Math problems at provincial finance

That 60 cycle hum you hear is not the turbines spooling up on the Lower Churchill.

Nope.

That noise would be the intense spin – torque would be a better word – the provincial government is putting on its infrastructure announcement this snowy Wednesday. 

The reason for the announcement:  the provincial pollster – CRA  - is in the field.  With the nurses taking a strike vote and with a certain amount of anxiety out there about how bad the budget will be, the government party must have felt the need to make it appear that something good was happening in the budget to keep those polling numbers high.

Note the word “appear” in that sentence.

This is all about appearance.  If the provincial government actually wanted to do something, then the legislature would be called back and the new budget would be introduced.  They could run with it tomorrow since the thing is settled and has been for weeks. 

If it wasn’t about appearance, a bunch of cabinet ministers wouldn’t be sent to Labrador to announce things already announced.  The hospital in Labrador West is now officially the most announced project that never appears in provincial political history.  The Lower Churchill still holds the record for most costly non-project.

And if they had been really smart, then no one would have been proudly pointing out that all this was just re-cycling old news, as natural resources minister Kathy Dunderdale did with CBC last night or one of the political gaggle did at the news conference in Goose Bay.

This budget announcement is apparently not about math.

We are told that infrastructure spending will be about $800 million.

We are told it is a record.

We are told that:

The $800 million the Provincial Government will spend on infrastructure in the 2009-10 fiscal year represents a jump of $285 million – well over 50 per cent – from the 2008-09 fiscal year.

Last year’s “unprecedented” infrastructure spending was valued at $673 million.  An increase of “well over” 50% of that amount would put infrastructure spending this year at $1.009 billion.

If $285 million – the size of the increase – is actually more than 50% of last year’s spending, then we have discovered something very interesting.  Despite announcing $673 million in “unprecedented” capital spending last year, the provincial government may have spent a not altogether unusual amount of somewhere around $500 million. That’s about 25% less than announced.

Based on that precedent, capital spending in 2009 will actually be around $600 million, not the $800 million torqued on Wednesday.

And it’s not like this is the first time something coming from provincial finance didn’t add up. Different figures keep appearing from Jerome Kennedy’s department all the time.  Like Equalization.  Numbers magically appeared all through that fiasco a couple of weeks ago that had never been seen before in public, including in the province’s audited financial statements.

Lucky for the finance crowd and their government publicity machine they can still hypnotise some people with the magic of PowerPoint slides.

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Churchill Falls “go-it-alone”: not so much edition

It’s not like you haven’t heard this before but the provincial government isn’t going alone on the Lower Churchill if the Lower Churchill goes at all. 

[Gilbert] Bennett indicated that the go-it-alone option is not the only one on the table for the potential megaproject.

"The preferred alternative is for us to lead the development of the project," Bennett said.

"That statement has been made certainly by government on many occasions. From our perspective, our job at this point in time is to collect the data necessary to give government the information they need to make a decision. So I'm not going to comment on partners, sources of equity, at this point in time."

This story – from the Wednesday telegram confirms what Bond Papers said in 2006: the thing is more show than substance and the thing can only work if other people chip in to pay for it.

When the project was announced, though, the Premier wasn’t quite so equivocal as to call going it alone merely a “preferred” option:

- "The purpose of the announcement today was to indicate that the Government of Newfoundland and Labrador, and the people of Newfoundland and Labrador, are going to do this project themselves."

- "...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..."

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Lower Churchill EIS: first observations

NALCO released the environmental impact statement for the Lower Churchill development on Tuesday.  Following are some initial observations on certain sections.

1.  Need:  The project is justified based on meeting current and future domestic demand including industrial development, export potential and maximising local benefits.

a.  Domestic demand: NALCO’s own figures forecast load growth at “1.1 percent on the Island and 0.2 percent annually in Labrador. Forecasts indicate that by 2027, an additional 582 MW of generating capacity will be required to meet the demand in the Province, an increase of more than 29 percent over requirements in 2007.”

The report varies the power measurement units (megawatts in some places and gigawatt hours in others).  This makes it difficult to assess clearly the actual domestic demand and supply situation without an independent analysis.

