18 December 2020

All around in circles 2 #nlpoli

December 17 is an auspicious day in Muskrat Falls history.

That was the date in 2012 when Kathy Dunderdale stood in front of a group of cheering supporters of the ludicrous megaproject and proclaimed that the government had formally approved its construction.

“It all begins here!” she shouted to the overjoyed throng. ““It all begins now!”

It didn’t start there of course.

Kathy had stood with Danny Williams two years earlier - 18 November to be precise - and announced a deal to build Muskrat Falls, the project the media hailed as the fulfillment of a dream to build the Lower Churchill and break the stranglehold Quebec had over our province.

That was a lie, to be sure. 

But still the reporters parroted Williams’ and Dunderdale’s lines just as they had 18 months before that - in April 2009 - when Williams said a deal to sell Churchill Falls electricity to Emera through Quebec had broken the stranglehold.

Arguably, though, Muskrat Falls started in May 2006 when Williams announced the province would go it alone to build the Lower Churchill.

The Clerk of the Executive Council at the time emailed the finance deputy minister and asked if anyone had checked with the deputy to see if the province could afford it.  He got no reply.

In April 2010, when a gaggle of politicians, bureaucrats, and Nalcor thugs decided to go ahead with Muskrat Falls first, they figured the local ratepayers and taxpayers would foot the entire bill out of their electricity rates.

By November 2010, when Williams announced the crowning achievement of his career, the cost of the project had grown to the point that the impact on electricity prices would make people unhappy.  SRBP pointed out at the time the price would double from what it then was. 

And so the Muskrateers started to figure ways to lower the sticker shock – mitigate the initial rates.

Every single Premier since Danny Williams has promised to mitigate the project’s impact on rates.

On December 17, 2020, eight years to the day after Dunderdale whooped it up, Premier Andrew Furey became the latest one to promise rate mitigation.

Furey made the pledge in a bizarre media circus that included a guest appearance by the Prime Minister, who delivered most of his remarks in French at the beginning, followed later by a technical briefing for media, and then another media availability mid-day. 

There’d been no hype beforehand.  No strategic leaks.  No talking points slipped to a friendly reporter to recite. Usually the tech briefings come before an announcement.  And the scrum right after featuring all the people involved.

But that didn’t happen this time.

In fact, the whole thing seemed wildly over-blown given there were only three kernels of hard news in the release.

And they were small.  


The federal government had finally gotten around to appointing someone to head their negotiations in the latest round of federal-provincial talks on rate mitigation. 

That was one.

The feds agreed to amend the date by which Nalcor had to finish the project under the second federal loan guarantee.  Used to be end of February 2021, with a possible six-month extension to the end of September.

Now it will be end of November 2021, with a six-month option that would take things out to the end of April 2022.

That was two.

And the feds had also waived the requirement in the second federal loan guarantee for payments in the sinking fund, that had been due 01 December 2020, and Cost Over-Run Escrow Account or COREA, that had been due on December 13.

That was three.

Otherwise the news was, as CBC described it,  that the two governments were starting talks.  They were aiming for an outline agreement by the spring and then a final deal by the time Nalcor commissioned the project.

Now the CBC reporter who wrote that story can be forgiven if that was a mistaken interpretation.  There were more than a few factual errors in that story, after all, including the total cost of the project and the impact of a previous discussion about federal restructuring of the Muskrat Falls debt.

But in many respects, today’s announcement that the feds had sent someone new to lead their side of the talks was the same as the provincial sudden announcement at the end of September that Brendan Paddick would lead a renewed provincial team with some different mandate than anything previously talked about.

So yeah, it’s a restart to talks that have dragged on through promise after promise after laughable by-election announcement without any result.  What Furey described as a tight timeline is not a virtue:  it is borne of the failure of everything until now to even describe what they were aiming to accomplish, forget actually delivering.

There is a deadline set for reaching an agreement to restructure the project,” CBC’s Peter Cowan tweeted.  “It will happen by the time Muskrat Falls is commissioned.” 

This is a penetrating insight into the obvious. This is also inadvertent humour at its finest.  In order to stop rates from doubling, the two governments *have no choice* but finish a deal by the time the project is in service. Otherwise, the federal loan guarantee from 2013 makes the original Williams commitment hard and fast to collect all the money needed from electricity rates.

The new negotiating timeline is only feasible, of course, because Nalcor has been so utterly incompetent that they will likely struggle to finish building the project by even the extended September 2021 deadline in FLG2.

This information has been out there since earlier this year, by the way. Most people in the province wouldn’t know that since neither Nalcor nor the politicians think it is important to tell people things about Muskrat Falls any more.  If you don’t check the PUB website, the oversight committee reports, or read this blog, you wouldn’t have known that.

But yeah, Nalcor currently doesn’t expect to get the power plant finished until the end of September 2021.  All sorts of ongoing issues – not the least of which is COVID – could hang things up again and drive costs up besides.

When it comes to rate mitigation, one of the problems has been deciding what it means.  SRBP noted before that the approach Dwight’s crowd was taking – which is the same as everyone else’s before and apparently since – just wouldn’t work.  

Insistence today by both governments that “everything is on the table” in the hunt for a way to mitigate rates only confirms they are still no further ahead.  Everything isn’t on the table, really.  They just have no idea how to get where they want to go.  This has only taken the Liberal administration of first Dwight Ball and now Andrew Furey five years to figure out, incidentally. Five years and they are still at the beginning.

Meanwhile, when someone talks about the federal government taking an equity stake or about building Gull Island, we should just shudder.

A federal equity share in Muskrat Falls doesn’t materially change anything when it comes to who pays for the thing.  

Building Gull Island is just nuts. The electricity would be so expensive, the market just will not buy it.  That’s why Danny and his gang opted in April 2010 to build the little dam first.  Gull was too expensive a decade ago.  The financials are no better today.  The markets are no less favourable.

And when anyone talks about the Atlantic Loop, just remember that Hydro-Quebec has already balked at it. They are worried – quite rightly – that federal subsidies would create problems for exports into the American market. They prefer provincially owned lines, a position they have maintained since 1964 back when Newfoundland believed the same thing.

Since the Atlantic Loop was basically tailor-made to absorb HQ’s large pile of surplus electricity in the first place, their rejection of the idea means that the idea itself is badly, if not fatally, flawed.  We might get lett holding another mess. 

Hydro-Quebec has experience in American markets.  We’d be well-advised to take their opinion seriously since access to American markets remains part of the Labrador hydro dream. We probably won't since for them, hydro is business. For us, it is an obsession, a kind of psychiatric disorder.

For all the political energy that went into Thursday’s dog and pony show, the political impact will be the same on any election as if they had made no announcement at all or relegated it to the simple couple of paragraphs in a news release it deserved.

Aside from the fact it is a week before Christmas, the reason this will be a political wash is that for a decade, Newfoundlanders and Labradorians have lived with the spectre that when Muskrat Falls finished, their electricity prices would double.  And for that same decade, they have heard promise after promise after ludicrous by-election announcement after newser announcing the start of talks with Ottawa, all without any sign of progress delivering what was promised. Thursday’s episode was – what? - the third such talks-are-starting newser in the past 18 months alone. Take that as a bad omen.

People have heard it all before. 

They tune out the blah blah blah within 24 hours, at the most. Most pay it no heed.

This is something the marketers miss. 

Politicians, on the other hand, cannot afford to forget that actions speak louder than words. 

After a while, all the words in the world, even the ones that get you a spot on the news for 24 hours, don’t erase the failure to deliver what you and all your predecessors have been promising for a decade.

That’s what voters will remember.