15 August 2010

Williams, Dexter ink secret energy deal …but with whom?

A service contract between a public authority and a private sector concessionaire, where the public authority pays the concessionaire to deliver infrastructure and related services, Typically, the concessionaire, who builds the infrastructure asset, is financially responsible for its condition and performance throughout the asset lifetime, or the duration of the agreement.

P3 Canada Fund definition of public-private partnership

Newfoundland and Labrador Premier Danny Williams and Nova Scotia Premier Darrell Dexter have apparently signed a deal to build underwater electricity transmission between the two provinces in partnership with a private sector company or companies.

Williams revealed the agreement when he launched into yet another tirade against the province of Quebec during a hastily-called news conference in St. John’s last week.

Williams said that the two provinces applied for federal funds in late June under the federal government’s public-private partnerships infrastructure funding agreement.

But that’s all he said about the secret deal.

Six weeks after the provinces reached an agreement, the people of both provinces still don’t know when the deal was signed, the conditions of the agreement, how much taxpayers will be on the hook for or the proposed financial arrangements with the private sector company or companies the two governments are or will be partnering with.

In his scrum, Williams very obviously avoided giving a simple, direct answer to a question on costs. He said only that the project cost would be billions depending on which combination of dams and transmission routes NALCOR built.

The cost of the project is currently estimated at more than $14 billion, including an interconnection to the United States. A study completed for the Nova Scotia government earlier this year  - reported by the Chronicle Herald but no longer on line - put the cost of the interconnections between $800 million and $1.2 billion.

Williams also made the false statement in his scrum that the decision of the Regie de l’energie – presumably meaning the May decision – had blocked NALCOR transmission through Quebec.

Meanwhile, though, the public doesn’t even know the name of the company or companies involved in the new secret deal on an intertie to Nova Scotia.

And obviously, there has to be a private sector partner or partners involved even if the two provincial governments haven’t said anything about that aspect of the deal.

The federal government established the $1.2 billion P3 Canada Fund in 2007 to “develop the Canadian market for public-private partnerships for the supply of public infrastructure in the public interest.” The fund will supply qualifying projects with a maximum of 25% of the projects qualifying direct construction costs. 

Typically, public-private partnerships include private involvement in everything from design to the long-term operation of public infrastructure. As the fund’s annual report puts it,

[t]he P3 procurement model is unique in that the private sector assumes a major share of the responsibility for the delivery and the performance of the infrastructure – from designing the concept, architectural and structural planning to its long-term maintenance.

The public sector gets needed infrastructure at reduced risk and cost.  Among the examples cite din the annual is the Confederation Bridge between PEI and New Brunswick.

In order to qualify for assistance under the fund, the private sector partner must have a substantive, continuing role in the project.  It must design or build the project and finance or maintain and operate it. [Round Two application, s. 5.2

In a P3 project, the private sector partner would also typically share in the profits of a long-term project as well as adopt risk. In some scenarios, as the application appendices suggest, the project may offer potential spin-off money-making opportunities for the private sector partner separate from the core public interest in the project.

Infrastructure assets developed by public authorities are rarely used to generate additional revenue. In some instances, private sector providers are motivated to develop opportunities for revenue beyond the public authority payment stream and this could be used to reduce the cost to the public authority.

Applicants must submit a business plan for the project between September 2010 and March 2011.

While Danny Williams mentioned a connection between the secret deal and the Lower Churchill, the Nova Scotia intertie is a separate project.  

It’s also bizarre that Williams mentioned possible shipment of power from Nova Scotia to Newfoundland and Labrador.  Demand projections used in the Lower Churchill environmental review show that demand on the island isn’t strong enough to support development of the Lower Churchill, let alone warrant importing power from Nova Scotia.

And if the intertie carried Lower Churchill power, there’d be no need to send Nova Scotia power into Newfoundland and Labrador.

A connection to Nov Scotia without the Lower Churchill would facilitate the development of untapped alternate energy potential on the island of Newfoundland.

To do that, though, the provincial government would have to abandon the 2007 energy plan and Williams’ obsession with the Lower Churchill.

- srbp -

42 comments:

pig said...

