More Muskrat Fun: HQ, NALCO and PEI #nlpoli #nspoli #cdnpoli

The Ghosts of Hydro-Quebec and NALCO:  A pair of readers fired off separate e-mails to point out an alternate  explanation for the “anything cabinet decides they can do” clause from the energy corporation legislation than the tack SRBP took.

They both pointed to comments made over several years by different politicians about making the local energy corporation act like Hydro-Quebec.  In the province those same pols love to hate, HQ gets involved in all sorts of public works.

The HQ spending supplements what the provincial government is doing and, as some of those pols noted, helps to keep a raft of what is essentially provincial government spending from the prying eyes of the Equalization cops.  The result is that Quebec gets to collect more Equalization than it might otherwise get if they transferred the HQ cash into the provincial treasury and had it counted as provincial government income for the purposes of calculating Equalization entitlements. To paraphrase one e-mail, you can also bitch at the same time about Ottawa not doing enough for your province as you collect all this extra money.

Those readers are absolutely right.  Some politicians had that as part of their goal for the energy corporation.  Usually they tied it with nationalising Newfoundland Power to create One Big Crown corporation.

Just to refresh people who might not have followed the whole discussion going back five years, the SRBP view is that Nalcor was essentially supposed to be like the old NALCO.  That was a failed Smallwood-era plan to use one giant corporation that controlled all the province’s natural resources to broker development.

NALCO with an R tacked on the end might not be able to control all resources but it would be able to assume an increasingly stronger role in economic development.  You can look at the exploration program and incentive grants created under the 2007 energy plan let Nalcor use its financial power to foster a leading relationship with smaller, cash-strapped local companies.  The fibre optic deal has Nalcor and the provincial government as the larger partner in the deal.  Even offshore, Nalcor’s exploration program can be seen as a way to step into areas where the private sector isn’t interested at the moment and where Nalcor can assume a dominant role.

Basically, though, the Equalization dodge and the One Big Corp idea aren’t incompatible with the idea of having the energy corporation assume a NALCO-like role in the economy.  The two ideas fit together rather neatly.

In a related story, federal New Democratic Party leadership contender Thomas Mulcair showed up in Prince Edward Island garnering supporter for his campaign.  Part of the story in the Guardian included this rather curious reference by a prominent Island Dipper:

"Tom supports policies which are good for P.E.I. including federal support for the Lower Churchill development which will give us a third electric cable and support for a moratorium on hydraulic fracking."

What Joe Byrne seems to be talking about is actually not a Lower Churchill project at all.  It’s a plan to run another line from the mainland to PEI.  There’s an SRBP post on it from January 2011 when the conventional media reported the federal government wouldn’t fund the project as a green initiative.

Other than that, the only time anyone talked about PEI and the Lower Churchill in the same breath was in 2005.  Back then a British Columbia company was looking at the idea of running a cable to PEI  directly from Labrador.  If memory serves, Nalcor was also thinking about the same option.  Apparently it never got to the point where anyone discussed it officially with the people running Prince Edward Island.

Of course with the Emera deal, there’s no reason to run another bunch of underwater lines to PEI. 

However, if the Islanders are happy to pay outrageous prices for electricity, the gang at Nalcor would be happy to speak with them.  They have just the thing you are looking for.

- srbp -

The Old Man, Old Habits and Old Chestnuts

labradore lays bare the foolishness that is the Old Man’s latest anti-Quebec tirade.

Score one for His Premierness’s crack research and intelligence team; after all it was just three weeks ago that Quebec’s intergovernmental affairs Minister — unlike some provinces, they actually have one — telegraphed his province’s opposition to federal subsidies for transmission lines.

…

Curiously, these nefarious Quebec plots seem to cycle at about three-month intervals; His Premierosity exposed the previous one back on May 12th.

And yes, ladies and gentleman, the last time the Old Man got in a back-risking lather was during the month his pollster was in the field collecting numbers.

Funny how that happens.

Regular readers of these scribbles will recall that the Premier’s foray into the anti-Quebec realm prompted this rather neat diagram of The World as the Old Man Sees It.  Thousands of you read it, no doubt laughed and – in a great many cases- downloaded it as the wallpaper for your computer desktop.

Perhaps it’s time to get some tee shirts made up. They’d go like hotcakes.

Levity to one side – and it is hard not to snort at this same old story being recycled yet again -  your humble e-scribbler would be remiss if there were not reminders of the following salient points:

1. There is no Lower Churchill project the power from which would presumably course down these currently non-existent but hopefully federally-funded transmission lines.  NALCOR has no customers and doesn’t have the $14 or so billion the thing will cost.
2. Not so very long ago, Danny Williams was working feverishly to get Hydro Quebec to take an ownership stake in the Lower Churchill, with no redress for the Churchill Falls contract included.  This would be – of course – completely contrary to his pre-2005 comments/commitments on the subject.  This is the biggest story of 2009, if not the entire Williams administration to date.  It remains one story that the conventional media in the province have steadfastly – and one must say now very deliberately – refused to mention for almost a full year. They have determined it is an “un-story” despite the evidence from natural resources minister Kathy Dunderdale’s own mouth.
3. There is no Lower Churchill project.
4. Your humble e-scribbler first discussed the whole idea of the permanent campaign and the quarterly poll goose in a series of posts in 2006.  There’s “The ‘Danny’ Brand”, “Playing the numbers”, “The media and the message” and “The perils of polling.”
5. There is no Lower Churchill project.
6. The bit from the CBC story after “particularly”  is false:  “Williams has had a tempestuous relationship with Quebec officials, particularly after regulators in Quebec in May dismissed Nalcor's bid to move power to U.S. markets on Quebec's transmission system.”  The Regie d’energie did no such thing. Anyone who read the decision in English or French would know that. Your humble e-scribbler’s challenge from May remains unanswered.
7. There is no Lower Churchill project.
8. This bit is absolutely true:  “when we have a situation when one province is deliberately trying to thwart at least two other provinces, and indirectly affect four other provinces, that's sad."  And the Old Man should know since the last time it happened, he did it.

- srbp -

PUB quietly imposes water management deal

The public utilities board imposed a water management agreement on NALCOR and Churchill Falls (Labrador) Corporation on March 9, 2010. The reasons for the decision were filed separately ,

The PUB didn’t issue a news release when it issued the order, nor did it issue any sort of media advisory or news release on the half day of hearings it held into the application.

-srbp-

Hebron cuts: Dunderdale blunders; will NALCOR alone foot bill for replacement work?

In the House of Assembly on Wednesday, natural resources minister Kathy Dunderdale confirmed what Bond Papers told you about on December 11:

There are no provisions of the final benefits agreement signed in August 2008 that cover a work cancellation and mandate that it has to be replaced by work of equal value or the cash equivalent.

Nothing could be further from the truth

Dunderdale issued a highly misleading news release on December 11 that claimed “any such issues were contemplated in the Benefits Agreement and the replacement value of the work was captured and protected."

As you learned here last week, nothing could be further from the truth.

