12 September 2012

Bleeding and Motivation #nlpoli

The provincial Conservatives who hang tight around natural resources minister Jerome Kennedy like to say that you have to look at the motivations of people commenting on Muskrat Falls. According to the pro-Muskrat folks, you have to discount the opinion of people who have an interest in seeing the project stopped.

Let’s accept that for a second.

So by the same token we would have to check all the pro-Muskrat types to see if they have a bias that would allow us to completely disregard any opinion they would offer in favour of the mega-debt nightmare.

So what about Manitoba Hydro?

Had a few criticisms of Muskrat Falls for the public utilities board.  Now Jerome has hired them to bless … errr…review Muskrat Falls for cabinet as the debt monster rolls inevitably toward approval.

Seems that Manitoba Hydro is having a few financial problems in its home province.  The local utility regulator just gave them a quickie 2.5% rate hike on top of a two percent increase last April and a 3.5% increase currently under review.  Russell Wangersky has an excellent column on the rate increase in Tuesday’s Telegram.

What’s the issue? Manitoba Hydro is losing money.

“1. The need is urgent to avoid continuing losses on operations as will be evidenced in the quarterly report of the Manitoba-Electric Board for the three months ended June 30, 2012, which was to be released on or about Aug. 15 (a by-election has held up release of the quarterly report);

“2. financial ratios are deteriorating and are projected to further deteriorate in the test years;

“3. it is essential that the financial and credit rating integrity of Manitoba Hydro be maintained;

“4. prices on the export market are not expected to improve substantially in the near term…”

Its newest hydro station, Wuskwatim, has just come on line, and instead of making money, with low export sales prices it is actually losing money — and that cash will have to be made up. (Can you guess from where?)

Manitoba Hydro could use some help.

Like the kind of help you would get from a federal government loan guarantee. Federal finance minister Jim Flaherty was in St. John’s on Tuesday. Reporters asked him about the loan guarantee for Muskrat falls. Jim said they hadn’t finalised the deal but the federal government would backstop the project.

Nice if you are Nalcor and Emera building Muskrat Falls.

Nice if you were an electricity utility in another province that also had some financial problems and could use a financial hand from Uncle Ottawa.

Nice precedent, that would be, for Manitoba Hydro.

Now none of us have seen Manitoba Hydro’s report on Muskrat Falls yet.  We don’t even know what they were asked to do by the provincial government.  It might be nothing more than another one of these document checks from late 2010 that some people think were independent reviews that approved Muskrat Falls.

But it is interesting when you take the same principle of motivation that Kennedy and others like to use and apply it, hypothetically, to their own position.

After all, it’s only fair.