Government Abandons Energy Plan … quietly #nlpoli

These days, you have to hunt around the government website to find the provincial energy plan.  That’s despite the claim on the website – once you’ve found it – that the 2007 document “guides and defines Newfoundland and Labrador’s vision for energy resource development”.

The first pillar of that policy is something called “equity ownership.”  It’s right there on page 18:

Taking equity ownership in projects to ensure first-hand knowledge of how resources are managed, to share in that management, to foster closer government/industry alignment of interests and to provide an additional source of revenue.

Pretty clear?

The Ever-Changing Provincial Energy Plan #nlpoli

Premier Kathy Dunderdale told delegates to the provincial offshore oil and gas industries association on Tuesday that the provincial government wants to see more exploration offshore.

“Newfoundland and Labrador is past peak production from existing fields,” Dunderdale told delegates at the NOIA conference.  “To sustain growth, we need to find new fields.”

To compete globally for the limited exploration dollars, Newfoundland and Labrador is “not just open for business, … we are aggressively pursuing it.”

That’s was government policy from the 1970s onward.  More exploration means more oil and gas to develop.  Through the local benefits provisions of the Atlantic Accord (1985),  local companies could gain the experience to compete globally on other projects. That has been the successful policy in places like Norway and Scotland and local politicians and industry experts.

But that hasn’t been government policy since about 2009.

Reductio ad argentum: senatorial elections version

With the Conservatives who have been running the province since 2003, everything reduces to cash. 

For them, the only principle is cash.

Not surprisingly, when it comes to the idea of electing senators to represent the people of Newfoundland and Labrador in the national parliament, Premier Kathy Dunderdale said this:

Mr. Speaker, there are still a lot of questions that need to be answered. For example, who is going to fund it? Who is going to pay for it? Mr. Speaker, when we get the answers to those questions, then we will say whether or not we are in favour of elected senators.

Yes, whether or not Kathy supports democracy comes down to how much it might cost.

Come to think of the past seven or so years, this does explain a lot.

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No more give-aways indeed: Big Oil’s L’il Buddy considering cash breaks for major oil companies

According to the cover story in the latest issue of Natural Resources magazine, the provincial government and representatives of the major oil companies are reviewing ways to increase exploration offshore.

Operators are presenting the government with a “suite” of proposals, according to [industry representative Paul] Barnes — many of them involving fiscal incentives, such as tax credits or royalty relief, that could spur increased exploration. 

Barnes is quoted as saying that the talks are “high-level” likely meaning they involve the Premier and other senior cabinet ministers. The 2007 energy plan included a recommendation to establish a working group involving industry and the provincial government to develop “regulatory and fiscal measures” to promote exploration as well as what the document refers to as “other industry needs.”

One idea reportedly under consideration is a royalty break for dry exploration wells.

For example, companies already producing in the area may favour some type of incentive that’s royalty based. If they drill a well and come up dry, they could get royalty relief on current production. “If there’s some risk offset, that may encourage some additional exploration activity,” Barnes noted. He said there are similar royalty-relief holidays for deepwater exploration in the Gulf of Mexico, to help mitigate the cost of unsuccessful wells.

That’s a significant switch from earlier Conservative positions but it is consistent with what the Conservatives have done since they took office.

For example, before 2003, when oil prices were below US$30 a barrel, Danny Williams attacked any suggestion that the Hebron partners might need a flat one percent oil royalty in the early years of any Hebron project.  Once in office, when oil prices tripled, he agreed to just just a windfall for the oil companies. The provincial government will lose hundreds of millions of dollars as a result, if oil prices remain above US$35 a barrel. 

Other issues for the industry include continued uncertainty about the province’s oil royalty regime.  The 2007 energy plan committed to scrap the existing one and replace it with a new approach.  Four years later there’s no sign of work being done, let alone any progress.

In natural gas, the provincial government still doesn’t have a royalty regime.  That’s despite the fact work on the rules started in 1997 and the 2007 energy plan outlined a draft royalty policy.

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What it means to be an energy warehouse

Governors of New England states come to visit you looking for more juice.  In this case, Vermont’s top political leader took a two-day trip to Quebec to discuss power and transportation.  Governor Peter Shumlin wants to route a New York to Montreal high speed rail line through Vermont.  He also discussed electricity and natural gas pipelines.

"Everyone's trying to sell us power," Shumlin said. The New England market has excess generating capacity, and Vermont utilities have been approached with several offers, he said.

"It's a buyer's market," Shumlin said.

