16 September 2009

R.I. contradicts Dunderdale: no legislative problems and state still interested in power from NL

There is no legislative issue preventing the sale of Lower Churchill power to Rhode Island, according to Governor Donald Carcieri’s office.

Cost was identified as an issue in discussions under a 2007 memorandum of understanding between the state and the provincial government,  but the State of Rhode Island remains interested in the possibility of purchasing electrical power.

That’s not even close to what natural resources minister Kathy Dunderdale told the people of Newfoundland and Labrador during the emergency session of the legislature last week:
They found out that they did not have the capacity to negotiate a long-term power purchase agreement with Nalcor on behalf of the Province. Nor were they able, in their Legislature, to do the regulatory changes that were required in order to wheel electricity into the state. Therefore, Mr. Speaker, we learned a lot through that discussion but it was not possible and we have moved on because other customers are in a position to be able to do business with Newfoundland and Labrador.
Nothing had been heard about the MOU from the time it was announced until the questions in the legislature.  Bond Papers labelled it  missing in action.

Dunderdale’s response sounded bizarre at the time,  so your humble e-scribbler fired off some e-mails to the minister’s office looking for more information including a copy of a plan that was supposed to be drafted to deal with any issues that were identified.

The original MOU, announced in 2007, laid out  a two step process:
The MOU institutes a two-phase process to explore a possible arrangement for the sale and purchase of power. The first part of the process is a six-month mutual assessment of the merits of long-term sale and purchase agreement, as well as the development of an action plan to address any technical, regulatory and statutory requirements of the transaction. Upon completion of Phase I, the parties may enter Phase 2 negotiations for a binding agreement on the sale and purchase of power.
A copy of the MOU, obtained from the Liberal Opposition Office, showed that the action plan was due to be delivered to the state and province by December 31, 2007.

But according to a spokesperson for the minister’s office:
… the minister did not indicate [in the House] there was a report. Exploratory discussions as contemplated in the MOU were discontinued when issues regarding Rhode Island's enabling legislation were identified, which she referenced in the House of Assembly. As such, it did not make any sense to proceed further and produce a report on a non-option. This was one of a number of options being explored by Nalcor and, as such, Nalcor concentrated its efforts on other market options and priorities.
The minister’s spokesperson said in a September 11 e-mail that she would “look into” further BP questions on when the provincial government abandoned the process was abandoned and on the alternative being pursued. There has been no further comment from the minister’s office up to posting time.

But on the question of what the “issues” were, the spokesperson referred BP  to Rhode Island, as “[t]hat would be more appropriately answered by that jurisdiction given that it is their issue.”

The Governor’s Office sent the following by e-mail on September 16 :
… As far as we can determine, there is no legislative hold up here in Rhode Island, it is more of a question of cost.  While the power generation is inexpensive, the cost of transmission adds to the final price. The possibility of purchasing power is still alive; it may be a topic of discussion at the conference of New England Governors and Eastern Canadian Premiers that is happening today. Interest in purchasing renewable energy remains.
The governor’s office said it may have been that the provincial government was referring to a bill on renewable energy that was being debated in the state legislature.  But that cleared the State House and was signed into law by the governor  in June 2009.

That might be the case, but the law only made its way to the state senate in 2009, a year and more after the MOU was supposedly abandoned, if the timelines from the provincial government are right.  The MOU should have also included an action plan to deal with any legislative issues.

More to follow…