Emera is not the broker of further deals, as we took it earlier. It is the customer, at least as far as Newfoundland and Labrador Hydro is concerned.
At about the 17:25 minute of the news conference, the Premier says quite plainly that the power is sold on the Canadian side of the border to Emera which then is free to sell the power to the market. There's also a reference by Ed Martin at 23:24 to Emera selling power in New England, New York or into Ontario having taken delivery on the Canadian side of the international border.
Since Emera doesn't actually operate as a power distributor in New York, apparently, it's take from sales in the Empire State will be affected by the wheeling and other costs associated with the sale.
The Premier refers at about 25:55 to an escalator clause being in the contract but there is no indication of how that works. It could be something as simple as an inflation adjustment. No matter what it is, the figures tossed out by Ed Martin - maximum $80 million - don't match up with the returns from selling power that takes maximum advantage in the summer month demand spikes in New York.
Taken altogether that reinforces the notion - at least as far as the revenue projections go - that this deal is somewhat better than the previous arrangements. Ed Martin refers to 40 to 45% better than deals over the "past five to 10 years."
However, we also have to consider that the current market prices for electricity may also be better than they were even six to seven years ago. Any suggestion that this deal and the concept of wheeling power is responsible for the increase in prices would be like the government trying to take resposibility for oil being $150 a barrel last summer.
As one last caveat, take note of the references to making more as prices go up, subject to Emera taking a profit. That's all true. However, the downside is equally true, namely that if prices drop, Hydro will make less money. Notice there was no talk of having a floor price.
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