Let’s get that Muskrat Falls in production soon to take advantage of that buyer’s market.

Yeah.

Right.

So when are Pete and his buddies making a pilgrimage to sit at Kathy Dunderdale’s feet?

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The Fragile Economy: finance minister complains about his own policies

Finance minister Tom Marshall thinks its time for the private sector to step in and boost the economy around Corner Brook.

“Other than construction, I would like to see more economic investment; I would like to see more businesses coming in and investing here,” he said. “It is jobs ... What we have seen is government spending, in a massive way, in this area.”

That’s from a story in last Friday’s Western Star.

Two observations come readily to mind.

First of all, that’s a great big “D’uh” there, Tom.  Your humble e-scribbler has been banging out post after post after post over the past six years on this very subject.  The number of posts on it has gone up in the past two years because the fundamental situation is getting fundamentally worse. 

It is getting fundamentally worse – to hit the second point – as a direct result of government policy.  In everything from its energy policy to its disastrous seizure of private sector assets in 2008, the current administration has shown itself to be relentlessly opposed to creating an economic climate that attracts investment, promotes innovation and rewards entrepreneurship. 

The current fragile state of the provincial economy  - “fragile” is a word Tom Marshall used not so long ago, by the way - is a direct consequence of government policies.  Only a fundamental shift in those policies can move the province off the course it is currently on.

As it stands in early 2011, the current administration is firmly committed to continuing the policies that have contributed to putting the economy in its current parlous state.

We have seen the enemy, says finance minister Tom Marshall, and he is us.

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Ontario to double electricity rates

Ontario’s new energy plan will see the province’s electricity rates double, but in 20 years, not seven.

[Globe and Mail] This is the government’s second attempt to chart a long-term plan. While the latest version is broadly similar to the document released in 2007, it differs in one key respect: costs for building new power systems are estimated to be 45 per cent higher.

As a result, residential electricity prices will climb to $228 a month by 2030 for the average consumer who uses 800 kilowatt hours a month. This compares with $114 today.

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Time to retire the old schtick

On a certain level, you can’t blame Danny Williams for saying the same stuff over and over.

After all, audiences like today’s gathering at the Board of Trade keep lapping it up.  They turned out in force, chuckling and applauding in all the right places as if they knew the script by heart.

As the scrum video shows, local reporters from the province’s two television networks never tire of asking him the same old questions over and over, getting the same old answers over and over,  and then passing them yet again to the audience at home as if they heard it for the first time.  

But while some people never seem to tire of re-runs, there are likely an ever-increasing number of people in the province for whom the province’s political news is starting to look like watching some borscht-belt comedian on a 1970s American talk show.  Decades ago, the guy had one joke that sort of worked, yet the host thinks the old codger is a comedic genius.  So he flies the guy back from Florida to inflict him on his audience over and over again.  In the two channel universe of the 1970s or even the 13 channel cable world of the 1980s, audiences didn’t really have much choice.

Just to make sure you have a clear picture in your head, though, think Bobby Bittman from The Sammy Maudlin Show.

Then think of a parody of Bobby Bittman on The Sammy Maudlin Show.

Now you are getting close to the reality that is Wednesday’s vintage Danny Williams speech.  Take an endless recitation of how much money government spent on this that or the other.  Rattle off supposed triumphs. Talk of a new attitude of “confidence, courage, maturity and integrity”. Cliches and pat phrases interspersed with random quotations from Bartlett’s.  As formulaic as The Ropers.

The result is jarring even beyond the idea that merely spending increasing amounts of cash is the only measure of success, that running massive deficits displays “fiscal discipline” or that calling Bank of Canada Governor Mark Carney “a very powerful individual” is not trite.  With all the bravado and self-praise thrown liberally around as well, one has a speech that reeks of insecurity, fear, and childishness.

For Newfoundlanders and Labradorians, the speech was surely embarrassing. What else could it be when anyone  - let alone the Premier of a province – speaks of noble virtues, promises to “take no prisoners” in a political war with Quebec over the Lower Churchill, then immediately afterward quotes Mohandas Ghandi and yet remains completely oblivious to the stupidity of doing so in such a context.

On one level no one could blame any politician for doing what appears to work politically, but on another level,  the Premier’s performance at the Board of Trade was also a sign of an administration that has – to put it plainly - run out of ideas.

That lack of ideas is hurting the province.  The Premier has neither the markets nor the money to erect his $14 billion wet dream.  If he did, then Danny Williams would be building it instead of talking about it.  In the meantime, his obsession blocks out any development of wind or other energy power in the meantime.  That – as strange as it seems – is the government’s energy policy.