The EIS mentions possible small hydro projects but puts the total potential at 60 to 100 MW instead of 150 MW.  As well, the EIS does not include the upwards of 150 MW of capacity NALCO acquired in the December expropriation of hydroelectric assets on the island.

b.  Industrial Development:  The EIS lists a series of potential industrial developments and estimated energy demands. For the most part these are fanciful projects that have been kicked around for decades without ever being seriously contemplated.

Still, even if by some chance these projects all materialised and needed new power sources, the requirements for most of the Labrador projects could be met using Churchill Falls power under the recall option in the original contract. Additionally, CFLCo could divert additional power beyond the original contract amounts through an agreement with Hydro-Quebec.  Such an approach would be attractive to HQ since it would increase the profitability of CFLCo.

Project	Power Demand (MW)	Status/Notes
Aluminum smelter (Labrador)	560	Studied since 1970s.  Unlikely, based on market demand, costs etc. Would require large amounts of power at or below production cost to offset costs of importing raw materials and transportation to markets.
New iron ore mine (Labrador)	255
Uranium mine	35 to 45	Could be met with power from CFLCo.
Silicon smelter (Labrador)	50	Promoted since 2000, the project for western Labrador has thus far failed to materialize.
IOC expansion (Labrador)	20 to 30	Currently on hold pending changes in markets.  Power need could be met through Churchill Falls recall.  IOC is a partner in Twin Falls Power Corporation which currently supplies power to western Labrador through an arrangement with CFLCo.  Power demand for the expansion could be met easily through the existing recall arrangements under the 1969 Churchill Falls contract.
Voisey’s Bay underground mine (Labrador)	40 to 50	VBNC currently meets its electricity demand using thermal generation.  Expansion could be powered using same method. Potential exists for small hydro development closer to project than Lower Churchill.  Transmission lines from LC to VB would add significantly to project cost.
Refinery (Newfoundland)	175 to 235	Second refinery project died in 2007.  Only reported dead publicly in 2008. Current status:  dead.
Nickel refinery (Long Harbour)	80	Can be met with existing capacity, additional capacity expropriated from AbitibiBowater or development of added capacity through wind generation and small hydro.

2.  Cost:  The project, consisting of two dams and hydro lines connecting to Churchill Falls, is estimated to cost $6.5 billion.  This seems low based on the recent Montreal Economic Institute study of Hydro-Quebec and some media reports are carrying the estimated cost of the project at $10 billion.  Both figures apparently come from the proponent.  This suggests the project is considerably less well developed than it appears.  Were it close to actual development, the costs would not be varying by over 50% in the time it took to revise this EIS document. ($6.5 billion to $10 billion)

As a Crown corporation, NALCO debt is backstopped by the provincial government and therefore affects the province’s financial status.  As current structured, this project is larger than the current provincial government accumulated borrowings and approximately the same size as the provincial government current net debt (assets less liabilities). 

3  Timelines:  The project will not complete the environmental review process until late 2010 or early 2011.  If built, the project would require a decade to bring fully on stream.

This is considerably at odds with comments by NALCO chief executive officer Ed Martin who claimed as recently as October 2008 that problems in American capital markets would delay the project by a mere six months. By contrast, the Premier has been lowering expectations on the project timelines since early 2008.
A proposal by Ontario and Quebec in 2005 suggested project sanction in 2007 with first power by 2011 at the earliest. This was rejected in favour of the so-called “go-it-alone” option which envisaged first power in 2015.

4.  Land claims agreements.  The Innu land claims vote originally scheduled for January 31 was cancelled with reports the Innu Nation and the provincial government had returned to the bargaining table to discuss “outstanding issues.” There have been signs of problems with the agreement since shortly after it was signed on top of contentious periods during the negotiations.

The EIS does not discuss the most recent developments, noting only that the land claim is still being negotiated (p.25) and that the provincial government and Innu Nation signed an agreement in September 2008 that “resolves key issues related to the land claims (Innu Rights Agreement), Innu redress for the upper Churchill hydroelectric development and the lower Churchill (Project) IBA.” This may not be accurate.

5.  Power purchase agreements.  No sign of any at all anywhere with any body.  They are crucial to securing long-term financing. The EIS merely describes a standard, theoretical structuring of mostly long-term agreements supplemented by short and medium-term contracts. 

6.  The Long Way Around, a.k.a the Anglo-Saxon Route.  Originally conceived by Joe Smallwood as a negotiating ploy for dealing with Quebec, the idea of stringing power lines to the island and then on to the Maritimes remains more fantasy than reality.  The concept has always floundered on the basis of cost.  The ASR remains a rhetorical device for this project. 

