14 September 2007

The ghost in the turbines

The Telegram makes an interesting observation in its Thursday editorial on the energy plan:
How refreshing it is to hear a government making plans that consider a time that they might not be in office, as well as the time that they are;

to have a government looking at the long-term needs of the province, as well as addressing the sort of short-term needs that get governments re-elected.
How refreshing indeed, although it's doubtful Telly publisher Miller Ayre would acknowledge the most significant approach of the type. That would be Challenge and change, the province's strategic economic plan issued in 1992. It laid the groundwork for much of the economic success of recent times.

Challenge and change marked the first time in the province's history any administration had adopted a comprehensive plan to guide development well after the administration that implemented it had left office. The 1992 SEP was so successful that it has survived through every subsequent administration. The Progressive Conservative's 2003 Blue Book even contains a precis of the SEP as one of its chapters.

The Telegram editorial also endorses the energy plan's assumption for continuing high oil prices, saying "[a]ll in all, any forward-looking plan has to operate with some inherent assumptions, and a continuing high price of oil is probably a better bet than anything else."

A better bet than anything else? There's a highly debatable point and an odd conclusion given that the editorial also notes that the infamous Churchill Falls contract contained a low price assumption that proved wrong.
In the case of Churchill Falls, the assumption was that electricity supply would keep power prices low. A huge and unexpected upsurge in demand, when increased oil prices suddenly meant home-heating with electricity was more economical than fuel oil, blew those assumptions right out of the water.
The old Telegram editorialist four decades ago took a decidedly more cautious view of that agreement. Here's a sample of thinking at the time, in the form of a scan of one editorial. Click on it to enlarge the picture. You should be able to pick out the last two paragraphs.

Great promises of revenues to the provincial treasury all without a shred of paper or any detail to demonstrate how it would work. A call for the legislature to be opened to debate the deal and see what the deal between BRINCO and Hydro Quebec looked like.

Interesting that 40 odd years later, another editorial team was willing to take an administration's word for the riches to come, but with the knowledge of the earlier circumstance.

As much as we've decried the use of Churchill Falls as justification for just about anything in this province, it's a bit hard to avoid it in this case: the Telegram invoked the spectres in the turbines and then ignored the rattle of their chains.