What’s more, the opportunity that does exist south of the border is being squandered in imaginary political squabbles.  Neil Leblanc just finished his appointment as Canadian consul in Boston.  As he noted in a recent interview, the northeastern United States is a ripe a lucrative market. 

But, Leblanc noted, it is not good enough for Canadians to say simply that we are here so “Come buy from us”.  In other words, it is not enough to say we have the most phantasmagoric undeveloped green energy planet in all Creation.  Canadian provinces cannot sit and wait for business to fall into their laps. The New England states themselves are also building new energy sources.  Other American states are already building new generation and transmission facilities to supply the eastern seaboard.

"There is time for the Atlantic provinces and Quebec to put their best foot forward. We have a lot of natural resources here, which we can hopefully take advantage of," he said. "It's a win-win situation if we can do it."

It could be a win-win situation.

Unfortunately, as long as Danny Williams uses the same speech over and over again, the best foot is not going forward. 

Far from it.

It’s time for the old schtick to retire.

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Related: 

• Bury my lede at Muskrat Falls
• The Old Man, Old Habits and Old Chestnuts
• Reach for the Screech
• Five years of secret talks on Lower Churchill;  the Dunderdale audio

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.

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A summer like no other: torquing in Technicolor on the cheap

One of the great things about summer for perpetual campaigning is that cabinet ministers can spit out sheer nonsense and reporters for the local paper won’t even bother to ask pesky questions.

Like how will an imaginary project could ever  lower carbon emissions in the real world.

And in this bucolic world, where minister’s publicists apparently don’t have to pitch a puff piece, even one of the most incompetent of ministers can sound like she knows something.

The result is better than the stuff pumped out by the official government publicity system:  in this case, the reporter’s name goes on the piece and it appears in a local newspaper. Having gone through a supposed editorial review, the resulting piece suddenly has way more credibility than it actually deserves.

Charlene Johnson – arguably the second biggest bumbler in the current provincial administration  - recently got the chance to dazzle readers of the Western Star with her thoughts on how the province has an opportunity to lead the world in tackling global warming.

“There are opportunities to use energy more efficiently, displace fossil-fuel based power generated by Holyrood with renewable energy from Lower Churchill, and ensure we continue to manage our land and forests in ways that store greenhouse gases rather than release them to the atmosphere,” Johnson said.

If Johnson knew something more than her briefing books or was willing to speak frankly, she’d acknowledge a couple of relevant points here.

The most obvious is that the Lower Churchill doesn’t exist and likely won’t exist within the next decade or two.  As such, any ideas about reducing emissions from Holyrood using the Lower Churchill is just pure bullshit.

Second, the government’s energy plan places economic benefits ahead of environmental ones.  It isn’t about sustainable development or reducing the province’s greenhouse gas emissions.  It isn’t an energy plan or environmental plan as much as it is a business plan.

Everything is held hostage to the LC anyway, but the project talks about ways of building new energy generation for export.  It doesn’t address local needs at all.  If it did, the plan would set policies that encouraged energy conservation on the island and the development of new generation that has a low environmental impact. 

You can see this rejection of local needs in the Lower Churchill environmental review documents, for example. The first thing that strikes you is that the LC isn’t needed to meet current or anticipated energy needs on the island. 

Those demands are so minor that a combined program of conservation (including improved efficiency) coupled with new generation (more than 54 MWs of wind) would meet any demand anticipated in the LC documents.  And just remember that document was drawn up in a world where all that hydro from Abitibi’s Grand Falls-Windsor operation was making jobs in central Newfoundland.

As for Labrador, the Lower Churchill documents plan to continue using diesel generation, despite the fact power lines for the Lower Churchill would pass right by some of the communities it plans to leave on diesel generation. As astonishing that seems, that is the project the province’s environment minister is holding out as a way of dealing with emissions in the province.

This is not a new idea, by the way.  The 2005 climate change action plan contains the same fundamental bias in favour of large, expensive megaprojects.  It anything but a modest development of wind energy because wind is supposedly intermittent.  However, experience elsewhere shows that wind can deliver consistent power levels if a series of projects over a wide area are joined together and managed effectively.

There are opportunities for Newfoundland and Labrador in the fight against global warming.  The problem is that the provincial government policy rejects ideas that could take advantage of those opportunities or puts obstacles in their way.