I'd be stunned in the private company involved wasn't Emera, which is close to NS gov't and a giant NS business. There is also at least one NL firm that has sought to be aligned with the project through financing or whatever including Altius.

As for importing power from NS that would only be natural. Power companies buy and sell power on a constant basis. Hydro-Quebec, massive power exporter that it is, imports power regularly (daily) from NL, the U.S., Ontario and New Brunswick. The idea is you don't run your own generation when you can buy it cheaper elsewhere but rather save the fuel or store the power in your reservoirs. For example, if in the middle of the night, when demand is low, and NS turbines were producing unneeded electricity it could be exported cheaply to NL which would then store its own energy in its reservoirs. I wouldn't be surprised if the deal they've reached gives some sort of storage capacity or credit to NS for such transactions, as NS has no storage of its own.

pig said...

This is a live map of HQ's intertie system which shows imports/exports. Helps to illustrate the above.

http://www.transenergie.com/oasis/hqt/en/schemas.htmlxv

Ed Hollett said...

Point One, pig is that both governments have a deal here which they kept secret from the public. The only thing we know now that we didn't know before is that it is exists.


As for NL buying from NS, I really don't see the point, given demand and given the abundance of idled generation which Newfoundland acquired for virtually nothing.

If it did, the amount would be trivial.

Ed Hollett said...

Incidentally what you are seeing Incidentally, in that map, the inflows to Quebec are not some sort of transient purchasing, but the fact that HQ is actually a net importer of energy. At certain times of the year demand is so high they need to bring power into the province from outside.

It is not some sort of casual situation in the middle of the night on the spot market when they catch a good deal but an integral part of HQ's operation.

pig said...

True, both governments appear to have a deal that has not been disclosed to their respective populations. I don't support that.

I was just speaking to the fact that it may sometimes make sense to import energy into NL. I say it would be an irregular occasion but would happen just the same.

I'm not sure why you have an issue with my comments. They weren't meant to be contentious. All power companies buy and sell energy through interties according to their respective costs. HQ is a net importer solely because it imports so much energy from NL - if Churchill Falls didn't exist QC would not have the pool of energy available to export in large quantities or commit to long-term deals. Because usage patterns are different in different jurisdictions (for example, ON consumption peaks in summer while QC peaks in winter)it's possible and makes sense to buy cheap and sell high. For QC it's regular purchases from jurisdictions other than NL have more to do with keeping reservoir levels high and selling to the US or ON when prices are high. In any case, I doubt that the interconnection between NS and NL depends on exports to NL, but simply the possibility of such a transaction sweetens the deal.

Ed Hollett said...

For my part, I don't understand why you find my comments on your assertions to be a problem. That's what discussion is.

The Nova Scotia angle is very tiny, insignificant part of this whole venture. As such, I question the basis for your assertion that importing power from NS would be natural, wonderful, etc etc.

I did so by noting the difference between the supply/demand situation here and the one in Quebec.

Of course, a line to NS would be wonderful if it meant that the private sector could then develop the additional potential on the island for export. It certainly means that all the seized Abtibi/Fortis/ENEL assets will now have an outlet. They are largely idled at the moment and will be due to lack of demand.

That's the bit that sweetens the deal, not some sort of imaginary spot sales from NS to NL. The Premier's offhand, passing comment isn't the meat of this story by any stretch.

I could understand though, why discussing the meat of the deal and the major issues involved might cause some people some moments of anxiety.

Again, though, I am not sure why you apparently find a discussion on a Sunday morning to be "contentious" or otherwise off-putting.

Anyong said...

Are you suggesting PWilliams shouldn't comment on a political situation that has a tremendous impact on Newfoundland and Labrador because it doesn't fit your philosophical beliefs. Is this government wrong in everything it does especailly when it concerns Quebec when it still doesn't recognize the border of Newfoundland? Do you think another government could/would do better? Don't get your shorts in a knot, I'm just asking questions.

Ed Hollett said...

Well, Anyong:

1. Are you saying that you find it acceptable for a government in a democracy to make secret energy deals, keep the details from the public and to engage in a campaign of blatant misrepresentations on the larger energy issues involved?