A line to the Avalon peninsula from the Lower Churchill  is being sold in part because of its potential to be extended southward to the Maritimes.  The Nova Scotia Liberal Party leader recently met with Premier Danny Williams to discuss the ASR.  NALCO and Emera signed a memorandum of understanding to explore the possibility of moving power from Muskrat Falls and Gull Island to Nova Scotia.

The EIS mentions this project only obliquely.

7.  Project linkages or Do they not talk to each other in the office?  The Lower Churchill project is justified in part on the basis of replacing thermal generation at Holyrood.  The EIS contains no proposal for meeting that requirement. Instead, the line to Newfoundland is referred to as an addition.  All the same, it appears that this document has not been updated in some time.  Either that or people within the office don’t talk to each other.

EIS comment on the line to Newfoundland sent for environmental review within the last two weeks:

At the time of this filing/submission, Nalcor Energy expects that there has or will be a registration and project description filed for the proposed Nalcor Energy Labrador‐Island Transmission Link project.

8.  Alternatives: When you are the proponent of a megaproject that is largely driven by political considerations, you are likely to give short shrift to alternatives to the politically-favoured project.

a. Conservation:  Estimated to reduce demand growth (2007 to 2027) from 29% to 17%. The implication of this is not discussed at all since it dramatically alters the demand profile being used to justify the project.

b.  Wind:  Wind capped at 80 MW due to what NALCO describes as problems with management of demand flow.  NALCO already has contracts for 54 MW.

c.  Natural gas:  EIS gives a cursory discussion of natural gas noting only that the technical and economic feasibility of gas-fired generation has not been established.

d.  Added capacity:  A vague discussion, at best, this section does not catalogue the existing alternative hydro generation sites. 

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Lower Churchill EIS released

NALCO released the environmental impact statement for the Lower Churchill project on Tuesday.

The environmental review will not be completed until 2010/2011, marking yet another slide back in the project timelines since 2005/06.

The project will take a decade to complete.

Current estimated cost  - for two dams and the feed to Churchill falls - is $6.5 billion according to the EIS.  This seems low.  Some media are reporting an estimated cost of $10 billion which is closer to cost estimates based on other hydro projects described in the recent study of Hydro-Quebec by the Montreal Economic Institute.  The $6.5 billion does not include the cost of the line to the island.

 

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Local crude holds above US$40

While the most widely reported front-month crude price – West Texas Intermediate – continues to sit below US$40, the benchmark for local crude  - Brent - continues to trade above US$40 on world markets.

The price differential between WTI and Brent hit US$11 per barrel temporarily on Friday.

Brent averaged US$55.50 (approx CDN$69) in trading in the fourth quarter of 2008.

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NALCO handling expropriation talks: AbitibiBowater

The province’s energy corporation is handling talks on compensation with AbitibiBowater for the latter’s expropriated assets, according to AbitibiBowater chief executive officer David Paterson in a Globe and Mail story Tuesday.

Abitibi executives are dealing with the pending transfer of assets through talks with the province's hydro utility, which is handling the issue of valuation. "We are in a dialogue indirectly with the government through Newfoundland Hydro," Mr. Paterson said.

Still, he said, the process is very one-sided. "[It] basically consists of Newfoundland telling us what they are going to do and we have to comply."

He said the expropriation legislation does not give the company any right to a judicial hearing. As a result, the determination of value "is at their whim."

The carrying value of the assets is US$300 million, according to documents filed with the Securities and Exchange Commission in the United States.

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The border war that wasn’t

Told ya.

Meanwhile the tinfoil hat brigade which usually bitches about the Globe and Mail not covering their stories now blame the Globe for covering their story.

Go figure.

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Ruelokke, Rowe and the Rule of Opposites

A couple of years ago, you couldn’t swing a dead cat without hitting a comment by Danny Williams to the effect that Max Ruelokke as head of the offshore regulatory board would be a really bad thing.

How bad?

Andy Wells would be better kinda bad.

The hysteria surrounding that nationalist cause of that moment – Ruelokke is hardly a Newfoundland name, is it? – prompted at least one local journalist to question the value of the rule of law since it was obviously [insert eye roll here]working against “us”.