Dunderdale told the legislature on Wednesday (December 16) that the agreement contained a provision on amendments and another on dispute resolution. There was no dispute, according to Dunderdale, as the parties came together and achieved an agreement.

Well that’s not the same as having “the replacement value of the work”  already “captured and protected”.  That’s not  “copper-fastened”, either as Dunderdale also claimed. That’s people getting together and hammering out a new deal which could include provisions among the partners as to who will foot the bill for what amounts to a political decision – the replacement benefits – rather than a purely commercial one.

. And as for that section on amendments, here it is in its entirety:

12.3 Amendment.

No amendment to this Agreement is effective unless made in writing and signed by authorized representatives of all Parties

Nor is the new deal an actual, finalised agreement.  As Dunderdale told the House of Assembly, there is an agreement in principle that must now be translated into a legal document.  There’s still lots of room for further changes, in other words in a project not due to be sanctioned until 2012.

Abandon Ship!

By the end of the questioning, Dunderdale became so rattled that she abandoned her false claim last week that the benefits were secured within the agreement:

Mr. Speaker, the parties came together, we did not even need to use mechanisms provided in the Hebron Benefits Agreement. [Emphasis added]

That pretty much blew what was left of her credibility out of the water.

Dunderdale also disclosed that the total value of the cancelled work is less than $50 million.  Her office earlier refused to disclose what they claimed was commercially sensitive information.

The Hebron partners – including the provincial government’s NALCOR Energy -cancelled the work because it was deemed “uneconomic and has significant execution and schedule risks” for the project Dunderdale estimates may cost as much as $7.0 billion.

NALCOR to foot bill?

If the agreement in principle is actually signed, it is unclear at this point if the $50 million of replacement work will be provided by the oil companies or by the provincial government’s energy company in its capacity as an equity partner on the project.

-srbp-

No thanks to renegotiating ‘69 deal: Quebec

Quebec natural resources minister and deputy premier Nathalie Normadeau says Hydro Quebec isn’t interested in renegotiating the 1969 Churchill Falls power contract.

Okay, so like no one saw that coming.

And it’s not like Danny Williams can blame anyone in this province for feeding sooper sekrit information to the bad guys in Quebec.  He just said that to avoid answering simple questions and  - almost naturally – local media gave the unfounded comments top billing. 

Yes, front page of the print edition of the Telly and the top news spot on its website!

All for a load of shop-worn hooey.

In the meantime, as the Premier indicated in the legislature on Tuesday, Churchill Falls (Labrador) Corporation got its own legal opinion before sending the request to renegotiate off to Hydro-Quebec. 

And, as he told the House of Assembly on Monday,

As a result, we feel that we need to pursue this and the best way to pursue this is in good faith. The best way to pursue good faith is to have this information [the conclusions of the provincial government’s legal review] passed over to CF(L)Co. It is my understanding that CF(L)Co have announced today that president, Ed Martin, has now written the other shareholders of CF(L)Co to see whether, in fact, in good faith, this matter would be open for renegotiation, and that is a very good thing.

Did you notice that phrase:  “other shareholders in CF(L)Co.”

That would be Hydro-Quebec.

So if Danny Williams is wondering about who is passing sooper sekrits to the enemy, he can look no further than Ed Martin.

Of course, the entire traitor line is just one to distract from what is really going on:  a big bluff. 

After all, if NALCOR and the provincial government were really convinced they could cut a deal, if they really thought they had stumbled on the magic bullet to cure a 40 year old grievance, they’d never have done it in public perhaps before the letter to Hydro Quebec even got to Montreal.

Nope.

If you had any leverage at all, you wouldn’t pull a stunt.

You’d pull the lever.

-srbp-

Hydro Quebec has leverage on Danny Williams

If Premier Danny Williams listened to Opposition Leader Danny Williams he’d know what went wrong with efforts to develop Labrador hydroelectric power.

Here’s Danny Williams in November 2002 in full fury over a proposed deal on the Lower Churchill:

Mr. Speaker, could the Premier please tell the people why he did not use the Lower Churchill as a bargaining lever to address the inequities of the Upper Churchill contract? Would the Premier explain why he quit on the objective of every single Government of Newfoundland and Labrador since the deal was signed over thirty years ago?

Leverage.

Before he got elected, Danny Williams said there would be no deal on the Lower Churchill under his administration without redress for the 1969 Churchill Falls contract.

He rejected a joint Hydro Quebec/Ontario Hydro/SNC Lavalin proposal to develop the Lower Churchill in partnership with Newfoundland and Labrador Hydro.

Williams gave away what he himself described in 2002 as leverage.

That part was reported by the conventional media.

Then Williams went a step further.

After rejecting the proposal out of hand in order to “go-it-alone” and in complete contradiction to his own stated commitment on redress,  Williams then spent five years secretly trying to get Hydro Quebec to take an ownership stake in the plan to develop 3,000 megawatts on the Lower Churchill leaving the 1969 contract “to one side”.

According to the province’s natural resources minister:

“We know that if you come in here as an equity player that you have to have a good return on your investment. And we want you to have a good return on your investment.”

That part of the saga – Williams secret efforts, without redress - hasn’t been reported by the conventional media and likely never will.

At the same time as he was trying to court Hydro Quebec as a business partner, Williams lambasted Quebec as politically volatile:

Three weeks ago, in a bid to garner support for the massive Lower Churchill hydroelectric project in Labrador, Williams said Canada should reduce its reliance on energy from Quebec because the province is too politically unstable.

"The more we can spread out our energy supply means that we won't be totally dependent on Quebec for energy which, given the volatility of the politics in Quebec, could be a very, very sensitive situation in the years to come,'' Williams said Sept. 27.

He later apologised if anyone took offense but would not withdraw the remark.  Williams said he was only described the “reality.”

Not surprisingly, Hydro Quebec wasn’t interested in any Lower Churchill deal involving Danny Williams. 

With the Quebec market gone and the Ontario one looking less promising, Williams and his crew looked elsewhere.  

A potential deal with Rhode Island (not that far from New York city - died for an obvious reason:  Lower Churchill power was simply too expensive.  By the time the very expensive project got its power all the way to Rhode Island – along with all the American-side wheeling charges -  Rhode Islanders just wouldn’t/couldn’t afford the bill.  And let’s not even start talking about the depressed prices and forget the race to develop cheaper alternatives that are just as or even more green than Gull Island and Muskrat Falls.

Not content with the failures to date, the Williams’ administration then tried to undermine the 1969 contract with a clumsy legal ploy that would have given control of the entire Churchill River to the provincial energy corporation.

That failed too.

With no markets, no money could be raised.  And with no markets and no money, the very expensive project just wouldn’t fly. Even Danny Williams had to admit the obvious, recently.

And now, with that as prologue, Danny Williams and his energy corporation are turning back to an idea he rejected five years ago: redress for the 1969 Churchill Falls deal.

Theirs is nothing more than a dolled up version of an old whine:  “Aw come on, it’s just not fair.”

And it isn’t fair, really.