My philosophical beliefs oppose both those things.

Do yours?

2. This issue has nothing to do with the border between Quebec and NL. Why did you bring it up?

Don't get your knickers in a twist. This is just a discussion.

Ursula said...

The other Danny (Dumaresque) had this to say : A former member of Newfoundland and Labrador Hydro's board of directors says the feud over the Lower Churchill is about politics and not economics. Danny Dumaresque says the latest route of moving power across the Gulf of St. Lawrence hasn't even been put to an environmental assessment, which he says could take years. He says Premier Danny Williams is fooling the people of the province. He says Williams has been fooling the people for seven years with this project. He's been rallying the troops for pure partisan politics. He says there's only one deal to be made here and that's with Quebec.----- VOCM .

WJM said...

Is this government wrong in everything it does especailly when it concerns Quebec when it still doesn't recognize the border of Newfoundland?

What border doesn't Quebec recognize?

Ursula said...

The answer to the $64,000 dollar question is ,drum roll, wait for it ....

The border between Quebec and Labrador .

Ed Hollett said...

Ursula: those comments prompt some other thoughts -

1. As I noted some time ago, the Lower Churchill exists as a political prop that the government of the moment typically trots out for its own domestic ends. That's been especially true with Tobin and Williams.

The Other Danny makes a good point, as far as that goes. All you have here is Williams' playing the same old game for polling season. Only the naive and his fanboys pretend otherwise.

2. The LC has so much political baggage attached to it that it will only be developed when someone is brave enough to get the politicians out of the mix. Unfortunately it is like crack and the addicts can't be weaned off it.

3. Dumaresque is wrong if he said that the only deal is with Quebec. There are many energy options available, including letting the megaproject sit there until it is economically viable.

What the province needs is an energy plan worthy of the name, not the current ex post facto manifestation of someone's OCD.

But to go back to the underlying point: as long as politicians keep trying to run it, this project (and the associated anti-Quebec hysteria Williams is currently trafficking in) is nothing more than a political prop.

Watch next week as the hysteria goes into overdrive especially on voice of the cabinet minister.

It is no coincidence that the government pollster is in the field right now. Only the naive or a fanboy would pretend otherwise.

Ursula said...

Did the Grimes' government at one time broker or negotiate a deal on the LC with Hydro Quebec ?

Ed Hollett said...

Aide from what went on with respect to the LC from 1950ish up to the late 1980s, there were talks in the early 1990s, the late 1990s and again in the early part of this century to get the thing up and running.

The latest version of the project has been really nothing more than a re-run of work done under Tobin and again under Grimes. Some of the work - like the the line to Soldier's Pond evidently dates back to the 1980s before Gros Morne. That's about the only reason the line ran down that way.

Ursula said...

Dumaresque makes mention of an "envoirmental assessment" concerning The Gulf of St.Lawrence , is he correct on that front ?

Ed Hollett said...

Absolutely correct.

The entire project is subject to a federal environmental assessment.

So far that hasn't even been started.

The P3 funding documents note specifically that the money may be tied to successful completion of things like EAs.

Ursula said...

If this deal between Nova Scotia and this province is so far-off ,then would one be correct in assuming that Williams is just "making political hay " ....

Anyong said...

WJM said...
Is this government wrong in everything it does especailly when it concerns Quebec when it still doesn't recognize the border of Newfoundland?


A true mistake....Labrador...and you know what I meant. Gawd...you people are so very, very willing to mearm.

Simon Lono said...

mearm?

Anyong said...

I didn't say anything about secrecy because that is not what I asked. And again...being picky, a misplaced show of superior intelligence...you know it was a mistake....Labrador...the border of Labrador. If Quebec cannot recognize the border between it and LABRADOR, what do you think it is going to do about energy especially between two other provinces finding and working on a solution, when Quebec thinks it will lose out? And yes, for a democracy to do anything in secret is not performing as a democracy and seems to be hiding. However, do you think another government could/would do better such as the NDP, Liberals, Greens etc Ed? And Ursula...drum roll all you want, you also know what I meant. Does it give all of you some kind of perverted gee because if it does to mearm a mistake when knowing it is a mistake, just makes you all sound a tad spiteful. As for Newfoundland needing energy sent back to it...let's rap our heads around tidal energy...lots of it to be had in and around Newfoundland & LABRADOR.