Anyone can see the fundamental problems in the provincial government’s policy – it doesn’t actually have a sustainable development act or a green energy policy, for example – if one had the time or took the time to read.

Fortunately for Charlene, the crowd at the Western Star didn’t have the time to get ready for her.  As a result she gets to spout complete bullshit and have the Star present as if it were gold.

What better way for a bumbling minister top spend August than torquing in Technicolor on the cheap.

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NALCOR: the power of constipation

Supposedly all we need is to know that the provincial government’s energy corporation, d.b.a. NALCOR, is “aligned” and will take all the time it needs in order to arrive at a “quality decision” on whether or not to install emission control equipment on its diesel generating plant at Holyrood.

For now, let’s leave three things out of this discussion.

First, this isn’t the place to rehash the nonsense which is NALCOR’s two, inherently contradictory position on Holyrood.

Second, and related to that, let’s not draw too much attention to the fact that NALCOR chief executive Ed Martin’s proposed solution to the $600 million cost of cleaning up Holyrood’s act is a multi-billion dollar pair of hydroelectric dams in Labrador and a giant set of power lines, the lines by themselves estimated to cost more than three times the scrubber cost, that will stretch out to the Avalon.

And third, let’s not note that NALCOR’s own capital plant maintains that Holyrood will have to continue running for the next two decades at at least one quarter to one third its capacity.  In other words, it won’t be shutting down at all.  As such, NALCOR will have to spend the $600 million or so in order to reduce noxious emissions from the plant regardless of whether the Great White Whale gets built or not.

Why Ed Martin and his boss, the Old Man, continue to pack around about this and bullshit the people of the province is beyond rational comprehension.

Instead of that, let us focus Martin’s suggestion that maybe some new types of generation might allow NALCOR the dirty power at Holyrood with some nice clean stuff. That might be cheaper, sez Martin than the environmental cleaners.

For starters, Martin is already sitting on juice to help replace Holyrood.  He got it as a gift from Danny in December 2008.  The only problem – apparently  - is that the interconnection between the Avalon and the rest of the island cannot carry the whole load. 

NALCOR needs some cash to make things happen. NALCOR has the cash, of course, or the capacity to borrow it, thanks to some generous gifts of public money  - yours and mine – courtesy of the Old Man and his crowd. The company is in a nifty position, frankly, since they get to play at being an oil company without having to pay all the costs.  NALCOR won’t pay the owners of the resource  - you and me - a penny in royalty for the oil we’ve given then.  We get the liability and the cost.  Martin and his crowd get the cash.

Pretty sweet deal, if anyone is asking.  And frankly, given the generosity of the current administration with resources and cash – yours and mine - it wouldn’t be too much if you and me expected Martin to install the cleansers and the new line most ricky tick.  He can spare us the bullshit and just get on with the job.

But it is when Martin mentions wind energy that he turns from a purveyor of  annoying bullshit to profound disingenuousness.

As Martin knows, this province has the smallest amount of wind power installed or under development of any province in the country.  It is a mere 54 megawatts in two sites. Tiny Prince Edward Island has more than twice that already on the go.  In short, this province, the one the Old Man and his retinue proclaim as a current and future energy warehouse is so far back in the field that it is not even close to being able to see the far distant ass the of the last place contender for the Crown.

There are two reasons for that.  Assuming that Martin read the Lower Churchill environmental applications he already knows that there is actually no reason to build the LC if the main reason is shipping power to St. John’s.  There’s really no need for additional generating capacity and, as it stands, NALCOR can now reduce Holyrood to virtually nil capacity.

As for the rest of the province, that is, the largest bit of it, the reason there are no wind farms under consideration is simply because NALCOR and the province don’t want them.  Official government policy subordinates any new generation, from small hydro to wind, to the Great White Whale project.

Put another way, innovation is dead as a doornail in Newfoundland and Labrador. The provincial government’s energy policy is working against the best interests of the people of the province.

Ed Martin’s comments to CBC recently could just as easily have been summarised with a parody of the old Mexican bandito line:  “Innovation?  We dun need no stinkin’ innovation.” Martin merely affirmed the power of constipation that afflicts the administration and its energy company, at least when it comes to innovation and energy.

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Samsung signs energy deal with Ontario

Under a deal announced Thursday, Samsung Group of South Korea will develop 2500 megawatts of wind and solar energy in Ontario at a cost of $7.0 billion.

Samsung will also create 16,000 manufacturing jobs in Ontario.

