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.

Reality Control #nlpoli

The Memory Hole

Nineteen eighty-four is popular these days.

People think that the ideas in the book like the memory hole are modeled on communist or fascist dictatorships from the early part of the last century.

What those people forget is that George Orwell worked at the BBC during the Second World War.  As Dorian Lynskey noted in his recent history of the novel, Orwell thought that “radio, as it existed in the 1940s, [was] ‘inherently totalitarian.’”  

In Spain during the Civil War, he saw his first newspapers that “did not bear any relation to the facts, not even the relationship which is implied by an ordinary lie.” But it was in his exposure to radio during the Second World War that Orwell heard in all the propaganda on all sides very similar distortions of reality.

“This kind of thing is frightening to me," Orwell wrote in his 1943 essay Looking back on the Spanish war, “because it often gives me the feeling that the very concept of objective truth is fading out of the world.”

“After all, the chances are that those lies, or at any rate similar lies, will pass into history… Yet, after all, some kind of history will be written, and after those who actually remember the war are dead, it will be universally accepted. So, for all practical purposes the lie will have become the truth”.

This is only a small step to the slogan of the Party in Nineteen eighty-four: “Who controls the past, controls the future: who controls the present controls the past.”

Muskrat committee flags cost risk for potential alternate transmission software #nlpoli

At the end of December 2019,  the Muskrat Falls Oversight Committee added development of alternate protection and control software for the high voltage direct current transmission system – that is, the Labrador-Island Link  - to its list of risks the committee is monitoring for potential added project costs.

Alternate software and syncronous condensers
are major project cost risks.

The reasons for the concern are contained in the section of the report on a visit by the Independent Engineer to the software development team:

“While the plan still shows expected completion of the factory acceptance tests (FAT) by June 9th, 2020, there is little confidence that the target will be met. Progress velocity remains in risk category ‘red’.”

The report received by the oversight committee in late February 2020 also noted that the number of “outstanding bugs that will be identified/ remedied at later stages presents an unknown risk to Project schedule and S/W [software?] performance.”

The Independent Engineer’s site visit to the GE development team also observed that “GE’s project plan does not include full regression testing of the completed software release or provides time allowance for bug fixes between the project phases. That raises a question if that approach will ensure full functionality of this critical component.”

The Independent Engineer was supposed to do a site visit in the first quarter of 2020, but COVID-19 forced postponement.  In the report on this period received by the oversight committee on 15 June 2020, the committee noted that the software development and schedule remained a “key project risk.”

The Q1 2020 report also noted problems with another, unrelated issue: “Soldiers Pond synchronous condensers vibration and binding issues root cause and remediation remain ongoing. When Unit 3 bearings and housing were removed corrosion and damage was [sic] observed.”

At the recent annual general meeting, Nalcor chief executive Stan Marshall apparently made no mention of the ongoing difficulties with the P and C software and the synchronous condensers.  Media reports just talked about the impact of COVID-19 that forced closure of the work site for a couple of months.

-srbp-

Cleaning up the mess of Muskrat Falls #nlpoli

There are a couple of points in his 1,000 page report where commissioner Richard LeBlanc refers to politicians and other officials of the Government of Newfoundland and Labrador as being naive in their dealings with Nalcor officials about Muskrat Falls. He says Ed Martin took advantage of the politicians and bureaucrats.

It is arguably one place and perhaps the only place where LeBlanc is wrong in his description of Muskrat Falls and how it came to be.

Muskrat Falls was, from the outset a political project, initiated and then relentlessly pursued by a group of politicians for their own reasons.  Their leader, Danny Williams, selected Ed Martin to work with him on the Nalcor project, chiefly to build something on the Lower Churchill as Williams’ legacy.

Martin told LeBlanc that he had one job – to build the project – and that was all of it. But Martin did the job for Williams.  Along the way Williams recruited to his circle senior bureaucrats who also actively collaborated in the project for their own reasons.  It was this circle that met in April 2010 at The Rooms and decided to plunge ahead with the redefined project now known as Muskrat Falls.