Anyong said...

Simon Lono said...
mearm

What do you think it means?

It is a very old British saying for spiteful.

Ursula said...

Sorry Anyong ,my attempt at a little levity was not directed at you .

I was "leg-pulling" WJM .

Anyong said...

Mearming.... belabouring inconsequential comment.

Ursula said...

You are making this too easy Anyong .

I guess you are now guilty of "mearming"....

WJM said...

The answer to the $64,000 dollar question is ,drum roll, wait for it ....

The border between Quebec and Labrador .


Well, that's not a Newfoundland border, now, is it?

And in any event, the premise is flawed: Quebec has recognized, and continues to recognize, the Labrador border, in many, many, many ways, since March 1927. It is an utter myth that Quebec does not.

In fact, until Danny decided, for whatever reason, to temporarily move off Canada as the target of his hate, and redirect it to Quebec, he himself said repeatedly (and for once, truthfully) that the whole border thing was nonsense.

I just wish, for the sake of a whole lot of Labrador files which require a sane and adult relationship with Quebec, that the old Danny Williams, the one who was going to be a sane adult who'd work with Jean Charest, was still alive.

WJM said...

If Quebec cannot recognize the border between it and LABRADOR,

Flawed premise: Quebec already recognizes that border.

what do you think it is going to do about energy especially between two other provinces finding and working on a solution, when Quebec thinks it will lose out?

What will Quebec do?

Nothing different than what Danny the Demagogue did to Shawn Graham last fall, only in a much less hysterical manner, and not tied to the quarterly polling cycle.

Ursula said...

I resided in Wabush for 6 years and in Bagotville for 5 years ,you'll get no argument from me ...

Anyong said...

Smarmy...now there's a word.

Ed Hollett said...

Wow, Anyong, that's quite a huge pile of comments in a small space. let's deal with them one at a time:

1. It is hardly an inconsequential detail if it goes to the core of your comment AND is also completely false.

2. "a misplaced show of superior intelligence" - I am not sure what you meant by this. I asked why you brought up the border and understood fully what you meant.

If you are referring to Wally's comment he just came at the same point by another means: your premise is mistaken.

This issue has nothing to do with the border. HQ's position has nothing to do with the border and bears no resemblance to the political misrepresentations made here that you are apparently - and I say apparently - swallowing whole and without question.

3. "However, do you think another government could/would do better such as the NDP, Liberals, Greens etc Ed?'

I am not sure how you can miss my consistent point that the LC is nothing more than a political prop. The partisan stripe of the prop-users, i.e. the actors, is irrelevant.

Why do you think it is a partisan issue?

4. Ursula was answering Wally's question with her drumroll. Maybe you read a bit too much into it.

5. "As for Newfoundland needing energy sent back to it..."

You seem to be mixing up the idea of importing energy to the province from outside with the fact there are a great many opportunities to generate electricity within the province (and in the waters around it with tidal, for example).

NALCOR's own demand forecasts show there is no need to use any of this generation inside NL since we already meet our own demand and exceed it by quite a huge margin. The diesel generation could be replaced by green but that isn't government's policy.

Ursula said...

Humourless ----- another good word .

Simon Lono said...

Mearming. . . . never seen that one before. I like it :)

Wm. Murphy said...

Word on the street is that the details of this apparent deal will be relaesed in Novemeber to coincide with polling.

Is that what you are hearing Eddie??

ClaudeB said...

A few comments, if I may:

1) the private partner is likely to be Transmission Developers Inc., the same ones pushing the 1,200 MW HVDC line from Montreal to Yonkers, NY before the New York Public Service Commission. The company is chaired by former Ontario Premier David Peterson. In one of the stories I used for the Wiki article, they talk about another submarine cable project between NS and New England.

