01 May 2013

Province settles Fortis asset grab for $76 million #nlpoli

Natural resources minister Tom Marshall announced in the House of Assembly on Tuesday that the provincial government had settled with the last of a string of private companies victimised by a 2008 asset grab of hydro-electric generating facilities by the provincial government.

Taxpayers will cover a $54 million debt owed by Fortis, one of the partners in the Exploits Partnership, as well as pay the company an additional $18 million.  Taxpayers have already paid more than $4 million according to media reports, bringing the total to about $76 million for the Fortis asset swipe alone.

In 2011, the provincial government took responsibility for a $40 million loan owed on Star Lake, another part of the 2008 hydro asset expropriation.  The government also paid $32.8 million to Enel one of the partners in the project.

The provincial government seized the hydro assets in an extraordinary expropriation bill that government original touted as being aimed at Abitibi in punishment for closing a paper mill in the central Newfoundland town of Grand Falls-Windsor. 

Information subsequently came to light that confirmed the government’s real target in the expropriation were the lucrative hydro-electric generating assets owned by Abitibi, Enel, and Fortis in two separate partnerships.  The provincial government turned over the assets free of charge to the Crown-owned Nalcor Energy. 

Nalcor will now use the generating stations to help meet its commitments to provide Emera with free electricity for 35 years under the Muskrat Falls deal.

For now, though, taxpayers are being forced to pay for the seizure and for the electricity Nalcor makes at the seized plants.  Under a cabinet order dated April 4, 2013,  Nalcor sells electricity from the Exploits plant to its subsidiary Newfoundland and Labrador Hydro for the fixed price of four cents per kilowatt hour.  Hydro sells the power to consumers at much higher rates, thereby pocketing a sizeable profit entirely at public expense.

In its original plan, government intended to skim off any valuable assets and leave Abitibi with any environmental liabilities. As it turned out, the expropriation seized one of the most polluted properties Abitibi held.  The expropriation freed Abitibi of any liabilities since they went with the ownership.

There is no independent estimate available of the costs of the environmental clean-up of the seized facilities.