They were not naïve.  They were not duped.  They did not care.  They had one goal. They worked together to achieve it from the time Williams launched the venture in 2006 until thd last of them resigned in 2016.

Muskrat Falls was the bastard child of ego and ambition, nothing more.  All the other ideas associated with it, such as retribution for the 1969 power contract, were never anything more than lies – rationalisations to gain support for the project.  The cabal from The Rooms deceived the public and they deceived themselves.

They wanted it built and nothing would stop them.

Interesting news, buried under bull #nlpoli

There are two aspects to Monday’s announcement about Muskrat Falls and electricity rates:  political and practical items related to Muskrat Falls.  

Another set of decisions are actually related to the provincial government’s non-Muskrat Falls finances.

And then there’s a little tidbit about how far behind Muskrat Falls is.

Political - If this is how Dwight treats his friends…

Monday’s announcement was a political stunt pulled purely for the province's benefit apparently to cover over the fact that there was no agreement as Dwight Ball had promised before Christmas.

The announcement came front-end-loaded with the sort of ego stroking and puffery that is not merely unnecessary but tends to turn off audiences listening for a major announcement about arguably the most pressing public issue.

A mouthful of burp #nlpoli

Not one mitigation scheme.

Not two mitigation schemes.

Three mitigation schemes.

Delivered by the end of January.

All wonderful grand and all believable if you have had the sense knocked out of you by the endless string of promises Dwight Ball has made about mitigating the impact of Muskrat Falls on electricity rates.

Promises made but not kept.

No change in the weather? No change in we. #nlpoli

The problem we have is not a lack of options and opportunities to sort out the government finances ourselves.  The problem facing Newfoundland and Labrador is that the leading people of the province, not just the politicians but all the leading people,  don't have the stomach for making the kinds of decisions needed. They don't even want to talk about sensible things. They talk about foolishness like Equalization or fight against imaginary "austerity" instead.

SRBP, "Sovereignty",  January 2017

Lately, Alberta economist Jack Mintz likes to remind Canadians that Alberta is pissed off with the federal government.  The Alberta government is running massive deficits but Mintz thinks Ottawa is to blame, not, you know, the provincial politicians who actually made the decision to spend more provincial tax money than the provincial government takes in.

Mintz turned up in the Toronto Star and CBC Radio last week pushing Ottawa to bail out  Newfoundland and Labrador.  He’s hooked up with a shadowy new outfit calling itself the Schroeder Institute that also launched itself last week with a campaign to get Ottawa to funnel money to Newfoundland - as Schroeder’s Twitter feed keeps calling it – to stave off financial catastrophe in the province.

Then local musician and business owner Bob Hallett took 2,000 words on CBC’s local website to deliver the same message:  Newfoundland’s financial mess is Ottawa’s responsibility to clean up.

That’s a wonderful sentiment sure to get lots of support from people in Newfoundland and Labrador who are worried about their future.  Sadly for those people, Schroeder, Mintz, and Hallett rely on a string of old fairy tales that have been long debunked – not to mention stuff that is just wrong – to make their case. They also are a reminder that wisps of air and pixie dust are a piss-poor foundation for successful policy against very real problems.   That is, after all, how Newfoundland *and* Labrador got into its current mess in the first place.

Restoring Power: destroying the monster #nlpoli

The threat from Muskrat Falls can only be removed by concerted action that addresses the project’s financial burden, restores integrity to the system of electricity regulation, and that breaks, once and for all time, the fundamentally corrupt relationship between the provincial hydro-electric corporation and the provincial government. This is the only way to restore power to the province’s people so that they may control their own future.

And there shall be plans,  and planning for plans...

This weekend, there’s a story at CBC about a recent study done by a provincial government department into why people from this province leave and what it would take to get them back. Don’t be bothered by that sense you’d heard the story before because you had.

Danny Williams and an unidentified aide unveil
the New Approach, 2003 (not exactly as shown).
Some things are best left buried.

The new CBC story came out of a recent two-parter in The Independent. That came out of questions raised in the House of Assembly in June about the bits the government had cut out of the report it commissioned in 2018.