But that doesn’t matter, as Danny Williams, opposition leader, and Danny Williams, lawyer, know very well. Without some sort of leverage, there isn’t any way to get at the 1969 contract and amend its terms.  Whatever leverage he had, Danny Williams has managed to either fritter it away or take a giant axe to it.

About the only saving grace for Newfoundlanders and Labradorians is that Hydro Quebec is unlikely to take the request to renegotiate the deal seriously; not likely that is, unless there is a chance of making it even sweeter for them in other ways.  There are always things that could get better for Hydro Quebec.

Take, for example, the tax free status of the project until 2016.  In the early 1990s, HQ wanted to have that extended as part of a Lower Churchill deal.  The idea fell on the deaf ears of the Liberal administration of Clyde Wells.

Maybe Danny Williams would be more amenable given that he is quite obviously jammed up:  he needs a political score for the 2011 election much more than Hydro Quebec needs any talks or more money.

Then there is the issue of shares.  Right now Hydro Quebec holds about 35%. Danny Williams has already said that he was willing to see Hydro Quebec gain a good return on its investment.  Perhaps more shares in CFLCo and a new corporate structure could be worked out in exchange for cash.  That way, Hydro Quebec gains back some of the cash it would have to pay the corporation it already owns a significant chunk of:

[Claude Garcia] also noted that new benefits to the project operator, Churchill Falls (Labrador) Corp., would also provide some juice to Hydro-Quebec because it has a one-third interest in it. Nalcor Energy holds the remainder.

And after all, Williams is on record as saying that  - at some point – principle converts to cash.

Even without the prospect of a deal, Hydro Quebec can win big concessions just for talking.  They can get Williams to shut up about transmission on the Lower Churchill.  They can get him to withdraw NALCOR’s current procedural assault on Hydro Quebec Transenergie’s wheeling rates.

Maybe there’s something else no one has even thought of yet.  After all, re-opening the contract, as NALCOR has asked, means putting everything on the table.

Hydro Quebec actually has nothing to lose in entering talks quietly.  In fact, they have everything to gain.  On the other side, Danny Williams and NALCOR – like BRINCO 40 years ago – are in a tough spot.

Leverage.

It’s great when you have it.

Sucks when you don’t.

And right now Danny Williams and NALCOR have no leverage.

-srbp-

Fire cost NALCOR $18 million in lost revenue

A fire at Churchill Falls last November cost the province’s energy corporation a total of $18 million in lost revenue in late 2008 and early 2009 under the Guaranteed Winter Availability Contract (GWAC) with Hydro-Quebec.

NALCOR Energy released updated information in response to a request from your humble e-scribbler.

The fire occurred November 3, 2008 in a cable shaft at the Churchill Falls generating station and caused what a NALCOR spokesperson described in an e-mail as “extensive damage”.  Damage knocked two of the plant’s 11 turbines out of action and reduced overall generating capacity by a reported 1,000 megawatts.

According to the spokesperson,

This contributed to the decrease in GWAC revenue to Nalcor Energy in 2008 of $8.4 million and year-to-date 2009 of $9.6 million. No penalties [for non-performance] apply under GWAC.

One of the turbine/generation units was back in action by February 2009.  Repairs to the second unit were completed over the summer.

Under the GWAC,  Churchill Falls Labrador Corporation [CFLCo] agrees to supply Hydro-Quebec with a set amount of power during HQ’s high demand winter season apparently in addition to that supplied under the 1969 contract.  The power is used in Quebec. 

GWAC is one of several elements of a 1998 deal that included the recall and resale of a block of 130 megawatts of power and a new shareholders agreement for CFLCo between majority shareholder Newfoundland and Labrador Hydro and minority shareholder Hydro-Quebec.  

In the recall component of the deal, NL Hydro recalled a block of power under the 1969 contract and then resold it to Hydro Quebec at new, higher rates.

The recall element of the agreement has now been replaced by a new deal to wheel upwards of 800 megawatts of Churchill Falls power to the United States through Quebec.  Newfoundland and Labrador Hydro pays Hydro Quebec’s transmission corporation $19 million annually in fees for wheeling the power under terms set down by Quebec’s provincial energy regulatory board.

NL Hydro gets  about the same net price for its power under the wheeling deal with Emera and Hydro Quebec as it did selling the power directly to Hydro Quebec. 

Note that some of the links on GWAC are no longer active. They seem to have disappeared in a series of routine redesigns of websites in the provincial government and in the development of the new NALCOR website.

-srbp-

Lower Churchill “unviable for the foreseeable future”: analyst

Energy analyst Tom Adams had this to say about the Lower Churchill project in a recent commentary on the NB Power sale:

Premier Williams has attacked Quebec’s interest in NB Power as a threat to Newfoundland’s prospects for developing the Lower Churchill’s hydro‐electric potential. Charged with emotion arising from historic Churchill Falls grievances – a contract that Newfoundland’s then Premier Smallwood sought out and willingly signed and that has been twice confirmed by the Supreme Court – Premier Williams imagines inter‐provincial intrigues to be Quebec’s motivation. This emotionalism blinds some Newfoundlanders to the real commercial challenges to the Lower Churchill’s development. Just as natural gas from the Mackenzie delta is now recognized as uneconomic in light of foreseeable market conditions, the factors that have driven down power prices in Northeastern North America make the economics of Lower Churchill development unviable for the foreseeable future. Newfoundlanders are lucky that Nalcor, their Crown energy company, is not out in the market the trying to sell high cost power right now. [Emphasis added.]

Unfortunately, NALCOR and Danny Williams didn’t get Adams’ memo. Premier Danny Williams revealed yesterday that NALCOR is out there trying to flog high cost power from an economically unviable project.

-srbp-

Shawn to Danny: sod off, mate

New Brunswick Premier Shawn Graham sent Newfoundland and Labrador premier Danny Williams a polite letter on Wednesday telling him to keep his nose out of the NB Power talks and stick to running his own province.

Graham also repeats the point that others have made, namely that any suggestion that the grid through new Brunswick might be somehow closed or restricted as a result of any deal with Hydro-Quebec is without merit or foundation. Click that image, by the way, and you’ll get the whole letter, courtesy of cbc.ca/nb.

Stunning.  Not.

Incidentally, there’s also no small irony in Williams’ comments warning about New Brunswick selling off its natural resources to Hydro-Quebec.

In September natural resources minister Kathy Dunderdale revealed some details about Danny Williams’ previously secret offers to Hydro-Quebec to take an ownership stake in the Lower Churchill.

labradore offers chunks of the transcript of Dunderdale’s interview. So much for “despicable.” 

Those Dunderdale comments were all the more stunning in light of Williams’ previous position about demanding redress for the Churchill Falls contract before there would be any deal on the Lower Churchill.  According Dunderdale, Williams was willing to set the whole issue of the odious 1969 contract to one side in the interest of giving Quebec a fair return on its investment in the new project.

-srbp-

Kremlinology 10: Ah to be a Tory in Gander in October, when the dogs are fit to wag

When the political going gets tough, what better way to handle it than to launch a phoney jihad against a completely imaginary enemy over a completely imaginary dispute:

The Premier is gearing up for another fight on the national stage. Danny Williams says Hydro Quebec continues to try and block this province from developing the Lower Churchill, now refusing to sign onto a water management agreement for the Churchill River in Labrador.

