01 February 2017

No Market Research Required #nlpoli

In the House of Commons, members can put questions to cabinet ministers several ways.  One of them is called Questions on the Order Paper.

Ask a sensible question.  Get a sensible answer.

This is a truly amazing idea given that the House of Assembly got rid of the notion 20 years ago. Actually telling people something useful instead other uncommunication that remains all the rage in provincial government circles.

Bloc Quebecois member of parliament Marilene Gill put a Question on the Order Paper about Muskrat Falls and the recent federal loan guarantee for $2.9 billion.

Here are the questions from Gill and the answers from natural resources minister Jim Carr.  Note the underlined bits for anyone not aware of this information.

Question - (a) on the basis of what analysis did the Minister decide that the Muskrat Falls facility would enable Nalcor to cover project costs:

Answer - with regard to (a), the cost recovery framework for Muskrat Falls consists of a series of revenue agreements available on the Muskrat Falls website..., in provincial legislation, and in orders in council. This cost recovery framework legally requires that all project costs be recovered from electricity consumers in Newfoundland and Labrador, regardless of the final costs.

Question  - (b) at what price will the electricity produced at Muskrat Falls have to be sold for to enable the project to achieve a breakeven point...

Answer - With regard to (b), the prices paid to the project entities will be set at a value that ensures full cost recovery plus a return on equity. These prices will be determined once the projects are complete and the final construction cost is known.

Question - (c) before offering a new loan guarantee of $2.9 billion, did the Minister conduct market research to determine that the price of electricity in the Atlantic provinces and northeastern United States would enable the Muskrat Falls project to achieve a breakeven point...

Answer - With regard to (c), the Muskrat Falls project’s viability is not dependent on electricity exports; all project costs will be covered by electricity consumers in Newfoundland and Labrador. As such, no market research was required to determine whether export prices would enable achievement of a break-even point.