Ruelokke and the offshore board are looking a lot like O’Brien/50% and the 1985 Atlantic Accord: something that was officially “bad” when it suited the current administration’s purposes but which turned out to be good in actual experience.

It’s yet another manifestation of The Rule of Opposites:  what is correct is the exact opposite of what the official government line was at the time.

Hibernia management and Development Company and Petro-Canada are suing the offshore regulatory board over its rules on local research and development.

At issue: new offshore R&D spending rules brought in by the Canada-Newfoundland and Labrador Offshore Petroleum Board in 2004.

Those rules require HMDC and Petro-Canada to spend a percentage of their annual offshore revenue on research, development, education and training activities in the province.

That money was estimated by the board in 2007 at $25 million annually, depending on world crude prices.
Under the new rules, the board has the right to suspend production licences if oil companies fail to meet their R&D spending obligations.

Both HMDC and Petro-Canada say the board has unilaterally changed the rules in midstream and they question its authority to do so.

Incidentally, the Hebron deal includes a huge give-away on research and development but that’s another story.

So this case has been working its way through the courts with the offshore board winning at every turn. The oil companies are now headed to the Supreme Court of Canada for the last legal round of the fight.

Odds are they’ll win again.

But you can’t help but notice that this is running contrary to the predictions from a certain segment of local public opinion.

The courts appointed by Ottawa, the courts that ruled “our” oil wasn’t our oil in the early 1980s are here standing by the crowd at the offshore board led by Max Ruelokke as they protect Newfoundlanders and Labradorians yet who, we were told emphatically, would not act to protect the best interests of Newfoundlanders and Labradorians.

And the appeals court justice who dissented from the majority opinion  - i.e. who sided with the oil companies - was a guy Jerome Kennedy recommended to go to the Supreme Court of Canada last September 6.  Kennedy’s recommendation of Mr. Justice Malcolm Rowe – along with Mr. Justice Leo Barry - was faithfully reported by the voice of the cabinet minister at the time, even if they don’t like you reading stuff from that long ago. (you can find the story through google but clicking on it generates and “error” message.)

Amazing as it seems, in the case of the offshore board – like Equalization - you really can’t go wrong most times by taking the government position of the moment and thinking the opposite.

And what about those oil companies like ExxonMobil that were “bad” in 2006 but which are now called “our offshore partners” by everyone from the Premier to his official spokesperson in natural resources?  Well, judge for yourself.

Your humble e-scribbler didn’t accept that they were enemies when some people wanted you to think that.  These days, they aren’t friends.  They are just companies doing business in the offshore and they should be treated as such. 

In the case of the suit against the offshore board the companies are just doing what they think is in the best interest of the people they represent: their shareholders.

That’s basically what the offshore board is doing on behalf of the people of Newfoundland and Labrador. Funny though how what happened is exactly the opposite of what some people wanted you to believe.

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And what about Signal Hill, 2012?

As it turns out, 2012 marks the anniversary of several major events in Canadian history but so far there has been very little talk of any commemorations.

The last battle of the Seven Years War took place at and around Signal Hill, St. John’s in 1762.

Other major North American battles of that war have been marked already and there was a plan to mark the anniversary of the capture of Quebec with a re-enactment of the battle. That plan fell victim to an outcry from Quebec separatists. The event was supposed to draw thousands of tourists including the history enthusiasts who  re-enact these sorts of events.

Well, those people who won’t be going to Quebec should be gearing up to come to St. John’s in 2012.

At the same time, 2012 marks the 200th anniversary of the War of 1812.  The Newfoundland Regiment played a significant role in several battles, including the defence of York. There are re-enactors for that war as well and they too will likely be getting ready for the big event three years from now.

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Hydro towers through UNESCO World Heritage sites: the editorial view

The Telegram Saturday editorial takes a dim view of NALCO’s proposal to string high voltage transmission lines through Gros Morne.

The problem is that the Gros Morne proposal, on the face of it, is hardly an acceptable option for a national park. Between a rock and a hard place, indeed.

Indeed it is.

One of the comments from a reader suggests that it is preferable to do this than keep a diesel generator running at Holyrood.

Fair enough at least for a proposition.

But the NALCO proposal doesn’t address the current electricity demand and the current utilization at Holyrood to cement the case that this massive transmission project – at least $2.0 billion in added taxpayer debt – is actually the best solution to the Holyrood problem. 