Everyone fixated on the bits the government cut-out in the recent story but there’s something in the conclusions.  The people surveyed were all under age 35, had higher education, and marketable skills.  They left either to find work or find better work and they would come back to the province if they could find a job or a situation here comparable to the one they already have.

This is something people in this province have known for the better part of a century and it is certainly something the provincial government has known for at least 30 years or more.  Not even a hint of exaggeration in any of that.

The study is part of the current administration’s effort to develop a plan to replace the strategy developed by the crowd that ran the place before now to attract what Danny Williams used to call the homing pigeons back to Newfoundland and Labrador.

And the key feature of the ex-pat report is the same as the key feature of a study on immigration or young people who were thinking about leaving the province.  If there are jobs, they will either stay, come back, or come here in the first place, depending on the current physical location of the group you are studying.

Luncheon Speech: From Muskrat Falls to the Future #nlpoli

Please note time change

Your humble e-scribbler will be speaking to the St. John's Rotary Club about getting beyond Muskrat Falls.

That's Thursday, August 1, 2019 at the Sheraton Hotel Newfoundland.

Luncheon starts at 12:30 PM 1:00 PM with the talk at around 1:00 PM  1:30 PM.

-srbp-

The background to the Rotary speech:   

1.  Restoring Power:  Mitigating the entire impact of Muskrat Falls. (April 2019)

2.  Restoring Power:  The tax option (July 2019)

Restoring Power: The Section 92A Option #nlpoli

One of the potentially most valuable revenue sources would be a new tax on electricity production that could yield upwards of $450 million a year. The bulk of the tax would be paid by Emera and Hydro-Quebec, both of which currently profit from free or near-free electricity through two patently unfair agreements. 

The basic problem of the Lower Churchill was always how to pay for it. 

Everyone who tried to build it before wanted people outside the province to use the electricity and pay for the whole project, with the profit flowing to the people of Newfoundland and Labrador.  When they couldn't get that to work, they simply didn't pursue the project. 

The politicians and bureaucrats behind what became Muskrat Falls were smarter.  They decided in a meeting at The Rooms in April 2010 they would force the people of Newfoundland and Labrador to pay for the entire project through their electricity rates, even though they would use very little of it. The benefits would flow outside Newfoundland and Labrador. 

The Dwight Ball-Ches Crosbie rate mitigation scheme is still about having Newfoundlanders and Labradorians alone pay for Muskrat Falls with others reaping the benefit.  On top of that, the Ball-Crosbie approach includes money that doesn’t exist.  Their scheme also doesn’t address other problems with Muskrat Falls that are as troublesome as the problem of the government’s proposed scheme to have only one small group of people bear the whole cost.  So, it won't work.

The Kick in the Guts #nlpoli

Those following the Muskrat Falls inquiry last week will likely have noticed that one of the big issues not discussed during Dwight Ball's testimony was the circumstances surrounding Ed Martin's resignation.

It bears on the inquiry since the entire episode goes to the heart of the government's relationship to Nalcor, which itself shaped Muskrat Falls, and to the resolution of the Astaldi mess.

Yet, for some reason,  Commissioner Richard LeBlanc does not want to hear about Martin's departure.

The incident that supposedly triggered Martin's departure (and that of the board) were a few sentences in the budget speech from April 2016.  Ken Marshall described it as a "kick in the guts" for the folks at Nalcor.

Your humble e-scribbler posted this as part of a bigger piece back in 2016 but just for the fun of it,  here are Bennett's words, in total:

As the province’s energy corporation, Nalcor belongs to every citizen of Newfoundland and Labrador. 

Since its creation in 2007, taxpayers have invested over $2.25 billion yet have received no dividends. For all corporations and their shareholders, this would be unacceptable. 

The previous administration allowed Nalcor’s organizational structure, compensation and benefits packages to grow beyond what taxpayers would consider reasonable, particularly given our current fiscal and economic circumstances. 

Through Budget 2016, initial steps have been taken to identify operational savings at Nalcor approximating $6.7 million. 

