19 April 2011

Risky Business

Natural resources minister Shawn Skinner has a letter to the editor  in the Telegram criticising former Newfoundland and Labrador Hydro director Ed Hearn.

Hearn, you may recall, suggested in a letter to the editor of his own that the provincial government should be looking at all its options before embarking on the very risky Muskrat Falls venture.

Hearn wrote, in part that:
Section 92A [of the Constitution Act, 1867] provides authority to tax, set export quotas and prices with respect to electrical energy produced in the province. Properly drafted legislation could allow the province to recall energy from the Upper Churchill at a cost of two mils (one-fifth of a cent) per kilowatt hour for domestic needs. Similarly, properly drafted provincial legislation would prevent the renewal of the Upper Churchill contract in 2016 unless there were proper price adjustments and energy reserved for provincial needs.
Skinner  - or more accurately his letter-writing aide - summarises it this way:
Section 92A resolved these issues by confirming and expanding provincial power to include the authority to legislate in respect of the export of natural resources and electricity.
This theoretically includes the power to impose restrictions upon the export of electricity from a province, or to require electricity destined for export to be diverted to the provincial grid.
Mr. Hearn uses the common term for such legislated action: to “recall” power.
Too risky, says Skinner, to go after something which he dismisses as theoretical.

Instead, the government will force local taxpayers to foot the bill for a very costly venture called Muskrat Falls that makes financial sense only if you accept highly speculative – and hence risky – oil price forecasts, highly dubious  - and hence risky – forecasts of domestic electricity demand, and accept the gigantic risk of imposing on the most benighted taxpayers in the province the single largest increase in public indebtedness in the province’s long, sorry financial history.

Thank merciful heavens Shawn Skinner is scared of a financial danger.

Praise be to the Almighty that Shawn and his cabinet mates are the very souls of fiscal prudence and responsibility.
- srbp -

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