04 December 2012

Jerome’s Grim Fairy Tale #nlpoli

Last week, some people wondered if Premier Kathy Dunderdale was out of the loop on negotiations over a federal loan guarantee when she seemed to say she did not know anything about an announcement in Labrador.

Some other people wondered if perhaps she knew about the talks but for some reason opted to claim she didn’t know what the Prime Minister would be announcing. If you want an example of the media reaction, take a look at the first story on the Here and Now broadcast on Thursday.

Reporters found her comments on Thursday afternoon so odd that one of them raised the issue with Prime Minister Stephen Harper during his news conference after the announcement.  Harper replied that he did not believe the Premier was unaware of the talks and the announcement but that she was being a wily politician.

That was just part of the confusion.  Later on Thursday, the announcement seemed to be off.  But almost as quickly, things were back on.  A story in the Chronicle Herald on Friday credited Nalcor boss Ed Martin with salvaging the deal.

How interesting, then, on Monday morning that a an entirely different story appeared, apparently from the Premier’s Office.

Like Last Week Never Happened

CBC provincial affairs report David Cochrane conveyed a wonderful story of negotiations that went awry during a debrief on CBC Radio  Morning Shows across the province. [Updated:  CentralWest Coast; Labrador; St. John’s not online].  The federal government wanted the loan guarantee to apply once Emera sanctioned the Maritime Link. The provincial government wanted to start borrowing money pretty much right now. The Premier drew the line and broke off the talks when a crucial detail on timing wasn’t going the way she wanted.

An impasse.

Newfoundland and Labrador walked.

The prime minister called the premier.

And just as quickly, the announcement was back on.

Jerome Kennedy repeated much the same version of events in the House of Assembly on Monday.  In a ministerial statement, Kennedy said:  “Our Premier’s perseverance and persistence have paid off and we have successfully achieved a loan guarantee that will provide projected savings of approximately $1 billion to ratepayers in Newfoundland and Labrador.”

In Question Period, Kennedy claimed that in his “personal experience dealing with the Premier over the last couple of weeks that she stood brave and tall in ensuring, Mr. Speaker, that Newfoundland and Labrador’s objectives were met.

Three Things

Monday’s new version of the story from the Premier’s Office stands out for three reasons.

First, it replaces the story from last week that resulted directly from the Premier’s own comments with one that is diametrically the opposite.  There isn’t much in the way of independent corroboration for it, either.

Second, the new version of the story uses a very familiar narrative theme in provincial politics:  the resolute  Premier defying the treacherous Ottawa schemer for the good of the poor benighted Newfoundlanders.

Third, the new version of the story misses a key bit piece of information to make it believable -  how did the deal change to meet the Premier’s supposed vital provision?

Look at what Jerome Kennedy said:

In fact, Mr. Speaker, as late as 10:30 on Thursday night, it was until the Premier spoke to the Prime Minister that the deal was finalized.

Literally true:  the two spoke and then they had a finished deal.

Kennedy even used a passive construction for the sentence, in the old bureaucratic way of obscuring details and information.

But what was Dunderdale’s deal breaker?

By Kennedy’s own account it was the timing of the “draw down” or when the loan guarantee started.   The loan guarantee term sheet Kathy Dunderdale signed on Friday kept the conditions exactly the same as the federal government wanted all along.  The loan guarantee will only start once Emera sanctions the Maritime Link.

In other words, the provincial government didn’t get what it wanted. The Premier’s “perseverance and persistence” didn’t pay off at all.  Instead, the provincial government’s energy company is now frantically trying to get Emera to sanction the Maritime Link as quickly as possible. 

Apparently, Nalcor can’t afford to let Emera take the time granted in the Maritime Link development agreement (July 2014).  While Nalcor plans to use its equity from the provincial government – $2.0 billion – to cover initial costs, the company will reportedly have to start borrowing in 2013 in order to to finish the dam and the line from Labrador to Soldier’s Pond.

In his scrum after Question Period on Monday, natural resources minister Jerome Kennedy looked extremely stressed as he explained that what he had suggested in the House earlier about Dunderdale and the loan guarantee simply wasn’t true. When asked whether he believed Emera would sanction earlier than originally planned, Kennedy spoke [around 2:20] about his understanding of comments last week. 

At the end of the sentence his voice trailed off into high pitched silence.  Kennedy did not sound confident at all.  His voice got stronger when he suggested reporters go ask people in Nova Scotia what they would do.

Kennedy also kept harping on the idea he spoke about in the House, namely that the joint development agreement did not tie sanction to  regulatory approval. That would be a rather creative interpretation of the joint development agreement.  The JDA talks a lot about the Nova Scotia regulatory authority.  Many of the key financial aspects of the agreement, including the company’s rate of return, are set by the Utility and Review Board.

Specifically, though, the agreement includes a section (5.5a) that acknowledges both parties can sanction when they want.  However, “it is expected that a Party will not make a Sanction decision until the following have occurred: ( i ) any approvals that may be required from applicable Authorized Authorities have been obtained on terms satisfactory to the Parties.”  Authorized Authorities, as defined in the agreement, would include the UARB.

Kennedy also told the House of Assembly that the governments would release the loan guarantee term sheet on Tuesday.

Given that Jerome’s fairy tale about the loan guarantee didn’t hold up to even casual examination, letting people see the whole document could reveal even more grim details.  No wonder Kennedy looked so stressed on Monday.