2) Arbitraging. Yes, HQ is doing that. They often buy Ontario's surplus baseload generation (at night and on weekends) to feed the Quebec grid at $37-$40/MWh. The water saved can be turbined and sold at $50-$60/MWh during peak hours (prices are depressed on the US markets right now). But in order to do that, you need "liquid" (no pun intended) power markets at your border, the capability to store the water (even reservoir generating stations have to generate a little all the time, to maintain a steady flow downstream), access to interties and sufficient demand to use the load (HQ's load at night in the summer is probably in the 12,000-15,000 MW range).

3) Quebec a net improter of electricity. Yes, that's absolutely true, except for years like 2009, when HQ had a surplus of water while CF ouptut was down by a quarter because of a breakdown.

4) The border issue. Quebec acknowledges the border de facto, even if they're still calling it the "Tracé de 1927 du Conseil privé (non définitif)". I'm not aware of any recent situation involving some tangible assertion of jurisdiction over the disputed area by Quebec. Ed had an example of this de facto recognition of the border a few months ago, when HQ presented its planned route for the La Romaine-3-Montagnais powerline. He duly noted the fact that the powerline goes near the 1927 border but doesn't cross it. Same thing for the La Romaine-4 reservoir. They took great pains not to flood any part north of the line.

ClaudeB said...

Sorry, bad link for the 1,000 MW HVDC power line:

The correct url is:

http://en.wikipedia.org/wiki/Champlain_Hudson_Power_Express .

WJM said...

Quebec acknowledges the border de facto, even if they're still calling it the "Tracé de 1927 du Conseil privé (non définitif)".

There have also been examples of recognition de jure.

I'm not aware of any recent situation involving some tangible assertion of jurisdiction over the disputed area by Quebec. Ed had an example of this de facto recognition of the border a few months ago, when HQ presented its planned route for the La Romaine-3-Montagnais powerline. He duly noted the fact that the powerline goes near the 1927 border but doesn't cross it. Same thing for the La Romaine-4 reservoir. They took great pains not to flood any part north of the line.

Ed, Schmed!

ClaudeB said...

WJM: I duly apologize. I stand corrected! :)

Ed Hollett said...

Thanks, Claude and Wally.

1. As far as the short-term purchasing of power is concerned (arbitraging), I still think it is highly unlikely.

2. I think I've tackled the border thing before. The phrase "trace de conseil prive 1927" is literally true in that the line has not been definitively drawn by a survey. But it is there!

3. The idea that it is Transmission Developers is a new one, Claude. I thought of Emera as the more likely suspect up front, but frankly we are only speculating .

Maybe one of the conventionals will ask Danny a direct but simple question and see if he answers.

If he waffles, prevaricates, blusters or otherwise tries to avoid answering then you can put this whole thing down as a stunt.

HQ has been down that road before with Smallwood so I doubted they'll be fooled by someone rerunning the same weak-assed plays from the same weak-assed playbook again 40 years later. Reporters in NL may not remember but HQ damn well does.

Anyong said...

HQ has been down that road before with Smallwood so I doubted they'll be fooled by someone rerunning the same weak-assed plays from the same weak-assed playbook again 40 years later. Reporters in NL may not remember but HQ damn well does.

16 August, 2010 19:16

Now isn't that the truth with a capital T.

Ed Hollett said...

That's the other part of it Anyong.

As much as this is a poll goosing stunt, the whole Anglo-Saxon route play is really just another replay of the stuff Smallwood tried in the 1960s.

Williams ducked the costing question last week because the numbers don't work.

He might also find out, as did Joe Smallwood, that the Nova Scotians are much craftier negotiators than might first appear.

ClaudeB said...

I was mentioning TDI because of this TorStar story, that ran last March. According to Tyler Hamilton, the company also plans an undersea Maine-Mass DC line. However, with the current economic climate and demand situation in the US northeast, I doubt they'll get underway before the stimulus plan deadline in the States (Sept. 30, 2011).

And Maine, or the Maritimes for that matter, don't have much to sell at present or in the near future. A few hundreds of MW of non-dispatchable wind power doesn't count...

Anyong said...

ClaudeB

Tidal power in the Atlantic area is the way to go don't you think?

ClaudeB said...

Anyong:

Marginal at best. The power generated is predictable (a good thing), but you're talking about a few 10s of MW (100 MW?).