just a farmer. what do i know?

Edward G. Hollett said...

Well, there are bunch of things to take from it all.

1. It seems a bit odd to try and negotiate a contract on the one hand and at the same time go out and kick the shit out of the people you are trying to do business with.

2. It is really weird to accuse HQ of blocking the project when the fact is is that they have just been ignoring your efforts to sell them an ownership chunk in it, leaving 1969 to one side.

3. The emergency session of the legislature wasn't a good will gesture. They were being forced to undo the fiddle as part of the negotiations and the final deal.

4. It raises the question about what impact the histrionics and the wild accusations and attacks in September and October had in a scuttling the water management deal.

5. It raises the potential that the whole thing was an effort to poison the well so the thing could be fixed up by Andy Wells. Wouldn't surprise me at all that if the government wasn't getting his own way that he'd try something else to try and unlevel the playing field. That has been his MO with Andy Wells and the CNLOPB, Max Ruelokke etc etc.

Part of the subtext to the past six years is that whenever DW doesn't get his own way he tends to lash out and hurl all sorts of baseless claims and accusations.

6. You can see the fairly obvious effort to speed passage of huge bills by saying things that tried to down play the importance of the bills. I've got a couple of posts that also show instances of false statements being made in the House in aid of that effort.

In that one you can criticise the government for trying to slide tuff through and you can equally slam the opposition parties for being naive in going along with the whole thing.

You get lots out of it, in other words, not the least of which is that maybe this whole HQ thing isn't what people are trying to pretend it is. (That is, it isn't aboutsome plot by HQ to block the Lower Churchill.

Lonenewfwolf said...

I was thinking more along the lines of indictment than a merely criticizing or slamming...

If we could open up all their bank accounts and see the money trail that would make it alot easier. Maybe we could pass a law for that when they're gone on their way...

Edward G. Hollett said...

Well I am not sure what you are driving at there. certainly I am not suggesting anyone is personally profiting from anything. If you want to make those sort of accusations you better have something more than a vague possibility.

What I am looking at is the simple, straightforward goings-on.

pig said...

1. It seems a bit odd to try and negotiate a contract on the one hand and at the same time go out and kick the shit out of the people you are trying to do business with.


I've always assumed that negotiations with HQ over the Lower Churchill were contingent on or included a re-opening of the Upper Churchill - you're share a bigger pie if you're willing to do so (more) equitably.

Also, I think NL has just been trying to play hardball as much as it can and is trying to consolidate energy resources in the province. I think the hardball approach has backfired somewhat - from day one the province should have recognized that QC wouldn't want to abandon its highly lucrative position and simply negotiated directly with the Maritime provinces some sort of partnership to develop the project.

By the way Ed what do you think about the possibility of taxing CF(L)co or HQ now or at the time of the renewal?

Edward G. Hollett said...

"I've always assumed that negotiations with HQ over the Lower Churchill were contingent on or included a re-opening of the Upper Churchill - you're share a bigger pie if you're willing to do so (more) equitably."

And you and the majority of people - me included - thought the same thing at least until I heard Kathy Dunderdale admit the government was doing exactly the opposite.

It happened.

She said it.

There is no question as to what she said but not a single local news outlet has covered it at all.

Tax at the time of renewal is one possibility (2016), although the tax would have to apply generally to all producers.

All you have to remember though is that this provincie owns 65% of the company you'd be taxing. That is, the province owns it until the current administration sells it off, as they are open to do under their own policy.

pig said...

Dunderdale's comment was about HQ becoming an equity investor - how does that preclude redress on Upper Churchill? Why couldn't her comments imply HQ co-ownership and investment in return for two new contracts that are equitable and return profits to NL in the form of CF(L) profits and also taxes/royalties on the projects? As long as things are equitable and we're fairly compensated for any equity share why is Hq equity so bad or limiting of any other contractual features?

So you think we could tax HQ taxing ourselves? Sounds good to me - taxing ourselves would cancel out while taxing HQ would be income no?

Edward G. Hollett said...

Dunderdale said very clearly the pitch was made putting Churchill Falls to one side or words to that effect.

Essentially it is obvious from her statement that redress was NOT a part of the deal at all.

pig said...

I just looked over yours and Labradore's links and none of them say anything about putting Upper Churchill to the side and still inviting HQ to become an equity partner. Not doubting it just didn't see it.

Even if HQ came on as an equity partner in Lower Churchill there's a gulf of difference between that and outright selling a power company or resource in its entirety. Why do you consider the two to be equal? Do you think NB will retain its sovereignty over regulations if the regulations have to conform to Quebec regulations as per the MOU?

Edward G. Hollett said...

Geez, that is in a post somewhere but since I haven't done so, I'll have to post the full audio.

She says very clearly that the deal would be based on setting the upper Churchill to one side or putting it to one side.

Edward G. Hollett said...

It's actually in the post on the water rights reversion:

'Dunderdale told Open Line Show host Randy Simms and his audience that the provincial government proposed to “set the Upper Churchill [issue] to one side.”'

But I'll post the audio this evening or over the weekend

pig said...

Ok. Thanks Ed.

So why do you compare selling part of a company or project to selling the whole thing? Wouldn't you say there are vast differences in the two situations?

Can you really compare NL selling an equity stake in the Lower Churchill to NB selling everything it's got, including its own power to legislate without regard to Quebec legislation or regulations?

Edward G. Hollett said...

If you look at the Philsopher's Stone posts this week you will see it is government policy since 2003 to sell any Crown energy asset - all of them or singularly - either whole or in bits and pieces to pay down debt.

The current NL policy is exactly the same as NB's.

I don't have a problem with it but I suspect a whole bunch of Newfoundlanders and Labradorians are wandering out operating on a false understanding of what their own government's policy actually is.

The real policy is straight from the Premier's own lips.