Meanwhile, in Newfoundland and Labrador, the energy warehouse…

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Yipppeee! Bring on those higher energy prices

From the New York Times:

In 2009, some 31,000 households in Rhode Island will have their utilities shut off, and the effort to juggle energy bills and mortgages is helping push some homeowners into foreclosure, said Henry Shelton, director of the George Wiley Center, a consumer advocacy group here. (Here, as in many states, utilities may not disconnect the poor in the winter.)

Since 2000, the cost of heating a home with fuel oil has more than doubled and the cost of heating a home with electricity has risen by one third, outpacing many incomes. The recent surge in unemployment has thrown even more people into energy debt.

High energy prices will hamper any recovery in the United States.

Hindering a recovery of the American economy will screw everyone who depends on exports into the Untied States as a staple of their own economy.

Like say Canada generally and Newfoundland and Labrador in particular.

Any fiscal plan built on perpetually high energy prices is inherently flawed and prone to failure.

Catastrophic failure.

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Five years of secret talks on Lower Churchill: the Dunderdale Audio

In early September, natural resources minister Kathy Dunderdale revealed that the provincial government tried unsuccessfully for five years to get Hydro-Quebec to take an ownership stake in the Lower Churchill project.

A key component of the offers to HQ included the pledge to set aside any talk of redress for the 1969 Churchill Falls contract.

The talks were never revealed publicly until Dunderdale’s admission.

The news was all the more astonishing given that Premier Danny Williams stated repeatedly between 2001 and 2005 that he would not cut a deal with Hydro-Quebec on the Lower Churchill without some from of compensation – redress – for the inequitable 1969 contract that sees Hydro-Quebec buy virtually all the Churchill falls output for fractions of a cent per kilowatt hour.

To date, not a single conventional media outlet has reported Dunderdale’s comments.

Amazingly, not a single conventional media outlet has picked up the very obvious point about setting aside any grievance over the 1969 contract despite Williams repeated pledges to make redress a part of any Lower Churchill deal that involved Hydro-Quebec. 

That grievance is a core part of Williams’ intervention in the New Brunswick Power proposal.  On Friday, he noted the appropriateness of the Atlantic Premier’s meeting at Churchill Falls since “it symbolizes exactly what's happened to Newfoundland and Labrador at the hands of Hydro-Quebec.”

While excerpts have been posted at Bond Papers and at labradore previously, this is the first time, the audio file has been posted: Kathy Dunderdale, September 4, 2009, live on VOCM Open Line with Randy Simms (he’s the fellow pictured with mayoral chain ‘round his neck).

 

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Related:

• “Williams miffed Hydro Quebec rejecting ownership
  stake in Lower Churchill”, September 4, 2009
• “Churchill Falls reversion fails for second time”, September 9, 2009
• “NL caught screwing with Churchill Falls:  the quotes”, September 9, 2009
• “ Hydro Quebec not an issue:  Ed Martin”, September 10, 2009
• “R.I contradicts Dunderdale; no legislative problems and state still interested in Lower Churchill power”, September 16, 2009
• “Lower Churchill unviable for the foreseeable future”, October 29, 2009 [Market assessment by industry analyst]
• “Lower Churchill long way off”,  November 9, 2009 [Comments by Premier]
• “Lower Churchill definitely a long way off”, November 18, 2009 [problems in finalizing land claims deal]
• “Danny Williams and the Philosopher’s Stone:  Control and Resources” November 17, 2009
• “Danny Williams and the Philosopher’s Stone:  Converting Principles to Cash”, November 18, 2009

The Philosopher’s Stone at Work: the Hebron fiscal agreement

Consistent with government policy of selling off energy assets – converting principle to cash - clause 8.4 (A) of the Hebron Fiscal Agreement exempts the NALCOR oil and gas corporation from provisions of the agreement that allow government to treat the company differently from other offshore oil companies.

Sections 8.2 and 8.3 shall not apply to OilCo as long as OilCo is a Crown
corporation of the Province.

The words “as long as” suggest a provision to cover off the potential sale of NALCOR’s oil and gas subsidiary.

It wouldn’t be necessary unless the current administration anticipated selling the asset at some point.

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Related: 

• “Danny Williams and the Philosopher’s Stone: Control and Resources”
• “Danny Williams and the Philosopher’s Stone: Converting Principles to Cash”

Danny Williams and the Philosopher’s Stone: Converting Principles to Cash

 

“It's giving away their future.”

Danny Williams on the NB Power sale

__________________________________________________________________

At the heart of a little flame war last week on one local blog came a rather surprising nugget of hard news that Newfoundlanders and Labradorians likely have never seen and may well never see covered at all – let alone in depth -  by local media.