However, due to prior year commitments by the former administration, the required equity the province will need to invest in Nalcor this year is $1.3 billion, bringing the total investment by the people of the province to $3.6 billion. 

Further actions will be taken to maximize the return on investments made by our province. 

Like government departments and public entities, Nalcor will be expected to take a zero based budget approach to their administration and operations effective with Budget 2017. 

The Nalcor Board will be directed to review their operational structure to achieve efficiencies and develop a plan to bring their compensation, benefits, and gender equity policies more in line with similar positions in other public sector bodies. 

Work at the Muskrat Falls Powerhouse is significantly behind schedule. 

Faced with these schedule delays and expected cost increases on the project - a concern to all of us - government is doing and will continue to do everything possible to help get this project back on track.

-srbp-

Today's post was originally supposed to be a much longer look at Dwight Ball and Muskrat Falls.  This turned out to be a much bigger subject than anticipated.  Stay tuned for it to appear later this summer.

Quebec appeals court decision on Churchill Falls contract no win for Newfoundland and Labrador #nlpoli

Media reports, political comments, and pundit opinions are wrong about the decision last week by the Quebec Court of Appeal in a case about the renewal clause of the 1969 Power Contract between Churchill Falls (Labrador) Corporation and Hydro-Quebec.

The Court decision leaves Hydro-Quebec with virtually all of the electricity produced from Churchill Falls and, most importantly, operational control of water flows on the river.  This will have an adverse impact on Muskrat Falls. As a result, CF(L)Co is likely to appeal the decision.

__________________________________________________

The Quebec Court of Appeal ruled last week that Hydro Quebec retained operational control of electricity production at Churchill Falls. It made a minor change to an earlier decision by the Quebec Superior Court in a decision from 2016.

That’s why Hydro-Quebec issued a statement that it was satisfied with the outcome of the decision.

In other words, English-language media reports and political commentary got it wrong when they claimed “Quebec's top court rules for N.L. in Churchill Falls dispute with Hydro-Québec” (Canadian Press) or “A Victory For NL In Long-Standing Legal Battle With Hydro-Quebec On Upper Churchill” (VOCM).

The English-language reports focused on the idea that Hydro-Quebec could only buy electricity from Churchill Falls up to a maximum each month under the terms of an automatic renewal to the 1969 power contract between Hydro-Quebec and Churchill Falls (Labrador) Corporation.  VOCM went a step further in the mistake department my making it sound like both Hydro-Quebec and Newfoundland and Labrador Hydro could sell electricity from Churchills Falls. 

The clue that something was amiss in the English-language coverage is the statement from Nalcor that said the Quebec Court of Appeal “had ruled substantially in favour” of CF(L)Co on the question of Continuous Energy.

Here’s why.

Restoring Power - Mitigating the Impacts of Muskrat Falls #nlpoli

Left untended, the Muskrat Falls project threatens the financial well-being of the government and people of Newfoundland and Labrador. The threat cannot be removed merely by directing money from one pot or another to offset the impact the mismanaged project’s costs would have on electricity rates in the province.  

The threat from Muskrat Falls can only be removed by concerted action that addresses the project’s financial burden, restores integrity to the system of electricity regulation, and that breaks, once and for all time, the fundamentally corrupt relationship between the provincial hydro-electric corporation and the provincial government. This is the only way to restore power to the province’s people so that they may control their own future.

A CHEAP Framework - the PC and Liberal Muskrat Falls plans #nlpoli

The Conservative and Liberal Muskrat Falls rate mitigation plans are the same.  Both include magical assumptions of revenue.  Both omit crucial details.

Note: Some people asked on Monday for comment or analysis of the two plans to mitigate Muskrat Falls' impact on provincial electricity rates.  

This is an abbreviated summary of the two plans and some issues flowing from it. A more substantive analysis will come on Monday 22 April 2019 with the publication here of the SRBP rate mitigation proposal  called "Restoring Power."

General

The Conservative and Liberal rate mitigation plans are the same idea. 