For starters, Danny Williams is only pissed at Hydro-Quebec because they aren’t willing to take the ownership of the Lower Churchill he offered then. It’s not that they are so interested in the LC and Danny that they are blocking him, it’s really bothering him that Hydro-Quebec just isn’t interested at all.

And that’s after five years of desperately trying:

[Natural resources minister Kathy] Dunderdale told VOCM Open Line show host Randy Simms on Friday morning that over the past five years, the Williams administration “got a path beaten to their [Hydro Quebec’s] door” in an attempt to have HQ become what Dunderdale described as an “equity partner” in the Lower Churchill.

Dunderdale described the Lower Churchill “piece” as a “win-win” for Hydro Quebec. She said that despite efforts by the Government of Newfoundland and Labrador there was “no take up [from Hydro Quebec] on the proposal.”

But the biggest thing you have to consider on this water rights agreement thingy is that if the two parties – NALCO and Churchill Falls-Labrador Company – can’t reach and agreement on their own, the whole thing will be settled legally and finally by the public utilities board.

No big public, hair-mussing fuss required.

Danny Williams knows this because that’s what he amended the law to say in preparation for just such an event.

Well, okay first the provincial government tried to screw with the contract – as someone else tried in the 1980 water rights case - but they got caught red-handed in that little bit of tomfoolery.

While Williams and his ministers tried to downplay it at the time, they were caught so far in the wrong they even had to call an extremely rare emergency session of the legislature to deal with the mess created by someone’s childish legalistic game.

Anyway, that’s another story.

CFLCO not interested in the deal on water rights Williams wants?

Well that’s no problemo.

The whole thing just falls along according to amendments made to the Electrical Power Control Act in 2007 by none other than Danny Williams’ own administration.

The public utilities board – headed by Williams’ new buddy Andy Wells – just imposes a deal on the two sides:

5.5 (1) Where 2 or more persons to whom subsection 5.4(1) applies fail to enter into an agreement within a reasonable time, one or more of them may apply to the public utilities board to establish the terms of an agreement between them.

(2) Where an application is made to the public utilities board under subsection (1), the board shall establish the terms of an agreement for the purpose of achieving the policy objective set out in subparagraph 3(b)(i).

(3) An agreement established by the public utilities board under subsection (2) is binding on the persons named in the agreement.

Poof.

Job done.

Pas de sweat.

And lookit, the company involved here isn’t Hydro-Quebec, it’s the Churchill Falls-Labrador Corporation. That’s the company in which the provincial government’s energy company – NALCOR - owns a 65% stake.

And if you are still not convinced this is all yet another case of Tory dog-wagging, just consider that this evil foreign demonio Hydro-Quebec hates Williams so much and is working so hard to block the Lower Churchill they were will to sign a deal allowing energy from Labrador wheel across their province.

Wheel power and they make millions off the wheeling charges. Gee, that’s really putting obstacles in the way of the Lower Churchill. Yep, what better way to block the Glorious Lower Churchill project than demonstrating that Danny Williams can wheel power through Quebec to some other market than Quebec without any obstacles.

So what is all Danny Williams’ puffed chest really about?

Not even Ed Martin - the head of the provincial government’s energy company - seems to know.

But if one Ed doesn’t, maybe your humble e-scribbler can offer some easy suggestions on what issues are causing the provincial Conservatives to go hunting for a distraction:

- The by-election in the Straits is really not going well at all for the Tories. Then there’s Terra Nova to fight where the Tories haven’t even got a candidate yet and the Liberals wound up having two to pick from. Eight cabinet ministers in one day and four trips by the premier Hisself don’t seem to be working on the voters, at least not the way it is supposed to work.

Very frustrating when the old tricks don’t work any more.

- It’s really, really, really painful to make one decision and then be forced to make another. Think Danny Williams and the whole lab and x-ray thing. Jerome Kennedy confessed just this past week to what some of us have known all along: the decision to chop service was made by the entire cabinet.

That’s why they all stuck so hard to the line about “improvements.

That’s why they resisted changing their minds right up until the point they had no choice.

That’s why they tried desperately for weeks to try and blame someone else for the shag up rather than the people who actually shagged up.

It really bruises the ego to lose.

- And that’s on top of a string of “losses” including the Gros Morne one. Again, as much as they tried to downplay it, the whole emergency session of the legislature must have deeply embarrassed cabinet.

- There’s also the ongoing embarrassment of Paul Oram coupled with his decision to up and run when the going got tough. A cabinet minister resigns hot on the heels of another, thereby creating a mini-crisis in the government? Not a way to make the leader feel cheery. Paul Oram took himself off a raft of Tory Christmas card lists with his poorly executed exit.

- Unflattering comparisons to Roger Grimes? Lighten up a bit, people. It’s a joke.

- Let’s not forget the admission that the provincial Conservatives haven’t been doing such a fine old job of managing the public purse as they’d claimed. The word Oram used was “unsustainable.” Finance minister Tom Marshall said much the same thing.

- Then there’s the revelation that the government’s satisfaction rate ain’t what it was purported to be by the government’s own pollster. Between the opposition and local media, three recent CRA polls – never released publicly before – show that the people of Newfoundland and Labrador told CRA one thing but CRA told the public something else. The truth is sometimes painful but it does come out.

- Then there is the ongoing frustration of the Lower Churchill. As a story in the Telegram noted [not available online], NALCO has to go back and answer a whole bunch of questions for the environmental review on the Lower Churchill and that is now behind schedule. That’s on top of the lack of partners (see above), lack of markets - think Rhode Island - and the huge embarrassment to the government of being forced to abandon their original plan of slinging power lines through a UNESCO World Heritage Site.

On the whole it has been a very rough patch for the ruling Conservatives, at least from their perspective over the last six weeks and a bit more.

And what better place for provincial Conservatives to engage in some traditional Tory dog-wagging than the annual convention in Gander.

After all, that’s where ABC was born, at a time – as the House spending scandal broke in 2006, among other things – when things didn’t look all that rosy for provincial Tories in the short term.

Come to think of it, Loyola Sullivan packed it in not long after that, as did Paul Shelley and a few others.

Hmmm.

-srbp-

$10 billion for NB Power

A deal is close according to the Globe and Mail that would see Hydro-Quebec buy all of NB Power for $10 billion.

But the Globe story contains some of its characteristic shit reporting in the sub-head: “blocking access of other provinces' utilities to U.S. markets”.

There’s more the same drivel farther down the story but don’t buy most of it because it just isn’t true.

This sale can’t block access for anyone to NB’s power grid.  It can’t, not if NB Power and HQ want to keep selling power into the US.

And from the looks of it at least one statement could be completely false:  “Newfoundland and Labrador Hydro has complained to regulators in Quebec and the United States that Hydro-Québec's transmission arm is not providing it fair access to U.S. markets.”

You see Danny Williams has bitched alright, but he was bitching because he couldn’t get HQ to buy into the Lower Churchill. 