Telegram blog writer Geoff Meeker noted a comment by Premier Danny Williams in the House of Assembly on April 30, 2008.  In answering an opposition question about putting $100 million into debt reduction for Newfoundland and Labrador Hydro, the Premier said:

It was a previous Liberal government that wanted to actually privatize Hydro. This particular government wants to strengthen Hydro, wants to make it a very valuable corporation: a corporation that will ultimately pay significant dividends back to the people of this Province; a corporation that perhaps some day may have enough value in its assets overall as a result of the Hebron deal and the White Rose deal, possible Hibernia deal, possible deals on gas, possible deals on oil refineries and other exploration projects, where hopefully we might be able to sell it some day and pay off all the debt of this Province, and that would be a good thing. [Emphasis added]

That’s right.

Danny Williams spoke publicly about selling off some or all of the province’s energy corporation to pay down public debt.

CBC’s provincial affairs reporter David Cochrane added to the discussion online and offered some additional insight into the Premier’s thinking:

We pulled him outside for a scrum to ask about it. Even before we asked a question he clarified his comments. He said he misspoke in the legislature. He wasn't talking about selling Nalcor. He was talking about selling the individual assets it acquires.

For example, if the Hebron stake is eventually worth 5-billion [sic] dollars and someone wants to buy, Williams said he would consider selling it to reduce debt.

That was consistent with past comments he had made when the government rolled out its plan to revamp Hydro into an energy company.

As established in the first part of this series – Control and Resources -  that isn’t what Williams had been saying consistently at all.

To the contrary, selling any asset of the energy corporation would run directly counter to the stated goal of acquiring control over the province’s resources and hence its development and future.  Being masters of our own destiny is tied directly to resource ownership.

But Cochrane was right:  Williams had talked about selling some or all of the energy corporation before.  As Cochrane showed, Williams had mentioned the idea in October 2005 in a story Cochrane had done on Ed Martin’s arrival as chief executive officer of the fledgling corporation that would be eventually known as NALCOR Energy:

Williams says his top priority is for the company to become an investor in every form of energy development – or, as he calls it, to get a piece of the action.

"I would like to see Newfoundland and Labrador Hydro gain a strong asset base, so in fact then the government of Newfoundland, as a shareholder, also benefits from that asset base," he said.

…

"If energy continues to grow in value as it is now, perhaps what we could now buy for a billion dollars could be worth $10- or $20 billion in 10 or 20 years' time, which means that those assets have a value whereby we could pay off our debt," Williams said. [Emphasis added]

The 2005 comment is not as clear as the 2008 version in the legislature but they are along the same lines. 

And certainly in 2005, Williams wasn’t splitting hairs over regulated (electricity) versus non-regulated (oil and gas) assets as Williams apparently did in the unreported portion of the media scrum in April 2008.  As Cochrane described it:

Williams did not say he would sell off all the assets (i.e power generation and transmission capacity). He was talking energy assets in the oil and gas sector.

Now while it doesn’t appear that Williams has said this “many, many times” as Cochrane asserted elsewhere in that comment, there is no question Williams has spoken of selling off some or all of the energy corporation in order to pay down public debt, if the price was right.

Nor is it the only reference to selling energy assets, even though the idea is not contained in the energy plan or the campaign manual.   In a clause of the New Dawn agreement, released in September 2008, one provision covers the potential sale of the Newfoundland and Labrador interest in the Churchill Falls (Labrador) Corporation:

On the one hand, the Williams administration has a clear policy connecting the principle of control of energy resources with ownership of equity stakes in energy projects.

Yet at the same time,  the Premier has spoken publicly about the potential that these assets could be sold to reduce public debt.

And on top of that, an agreement with the Innu Nation includes a specific provision covering the potential sale of the Newfoundland and Labrador majority shares in the company that operates the  Churchill Falls power complex.

Clearly the two notions cannot live in the same space.

Well, they can actually if one considers another statement by Danny Williams which describes another aspect of his political philosophy:

What I said before and I said going in, this is about principles, but it's also about money as well. At the end of the day, the promise and the principle converts to cash for the bottom line for the people of Newfoundland and Labrador.

That’s a comment Danny Williams tossed out in November 2007 during the racket about broken political promises with Stephen Harper.

Williams used the word “principles” in the familiar sense.  A “principle” is a fundamental rule.  A “principle” may also be expressed as a value like openness, honesty, or integrity.