This is not surprising since the Conservatives copied the Liberal approach and used the same information from the Public Utilities Board review as the basis for the plan details.

The Liberal and Conservative plan uses the following approach:

1.  Pick a Number
2. Subtract other Numbers
3. Use Magic
4. Hit zero

Napalm sticks... #nlpoli

The latest poll from MQO is being reported as a statistical tie by NTV , while CBC says it shows a "neck and neck" race between the PCs and Liberals.

That's not really the story of the polls, though and what they might mean.

Here's the pretty chart showing every party choice poll result since 2015 (except for Mainstreet*).

Click to enlarge

Now here's what it shows.

Mitigating Muskrat Falls: Ron, Harry, and Hermione are still baffled #nlpoli

Mitigating the impacts Muskrat Falls will have on taxpayers of Newfoundland and Labrador remains the single biggest unanswered question in the province nine years after the project started and the politicians first started talking about how they might do it.

To mark the 14th anniversary of The Sir Robert Bond Papers,  here's the tale from 2010 to now.

Most people in Newfoundland and Labrador finally noticed the impact Muskrat Falls would have on electricity prices when Nalcor chief executive Stan Marshall confirmed that Muskrat Falls would double electricity prices in the province once it was finished in 2021. 

That was the middle of 2017.

The word “mitigates” - to make less severe or painful - became popular overnight.  Since Marshall’s comments, just about all that anyone in Newfoundland and Labrador has fretted about is how the government will make electricity prices not double because of Muskrat Falls.

But here’s the thing:  Muskrat Falls was always supposed to double your electricity prices. Right from the start – November 2010 – the provincial government talked about electricity prices of between 14 and 16 cents wholesale, which would have made the retail cost in this province about double what it was at the time.  No worries, people like Kathy Dunderdale said.  Oil prices will be so high and electricity prices will be so high by 2017, anyway, that you will never notice Muskrat Falls except that it will stop prices from climbing higher.

The PUB, Exemptions, and Muskrat Falls #nlpoli #cdnpoli

Here’s some background on the issue of Muskrat Falls and Public Utilities Board exemptions. 

At the end you should know what an exemption is all about, how the exemptions – there are more than one – came about – and what that means for now and in the future as far as electricity rates go.  We’ll deal with mitigation in another brief post next week.

The information here is based on material in the public record plus additional research and information accumulated over 30 years working on public policy issues in the province. That includes the 15 years of SRBP, much of which wound up being about the Lower Churchill project.

Let’s start with what an exemption is.

Electricity prices, risk, and what the editors didn't say #nlpoli

Okay.

What Muskrat Falls will do to electricity prices is not funny.

Never was.

But what *is* extremely funny are columns like Russell Wangersky's latest hand-wringer about the most recent round of electricity rates hikes.

Remember when we were told that Muskrat Falls was needed to stabilise electricity rates? 

Now, it’s pretty clear that it is destabilising them —- in a frightening fashion.

Let's review some information that has been in the public domain since the beginning of the project.  Russell has clearly either forgotten or chosen not to remember details because none of this stuff is new.

SRBP. "Fear and loathing on the energy campaign trail" from November 2010.

Note the date.

Muskrat Falls Inquiry Terms of Reference - Comments #nlpoli #cdnpoli

MF Inquiry TOR Commentary EGHollett by Edward Hollett on Scribd

Don't blame me (-dia) #nlpoli

Now that Muskrat Falls is officially a boondoggle,  all sorts of people are rushing forward to criticise it.

Others are also rushing forward to ensure we all know that they were on the side of the angels back in the day and so, as Brian Jones pleads this weekend in the Telegram, we shouldn’t “blame the media for Muskrat Falls.”

For the past year and a half,  Brian tells us,  people whom he calls “trolls” have been writing and calling him to ask why the local media did not reveal all the details about Muskrat Falls as the thing was unfolding.

“I always point out a basic fact,”  Brian says,  that “ the Newfoundland media, not just The Telegram, have covered every aspect of Muskrat Falls since at least 2010.”

Wonderful if it was a fact, but no.

Not a fact.