But…

According to Ed Martin, Williams right-hand on any of a number of issues, there is no problem whatsoever with Hydro-Quebec.  Thus it would be very odd if the company Martin runs was doing things – as the Globe reports -  like filing formal complaints alleging some pretty serious unfair market practices against HQ. 

All they have actually done is pursue a tariff through Quebec which they duly got.  Your see – Shawn and Rheal take note – NL Hydro has already been wheeling power into the United States across lines in Quebec in a deal touted by none other than …wait for it…Danny Williams Hisself.

Notice there is no further detail on that in the Globe story.  That’s a pretty good clue that Rheal Seguin and and Shawn McCarthy just didn’t do their homework.   Instead, they seem to have opted for a half-backed paraphrase of an equally a half-baked version of the old Danny story and not rely on what Danny’s energy minister said. 

In the process, the bitching morphed into a complaint filed with a Canadian or American utility regulator.  Look farther on in the story and that’s exactly what they do, and as you can see they got the bitching story and the bit about the alternate transmission line wrong too.  That’s what you get for quoting Liz’s thumbs and not doing any real research.

There’s also another completely asinine comment about HQ getting greater access to the US as a result.  If the guys at the Globe even bothered to check their facts, they’d know that HQ already owns capacity on the grid through New Brunswick. The story has been out there since the spring. That’s definitely not the motivation for this deal.

The upside to this story is that New Brunswickers will shed a 90-year-old chronic debt pig and retire in the process what the Globe describes as 40% of public debt in one fell swoop.

Let’s just hope that while about half the story appears to be complete fiction, the bit about New Brunswickers shedding their debt burden turns out to be true.

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Hydro Quebec not an issue: Ed Martin

A few days before Danny Williams tried to blame Hydro-Quebec for delays and problems in the Lower Churchill project, NALCO chief executive Ed Martin was singing the same old song about what a great project he had and how any day now he’d be ready to start talking to prospective customers about a sale.

He’s been saying that for three years.

But here’s part of what you’ll find in the August 31 Toronto Star:

Martin doesn't see the Quebec issue as a major stumbling block, as regulation requires the province to allow access to its grid in return for a set tariff. Hydro Quebec and Nalcor are just working out the details.

That’s the exact opposite of the line Danny has been pushing for a week or so, now.

You can also notice in this piece that  - according to Martin - the project will be financed at least in part by oil revenues.  Some of those are flowing now from White Rose, but others won’t be along for the better part of the next decade.

Ed Martin is going to have to pull off some neat financial tricks if he plans to pay for a $10 to $14 billion project  Danny Williams said will be pushing power in 2015 when the cash Martin is counting on won’t start showing up at his front door until around 2020. 

But anyway…

Ed needs to talk to Danny or vice versa.  Basically these guys are on two completely different pages about this project. 

Then again, Danny and others seem to be on different pages quite a bit lately, including with himself over Hydro-Quebec and an ownership stake in the Lower Churchill.

Rest assured though, that as much as Danny Williams and his team appear to be all over the map, there is a piece of paper somewhere with the word plan written on the top of it.

At least that’s what he felt compelled to tell the local board of trade the other day after a local newspaper editor pointed out the decidedly errat…mercuri…caprici…ummm…errr… impulsive way the provincial government tends to be. 

Well, he said “slaphappy” too, but let’s use impulsive because it is a bit friendlier than most of the words that come to mind.

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Churchill Falls reversion fails for second time

The Newfoundland and Labrador government  is making quick changes to a 2008 law after lawyers for the Churchill Falls (Labrador) Corporation  - CF(L)Co – raised questions about the impact of the bill on the company’s 1961 lease and rights to all property related to Churchill Falls.

Lawyers for CF(L)Co raised the issue with the provincial government’s  NALCOR Energy company during talks on water management for the proposed Lower Churchill project. 

The changes were tabled Tuesday in an emergency sitting of the House of Assembly.

It appears that - reminiscent of the 1980 water rights reversion bill - the 2008 bill stripped CF(L)Co of its lease.

In the original 2008 bill - Energy Corporation of Newfoundland and Labrador Water Rights Act - the Lower Churchill River is described as including “all waters that originate within the Churchill River catchment area and all rivers that naturally flow within the catchment area or from diversions into the catchment area.”

Clause three of the then stated that

any property in and rights to the use and flow of water, previously conferred by a grant, lease, licence or other instrument or under a statute of the province, or vested in, acquired by or accruing to a person by whatever means relating to the Lower Churchill River are extinguished.  [Emphasis added]

By combining the two clauses, the new bill effectively cancelled the 1961 Churchill Falls lease.  The 2008 law also blocked rights holders from any legal action and stripped them of  any entitlement to compensation.  

The bill became law on June 4, 2008.  There is no indication when cabinet issued the license to the energy corporation, now known as NALCOR Energy.

The changes introduced in Tuesday’s emergency session make it plain that the 2008 water rights law applies only to the Lower Churchill and that, for absolute certainty,  the 2008 bill “ excludes the area described in Appendix A to The Churchill Falls (Labrador) Corporation Limited (Lease) Act, 1961, and all waters while they are in that area.”

Emergency sessions are rare

For its part, the Williams administration is downplaying the session and the hasty changes.  In a news release, Dunderdale said that the act was never intended to cover Churchill Falls.

But the very fact the session was called to deal with one set of amendments to one bill suggests the issues involved are far from routine and that the legal implications of the water rights bill would be significant if left unamended.

Emergency or special sessions occur very rarely and usually only deal with extraordinary issues like war or labour disputes that threaten public health and safety.

Ordinarily – and if the implications of the bill were considered inconsequential or inadvertent -   CF(L)Co and NALCOR could simply have made routine amendments in the regular fall sitting a condition of an overall deal on water rights management on the Churchill River. 

Interestingly, the provincial government also tried to downplay the water rights bill in 2008, even to the point of making apparently misleading statements in the legislature.

In June 2008,  natural resources minister Kathy Dunderdale told the House of Assembly that the bill was needed since government had decided against using the  Lower Churchill Development Corporation as the vehicle to develop the Gull Island and Muskrat Falls power projects. 

But the 2008 water rights bill didn’t repeal the 1978 Lower Churchill Development Act, nor did it remove the LCDC option for development of the Lower Churchill.  The 2008 bill merely extinguished previously existing rights, leases, grants and licenses. 

Deja vue

This marks the second time since 1975 that a Progressive Conservative administration in Newfoundland and Labrador has found itself in hot water over legislation related to Churchill Falls.

In 1980 Brian Peckford’s administration introduced the Upper Churchill Water Rights Reversion Act.  The bill expressly cancelled the 1961 lease.  A subsequent legal challenge by creditors led to a landmark decision by the Supreme Court of Canada that ruled the 1980 statute was illegal. 

One of the influential factors in that case was public comments by politicians that identified the real purpose of the bill as being to undo the 1969 Churchill Falls agreement.

If the 2008 water rights bill effectively expropriated the Churchill Falls complex, it would be the second such move by the Williams administration in 2008.  In December 2008, the Williams administration moved to seize assets of Abitibi, Enel and Fortis including hydro-electric generating facilities. 