The dispute was a matter of principle, in that sense; a promise made is a commitment to act that must be fulfilled.  If someone breaks his or her word without good cause or explanation, the relationships between people can no longer function.

But “principle” in the way Danny Williams used it on that occasion in 2007 identifies the “principles” as nothing more substantive than the basis for a claim of damages or the source of a grievance.  Relief or compensation can be had by identifying a sum of money, or, as Williams puts it: “the principle converts to cash.”

The notion is hardly surprising for a lawyer who spent a lot of time arguing for damages for his clients, even if there are few others who would – on the face of it – accept that principles of any kind can be transformed to coin.

Yet Danny Williams obviously operates on the belief that he has a political Philosopher’s Stone in his pocket.  Like its legendary alchemical predecessor that converted base metal to gold, this stone would convert electricity and oil into dollars.

The curious thing is that none of this has been reported clearly and consistently within the province.   It is doubtful that a majority of Newfoundlanders and Labradorians know anything but the old and familiar notion that links control of resources with the future. 

Yet there is no mistaking that the Williams administration has another policy firmly in place  - at exactly the same time - which would allow for the sale of resources in a fashion that directly contradicts the notion of control on which the administration claims popular support for its policies.

Little wonder in April 2008 then that Danny Williams responded so strongly when reporters asked him to scrum on his statements.  Again, as the CBC’s David Cochrane described it:

We pulled him outside for a scrum to ask about it. Even before we asked a question he clarified his comments. He said he misspoke in the legislature. He wasn't talking about selling Nalcor. He was talking about selling the individual assets it acquires. [Emphasis added]

In the end, the reporters in the scrum opted to report nothing of the comments at all, including the Premier’s “clarification.”

Regardless of what the reporters decided on that busy work day, the Premier’s comments and the unsustainable internal contradiction in them are obvious in both the Premier’s criticism in the legislature of Hydro privatisation on the one hand and then the expressed interest in flipping assets to pay off debt on the other.  It doesn’t matter how often the Premier said it.

The comments take on new importance though given the Premier’s recent attack on the sale of NB Power to Hydro Quebec. 

And at the same time, as the province faces tight provincial finances, the question of exactly what is government policy on energy, control and sale of resources to meet financial needs deserves to be answered clearly and unequivocally.

Such a question can only be answered, however, if someone deigns to ask it.

-srbp-

Danny Williams and the Philosopher’s Stone: Control and Resources

“Securing equity means having greater leverage to control our own destiny.”

“The principle of making our own way and taking control of our resources is the right one.”

Two quotes from the Speech from the Throne,

House of Assembly, March 2008

_______________________________________________________________

Control is a key principle in Danny William’s political philosophy.

Control of the province’s natural resources is a core point in most of his administration’s public statements on oil, natural gas and electricity.

The word occurs twice in his recent letter to Shawn Graham about the proposal to sell NB Power to Hydro Quebec. There’s the reference to “New Brunswickers who no longer control their energy destiny.” Then there’s the contrast: “ But we took control of our own destiny and Nalcor Energy is now a crown jewel in our province’s energy assets.”

Williams also raised the concern about control of transmission routes supposedly resting in the hands of Hydro Quebec and of the control of rates resulting from the sale of NB Power.

Energy and control go together, as Williams made clear when he announced in 2006 that the provincial government would “go-it-alone” on the Lower Churchill. he made the following comments in the House of Assembly on May 8, 2006:

“...but the big message here is that we are masters of our own destiny, that Newfoundlanders and Labradorians are in control of this project for the benefit of Newfoundlanders and Labradorians."

- "By taking the lead we are in full control of the project, unlike the circumstance with the last government; that project, basically, was going to be controlled by Quebec. It would have been marketed, it would have been financed, the transmission would have been done by Quebec. The control of the project, the project management, would have been done by Quebec. As well, if there had been an overrun on the project, the last Lower Churchill project that was proposed by the Grimes government, in fact, we could have lost the project; because, if there had been an overrun, we would not have been in a position to be able to finance it….”

But control is not just a principle behind energy initiatives. Being “masters of our own destiny” is the same idea in other words and it crops up repeatedly in Danny Williams’ speeches and comments as an idea central to government policy.

Control is a principle of the administration’s policy. It is a guiding rule, an essential quality, or the basis for action.

Control in the Energy Plan

The relationship between resource control and equity is established clearly in the Conservative party’s 2003 election platform.