Confusion reigns in hydro policy

Revelation of the 2008 water rights ploy is the fourth Lower Churchill-related blockbuster news in a week.

On Friday, natural resources minister Kathy Dunderdale revealed that the provincial government had been trying unsuccessfully for five years to interest Hydro Quebec in an ownership stake in the Lower Churchill project. 

Dunderdale told Open Line Show host Randy Simms and his audience that the provincial government proposed to “set the Upper Churchill [issue] to one side.”

This move came despite commitments by Premier Danny Williams that there would be no Quebec involvement in the Lower Churchill without redress for the appalling 1969 deal that sees Hydro Quebec buy electricity at better than 1/30th the cost for which it is sold to consumers.    Williams has repeatedly railed against the 1969 deal as an example of a resource give-away by previous provincial governments.

The offer of an ownership stake to Hydro Quebec also flies in the face of Williams’ 2006 commitment to develop the Lower Churchill without any outside help:

"It's an opportunity for us to get back some of what we've lost on the Upper Churchill, and the fact that we're going to do this alone is significant," Williams said in an interview.

The Dunderdale revelation came after Williams accused Hydro Quebec of doing everything possible to block the Lower Churchill project. 

Williams also said last week that  his government would no longer plan to string hydro lines from the Lower Churchill through a UNESCO World Heritage site.

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Williams miffed Hydro Quebec rejecting ownership stake in Lower Churchill

Far from going it alone on the Lower Churchill or seriously pursuing a transmission route around Quebec,  the Williams administration has been working fervently to get Hydro Quebec on board as a co-owner  of the Labrador project. 

Those efforts have been in vain, according to natural resources minister Kathy Dunderdale.

Dunderdale  told VOCM Open Line show host Randy Simms on Friday morning that over the past five years, the Williams administration “got a path beaten to their [Hydro Quebec’s] door” in an attempt to have HQ become what Dunderdale described as an “equity partner” in the Lower Churchill.

Dunderdale described the Lower Churchill “piece” as a “win-win” for Hydro Quebec.  She said that despite efforts by the Government of Newfoundland and Labrador there was “no take up [from Hydro Quebec] on the proposal.”

The new version of events offered by Dunderdale is at odds with media reports this week of Premier Danny Williams’  speech to the Canadian Energy Forum meeting in St. John’s last Wednesday.  Williams reportedly accused Hydro Quebec of protecting its own interests and of blocking efforts to develop the Lower Churchill. 

However, Dunderdale’s comments fit with a more careful reading of  Williams’ remarks at the energy forum.

On Wednesday, Williams accused  Hydro Quebec of blocking the Lower Churchill project by not being interested in it at all.  Instead, the Quebec Crown corporation was pursuing other projects – like La Romaine – which Williams said was inferior to the Lower Churchill:  Williams is quoted by the Telegram in a Friday story [not online] as saying “La Romaine is not as good a project as the Lower Churchill.” 

Hydro Quebec is pursuing several projects within Quebec, including alternative sources of energy to hydro, all of which are aimed at boosting Hydro Quebec’s portfolio of capacity by more than 4500 megawatts. 

That was known at the time Williams made the decision in 2006 to “go it alone” on the Lower Churchill.  He also Williams attacked the other projects in 2006.  At that time, he claimed that those projects would get to market before the Lower Churchill and hence would beat out his pet project.  In 2006, Williams vowed to continue in spite of competition.

Friday marked the first time, however, that there was public acknowledgement the provincial government was actually trying to lure Hydro Quebec into an ownership position.

This week also marked the first time Williams linked a possible Hydro Quebec financial stake in the Lower Churchill to the 1969 Churchill falls contract.   Williams told the forum that as a result of Hydro Quebec’s exorbitant profits from Churchill Falls, “the very least I would expect Hydro-Quebec to co-operate with us to the fullest on getting the Lower Churchill through.” 

Previously,  Williams has consistently tied any negotiations with Hydro Quebec over the Lower Churchill with “redress” for the 1969 contract.  That’s inconsistent with offering Hydro Quebec an ownership stake in the new project.

Williams also said that Hydro Quebec had filed procedural applications in an effort to stall a hearing by the Quebec energy regulator - Regie de l’energie – into an objection filed by NALCOR/Newfoundland and Labrador Hydro over a regulatory issue. 

That’s a bizarre way to describe things, though.  Newfoundland and Labrador Hydro is one of several interveners in a decision on transmission rates for 2009.  NL Hydro filed its notice seeking intervener status at the last minute.  But since the rate hearings affect more companies than NL Hydro and NL Hydro is one of a dozen interveners, it’s hard to see how a routine regulatory process is part of a plot to frustrate the Lower Churchill.

What’s more, Williams’ claim flies in the face of successful efforts by NL Hydro to wheel power through Quebec.  Hydro started the process in 2006.   In early 2009, Hydro announced successful completion of a deal  with Hydro Quebec’s transmission arm to wheel power through Quebec to markets in the United States.  

Efforts to cut a deal with Hydro-Quebec while claiming something else are only the latest in a series of erratic moves and claims by the provincial government since 2003.

In 2006, Williams rejected out of hand a proposal from Hydro Quebec and Ontario’s Energy Financing Company to finance the Lower Churchill.  The proposal came in response to a called for expressions of interest issued by the Williams administration.  Under the proposal, Ontario and Quebec would buy the power and cover the costs of upgrading transmission facilities within the provinces and across the provincial boundaries.  The proposal also included flexible options on financing the construction of the two generating dams at Gull Island and Muskrat Falls.

Williams tossed that proposal and several others aside in favour of what he characterised at the time as going it alone.

In 2006, Williams said publicly that investors should look to the Lower Churchill instead of projects Quebec because Quebec is politically unstable.  Williams later apologised because people found the comment offensive but he did not retract his comments about Quebec’s political climate.

Williams has also sought financial support from others despite the “go-it-alone” claim. In successive federal elections, Williams has raised the idea of federal loan guarantees with federal party leaders.  He has also tied federal financial support for the Lower Churchill as some apparent form of compensation for having to run transmission lines around Gros Morne national park.

The erratic public positions don’t stop there. 

In 2008, natural resources minister Kathy Dunderdale indicated the provincial government was considering a law suit against the federal government over the 1969 contract.  Later in the day, the provincial government backtracked.

In early 2009, an official with NL Hydro hinted that the provincial government was considering financing options other than the “go-it-alone” version.  Little did the people of Newfoundland and Labrador know what the other options were.

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Curiouser and curiouser!

Even in the Land Through the Looking Glass that is Newfoundland and Labrador these days, a news release about an emergency session of the House of Assembly to deal with an amendment to  a single piece of legislation is very odd, indeed.

As the official version puts it:

In the course of negotiating a water management agreement for the Churchill River, CF(L)Co advised Nalcor that it felt aspects of the Energy Corporation of Newfoundland and Labrador Water Rights Act infringed upon its water rights lease for the Churchill Falls development. This was not the intent of the act, and government has agreed to amend it so as to avoid any ambiguity.