The section on resource development puts it this way:

The power to control development of offshore oil and gas is of little value unless the Province has the know-how to deal with technical issues and field assessments equivalent to the expertise of the major oil companies, and sufficient ownership in production licences to influence development decisions.

• A Progressive Conservative government will either restructure Newfoundland and Labrador Hydro as an energy company, or create a new Energy corporation, with a mandate to retain equity in the Province's oil and gas resources. This will be done on a go-forward basis.

The relationship is mapped out more plainly in the 2007 energy plan released in time for the 2007 election campaign. So important is control that it is the second principle guiding the plan, after sustainability:

Our Principles

1. Sustainability

…

2. Control

We will exercise appropriate control over the development of our resources to ensure they are managed and used in the best interest of the people of Newfoundland and Labrador. We will assume an ownership interest in the development of our energy resources where it fits our strategic long-term objectives.

The idea is repeated again in what, by now, is a familiar formulation in a discussion of energy resource management (p.13):

We will take more control than in the past over the development of these resources and the benefits they generate.

Having identified the importance of control and the connection to management, management, the plan then re-affirms that equity stakes in energy projects are the first lever used “to ensure sound and effective management and to maximize benefits over the long term.” (p.18)

Control and equity stakes are thus intimately connected in the Conservative philosophy.

The 2003 campaign platform identified the key role to be played by a new energy corporation in holding the equity stakes and thereby serving as the means by which the provincial government would exercise the sought-after control of energy resources.

As well, the energy corporation has other key control responsibilities set out in the energy plan:

- “If the Provincial Government [sic] lifts the moratorium [on small hydro projects], it will institute a policy that the Energy Corporation will control and coordinate the development of small hydro projects that meet economic thresholds and are viable for an isolated island system.”

- “One of our goals is to maximize our benefits from resource developments. We believe this means the Energy Corporation should control the development of all small hydro developments for the benefit of all electricity users and determine whether to do this alone or with private sector partners.”

- “To maximize these benefits [from wind power], the Provincial Government believes the Energy Corporation should control the development of all wind projects and determine when to develop alone or with private sector partners.”

- “Due to the strategic importance of generation and transmission to the future of Newfoundland and Labrador, the province, through NLH [Newfoundland and Labrador Hydro], will retain ownership and control of its existing transmission and generation assets”

To anyone familiar with the Williams administration, none of this will be new. in fact, it will be so familiar that one might wonder the point of such an extensive recitation of the relationship between the principle of control and the idea of equity stakes in Danny Williams’ philosophy.

That will become clear in the second instalment of this series.

-srbp-

So where’s NALCOR?

The 17th annual bilateral (U.S.-Canada) conference on energy issues is taking place in Boston this Thursday and Friday.

The conference theme is North American Energy:  Forging Ahead in the Current Economic and Environmental Climate.

Everyone who is anyone in energy issues on the northeast of the continent will be there as a sponsor and on the program.

Except the scrappy little energy company that Danny Williams would like to flip  some day. 

That’s right.

NALCOR Energy is nowhere to be seen.

All the big players are there as platinum level sponsors.

Newfoundland and Labrador is being represented by the provincial government which booked in for the second cheapest sponsorship level ($1500).

And the Newfoundland and Labrador representative on the program is none other than than…

Nope.

Not the Premier.

Jean Charest is a keynote speaker, though.

Nope.

Not Ed Martin.

Not even Kathy Dunderdale.

There’s only Wes Foote, an assistant deputy minister in the natural resources department.

And he’s not even an electricity guy.

Wes is the oil ADM.

If you really want to develop the supposed energy hub of North America surely goodness you’d be out there marketing the heck out of the oil, gas and electricity opportunities in Newfoundland and Labrador at a conference where all the people who matter are showing up.

And you’d be using the state-owned energy monopoly to do it.

But NALCOR isn’t there at all in a prominent spot.

What gives?

-srbp-

An energy warehouse

How can it be that Prince Edward Island is getting 15% of its energy needs met by wind power but all Newfoundland and Labrador has are two small projects pumping 27 megawatts each and a“demonstration project” at Ramea?

And that’s it!

-srbp-

Scoping out the wind energy deficit

The current issue of The Scope includes a front page feature on wind energy in the province or – to put it more accurately - the lack of any serious development of wind energy.

Maybe one of the answers is that everyone talks about an island when in fact there is a huge landmass on the mainland potion of the province that is ripe for wind energy development.  Heck it’s even got a connection so people can ship the power to where it is needed on the eastern part of the continent.

There’s just one obstacle.

Care to guess what it is?

-srbp-