First of all, one must realise, of course, that NALCOR is the parent of Churchill Falls (Labrador) Corporation or CFLCo.  It holds 65% of the shares, in fact, and the two companies are not completely separate entities.  They are rather closely and intimately connected, in fact.

Second of all, one must also note that the section of the Electrical Power Control Act 1994 requiring a water management agreement came into effect this past January. 

In 2007, the current administration introduced this amendment in the legislature requiring two companies trying to generate hydro from the same river to come to some agreement on water sharing have one imposed by the public utilities board.   For whatever reason the current administration did not give it force of law until early 2009.

Third of all, the original lease that CF(L)Co holds has been around since 1961.  its provisions are well known to a host people inside and outside the provincial government.   in fact, given the history of the lease, it’s probably one of the most well studied and well-understood pieces of legal documentation existing anywhere in Canada.

And that’s the really odd thing.

Well, aside from the oddity of the company effectively negotiating with Itself, and then notifying Itself in the course of negotiations that Itself had a problem with something Itself had been party to previously because that infringed on something else Itself had also been party to much earlier.

You see, there is nothing that would have been noticed during the negotiation of a water management agreement for the Churchill River since January 2009  involving NALCOR, Energy Corporation, Newfoundland and Labrador Hydro or CF(L)Co or whatever name the Crown version of Sybil is using at the moment that wasn’t painfully obvious to NALCOR,  Energy Corporation Hydro or CF(L)Co or Sybil, as she then was, when the provincial government introduced the changes to the EPCA, 1994 in 2007 and then introduced the Energy Corporation of Newfoundland and Labrador Water Rights Act in early 2008.

What seems to be up for discussion here is something  your humble e-scribbler pointed out back in February. 

If that weren’t enough, changes to the Electrical Power Control Act – passed in 2007 but only quietly implemented after the expropriation in December 2008 – ensures that NALCO can enforce its control over future developments through the Public Utilities Board.

If one takes the implication from a set of Hydro Quebec questions about the Lower Churchill environmental assessment, the proposed water management regime appears to require that Churchill Falls be run in such a way as to maximize the generation at the Gull Island and Muskrat Falls dams under all contingencies. 

This might adversely affect CF(L)Co and some of its contractual arrangements to supply power.  It would also seem to go against several sections of the original lease.

If the government news release is clear – and that is by no means obvious – then the emergency session of the legislature is likely to be about passing an amendment that removes the last clause of the water rights act.  That’s the one that requires a water management agreement be reached or that one be imposed by the public utilities board.

What’s so interesting – if that’s the case – is that this is coming in an emergency session and not simply held for the fall sitting.  An amendment to the legislation could have been made later on with the requirement to produce the amendment being made a condition of any water management agreement.

There must be some sort of threat at work here, something much more significant than the prospect of an agreement between  “Nalcor Energy or its subsidiary and CF(L)Co”.  Incidentally, CF(L)Co is a subsidiary of NALCOR. 

Rather, there might not be much hope of a deal at all in the near term.  Instead,  CF(L)Co  - perhaps at the insistence of one of its shareholders – is protecting its interests and ensuring that the legal problems inherent in the EPCA amendment and the water rights act be eliminated now, without question or condition.

And if it was anything else, like say a repeat of the old water rights reversion act, then the thing would have been trumpeted in news conference held by the Premier.  Something says he just wouldn’t be able to resist the temptation to grandstand against any slight. 

Nope.  This is something government is trying to downplay, somewhat.

But rest assured:  emergency sessions like this one don’t happen every day and they sure as heck don’t come for a routine amendment, even if it is one intended merely to avoid “ambiguity”.

There’s something big behind this.

And it may not be pretty for the Lower Churchill project.

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NALCOR may be exempted from offshore royalty payments

If the provincial government acts on a provision of the Hebron fiscal agreement, the government’s own energy corporation could wind up paying nothing to the provincial treasury in royalties.

That would set it apart from any other offshore interest holder,  including the federal government’s Canada Hibernia Holding Corporation (CHHC).

Under sections 8.4 of the Hebron fiscal agreement, the Hebron partners agree that the provincial government can “make amendments to the Petroleum and Natural Gas Act”…, “make amendments to the Royalty Regulations” or “make an agreement pursuant to section 33 of Petroleum and Natural Gas Act…to adjust, vary or suspend OilCo’s liability for the payment of royalties on oil produced from the Lands”  that would be different from the arrangements with the other project partners.

That provision  - which could see the province’s own oil company pay nothing at all in royalties - might also violate the agreement that is the basis for the province’s offshore wealth.

Under section 41 of  the 1985 Atlantic Accord memorandum of understanding between Ottawa and St. John’s,  “Crown corporations and agencies involved in oil and gas resource activities in the offshore area shall be subject to all taxes, royalties and levies.”

That section was intended to put any Crown corporation operating offshore, federal or provincial,  on the same footing as a private sector corporation.

That section applies to CHHC and should also cover NALCOR Energy.

The provision of the agreement appears to take advantage of hasty 2001 amendments to the Petroleum and Natural Gas Act which gave the provincial government the ability to make an agreement on royalties that differed from the generic royalty regime.

Although the changes to the province’s fundamental oil and gas law were substantive, the entire set of amendments passed through the House of Assembly in a single evening with only three speakers.

Energy minister Lloyd Matthews described the changes as “administrative.”  He did not give any detailed discussion of any amendment, and simply glossed over the section on royalty agreements – the new section 33 – as if it was nothing more than a change of numbering.

John Ottenheimer, the opposition energy critic at the time and now the chair of NALCOR Energy’s board of directors,  spoke on the bill but made absolutely no reference to the details of the changes concerning royalties and variance to royalty arrangements.

That’s surprising given that the opposition leader at the time had already begun to speak publicly against give-away resource deals. Section 33 set the legal stage for just such a give away.

Jack Harris also spoke on the bill, spending considerable time criticising the existing royalty regimes.  He made no reference to the substantive changes the bill made to the Petroleum and Natural Gas Act.  That’s surprising since section 33 gives the government the right to sign a royalty deal which wasn’t even as lucrative as the existing regimes which he was criticizing. 

Then opposition leader Danny Williams made no comment at all on the bill during debate.

There’s no way of knowing at this point if a similar provision exists in the deal on Hibernia South. Details of the fiscal agreement on that project have not been made public.

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CHHC pays off for provincial government

Even without owning it, the Government of Newfoundland and Labrador will likely earn more from the federal government’s 8.5% share in Hibernia than it will from its own 10% stake in Hibernia South.

That’s because the Canada Hibernia Holding Corporation (CHHC) pays royalties to the provincial government like any offshore interest holder and with Hibernia in payout, the royalty jumps this year from 5% to the current 30%.

CHHC’s stake covers an 8.5% interest in the remaining oil in Hibernia, including Hibernia South.  The total remaining oil could be as much as  1.2 billion barrels which would work out to the equivalent of about 100 million barrels for CHHC.

NALCOR Energy – the provincial government’s energy corporation  - owns a 10% interest in Hibernia South.  That works out to about 17 million barrels in the approximately 170 million barrels of the extension project in which NALCOR holds an interest.

Assuming an average price $50 per barrel, the NALCOR interest in Hibernia South would generate $850 million in gross revenue over the life of that project, less royalties that might be paid to the provincial government, as well as development and operating costs. The royalty on $850 million would be $255 million, assuming only 30% royalty.

But, using the same price,  the royalty paid by CHHC to the provincial government on the federal stake remaining in Hibernia – including Hibernia South  - would work out to roughly $1.53 billion.  That royalty comes with no deductions.

That’s not a bad return considering the provincial government took virtually no financial risk in Hibernia by acquiring an operating interest.

Between 2000  - the first year royalty payments were made - and 2008, CHHC paid the provincial government a total of $104.8 million according to figures released to Bond Papers by the federal finance department.

Table:  CHHC Hibernia Royalty

Year	Royalty Amount
2008	22,536,000
2007	15,576,000
2006	17,902,000
2005	20,582,000
2004	11,308,000
2003	6,254,000
2002	4,436,000
2001	2,205,000
2000	4,040,000
Total	$104,839,000

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Gros Morne international status threatened

Gros Morne national park could lose its designation as a UNESCO World Heritage site if NALCOR Energy, the provincial government’s oil, gas and hydro company, succeeds with plans to string a series of high-voltage electric transmission lines through the park.

There are alternatives but NALCOR has dismissed them already as being either costly or technically difficult.
The lines are part of a transmission infeed to bring power from the as yet undeveloped Lower Churchill river to eastern Newfoundland.

The Telegram has that as the front page story on Saturday.

The Gros Morne transmission plan generated opposition from environmental and tourism groups, along with Parks Canada, which must approve the project.

In February, Hospitality Newfoundland and Labrador (HNL) chairman Bruce Sparkes first raised the spectre of Gros Morne losing its spot on the United Nations list.

"It is a UNESCO World Heritage Site and it's been suggested that if you put this corridor down through it, it (may) lose the designation," he says.

"We believe Parks Canada is correct in opposing this."

No one from HNL or Parks Canada would comment for the Telegram.


Deputy premier and natural resources minister Kathy Dunderdale was also unavailable for comment.  While Dunderdale was consumed with the fisheries crisis this week, her office couldn’t even deliver a statement by the Telegram’s deadline, as the department had apparently intended.

In February, Bond Papers and others first raised the issue of slinging transmission lines through the park.

The Premier backed the idea:

“When park officials look at what the trade-off happens to be for the benefits we get at the end of day ... I think they will see the benefit,” he said.

One of the trade-offs would presumably be the international designation.  According to the Telegram only two sites have lost the designation.

When the park was established in the 1980s, transmission towers through its pristine natural beauty was described as “the most serious threat” to Gros Morne.

The power lines may not be needed.

A NALCOR official recently told a business group in Gander that adding more wind generation to the island system would not be a good idea until the transmission line is built.  The transmission line would allow surplus power to be exported.

[ NALCOR manager of business development Greg] Jones told The Beacon the province can only produce a limited amount of wind energy because it can cause water to spill from hydro dams if excessive amounts are produced. This roadblock will be eliminated with the introduction of a transmission link in 2016 for the Lower Churchill hydro project.

The infeed is being justified, in part, on the grounds that the island will need additional power sources by as early as 2013. 

However, the environmental assessment documents for the project project only modest growth in residential and industrial demand in the future.  That was before the AbitibiBowater paper plant in Grand falls closed and before Kruger decided to shut down one of its paper machines at Corner Brook on what appears to be a permanent basis.

Jones’ comments suggest that current and future demand on the island can be met with much smaller, less costly alternative generation sources.  Adding wind power now would add to the current surplus, if the full implication of Jones’ comment about water spilling over hydro dams is clear. 

But that also means that added wind power and small hydro developments could continue to displace the Holyrood generating plant and still meet the island’s energy needs.  Holyrood burns oil to generate electricity and has been a subject of ongoing environmental controversy.

While the plant is currently operating at a severely reduced capacity, due to low demand in the summer months, the infeed proposal would require the plant to operate its three generators year-round in order to stabilise the power transmission from Labrador.

The government’s 2007 energy plan committed to replacing Holyrood with other forms of generation.  Also in 2007, natural resources minister Kathy Dunderdale highlighted replacing Holyrood as one of the reasons for building the infeed.

In Dunderdale’s scenario selling Lower Churchill power to consumers in eastern Newfoundland  was one way the government planned to under-write the cost of the multi-billion dollar Lower Churchill project. 

No other power purchase agreements have been identified.  A memorandum of understanding with Rhode Island on a block of 200 megawatts appears to have gone no where since it was signed in 2007.

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BLTN Update:   CBC is running the story as well, on Monday.  The most interesting feature of this online story are the comments from a raft of pseudonyms - most of whom apparently like the idea of slinging power lines and steel girders through a park where right now the tallest power line is on a wooden poll. 

Nature schmature.

New Dawn still M.I.A

Announced with great fanfare last September, a land claims agreement-in-principle between the Innu of Labrador and the provincial government is apparently on life support.

The New Dawn agreement seems to have turned into the Matshishkapeu Accord after all.

The deal was supposed to go to a vote back in January but according to media reports the deal was postponed indefinitely.

Turned out there were unspecified “outstanding issues”.  Those issues have led to further discussions but it isn’t clear what the hold-up is or when, if ever, the deal may reach the stage where it can head to a vote.

Innu deputy chief Peter Penashue said last week that he hoped the deal will go to a vote in the fall.  He had hoped it would be concluded by now.

The deal was in trouble from the start, however and the same concerns within the Innu community are still be heard almost a year later.  The deal has a number of  other potential problems beyond local concerns over which Innu companies will benefit from the deal.

Whatever happened there’s no sign the deal is really back on track, despite Penashue’s optimism.

Settling a land claims deal with the Innu is crucial to development of the Lower Churchill.

In its annual report for 2008, the province’s energy corporation trumpeted the agreement as a major achievement in efforts to develop the Gull Island and Muskrat falls power complexes.  There’s no mention of the hang-up even though the report was released months after the vote was cancelled.

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Chamber concerned seized central hydro assets gain for provincial government, loss for region

The Exploits Regional Chamber of Commerce is very concerned about the benefits from seized hydroelectric assets going somewhere other than the region of the province in which they are located, according to the Grand Falls-Windsor Advertiser.

The chamber estimates that based on electricity used by AbitibiBowater (54 megawatts), savings to Newfoundland and Labrador Hydro in excess of $70 million annually are being realized.

The chamber wrote the CEO of Nalcor in May to try and meet to discuss how the Exploits region could benefit from being adjacent to the source of the power. While the letter was copied to local MHAs and members of the provincial Ministerial Task Force set up to deal with the closure of the mill, Nalcor has not responded.

NALCOR is the provincial government energy company which took control of the assets earlier this year.  They were seized by the government from three companies:  AbitibiBowater, ENEL and St. John’s-based Fortis.

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