Electricity demand is not exactly skyrocketing on the island.  Two major industrial projects have died since 2005 and the Vale Inco project at Long Harbour will only suck 75 megawatts a year, when it comes on line some time around 2012.  In the meantime, the expropriation bill gifted NALCO with almost 150 megawatts of power that costs virtually nothing to run.

On top of that there are at least six other small hydro projects that have been frozen in place since the late 1990s. According to the province’s energy plan, that moratorium is due to be reviewed in 2009.

Meanwhile, Kruger was looking at a site at Silver Mountain.  NALCO itself completed studies on two others in 2006, one at Island Pont (36 MW) and another at Portland Creek (23 MW).  On top of that, AbitibiBowater had three sites under consideration in 2006:

• Badger Shute (24 MW)
• Red Indian Falls (42 MW), and
• Four Mile Pond (24 MW).

There are others.

One of the problems facing any development of those alternative sources of power is the stranglehold NALCO now holds on development in the province.  The energy plan makes it clear that the government now considered NALCO to have a monopoly within the province even before it expropriated several private sector developments including Star Lake:

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. However, in the long term, the province, through the Energy Corporation, must maintain full control over any new hydroelectric generation assets. We will do this by adopting a policy that no new water rights for hydroelectric generation will be issued except to the Energy Corporation or another company acting in partnership with the Energy Corporation.

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. 

NALCO isn’t famous for getting things done expeditiously.  It has taken the company the better part of a decade to implement several small wind power projects.  Efficiency and effectiveness aren’t the usual order of the day at any Crown corporation and as a recent study on Hydro-Quebec shows, taxpayers usually aren’t well-served by the behemoths.

Between a rock and a hard place, as the Telly-torialist put it,  doesn’t even begin to describe what else NALCO will come up with besides stringing power lines through a UNESCO World Heritage site.  Next thing they’ll want to add upwards of $10 billion to the public debt for something or other without any sign of a way of paying for it beyond borrowing.

Oh, wait.

They have already.

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Not quite so way-back machine: September 2006

Konrad Yakabuski wrote on the Romaine project in September 2006 and your humble e-scribbler linked to the story at the time and covered the follow-up stuff.

You can find the full article - “Only the brave gamble with Hydro Quebec” – various ways online.

It’s worth talking the time to go back and read it, worth it that is if you actually are looking for information as opposed to being party to the latest manufactured crisis.

Among other things, the Globe columnist puts the whole Romaine issue in the wider context of the Lower Churchill.

The real kicker, as noted by one commenter on a recent post, is that he draws attention to the local talk radio shows and their conspiracy theories. 

Yes, the local Dominion stores sold out of ALCAN foil in record time this week as new rumours abounded about some giant plot by the latest crowd of Evil [Insert name of this week’s official enemy here] who have supposedly always had it in for people who wear tinfoil hats all the time.

While you are prowling the Bond papers archives for September 2006, you can find a couple of other goodies:

• “he spoke.  and rapidly drank a glass of water.” On the 2004 Old Christmas Eve massacre of a speech on the supposed financial crisis facing the province.
• Danny channelling John Kennedy but getting mixed up in the transmission.  or maybe not.
• A discussion of the Telly-torial at the time which stoked some of the tinfoil paranoia at the time.
• The start of a series at the twice before and now finally defunct Independent on negotiating terms of union with Canada, again.  Some of us miss the Indy for its weekly dose of inadvertent humour.  Sorta like what Night Line has become: the new home of repetitive strained-reality syndrome. Where else could you hear a guy who has pontificated on everything there is to say about the 1969 Churchill Falls deal admit he just finished reading the only serious book on the subject, written by the by in the mid-1970s.  Or talk about “the latest poll” showing Provincial Conservative supported had plummeted.  Said “latest poll” was on a blog, something clearly previously claimed he never read and, in this instance, on a blog written by someone he has smeared personally before.  [Hint:  it’s obvious the night-time host didn’t actually understand whatever it was he read on the blog of the guy he smeared even if he actually read it in the first place.]
• A post on Equalization – wait, it’s only short – noting that the federal Conservatives had plans for Equalization that the most unwillingly “have” province in the country wouldn’t like one bit. “The only question that remains is how long will it be before Danny Williams declares a jihad on Steve Harper?” your humble e-scribbler asked in September.  Turned out to be less than 30 days before the Premier was urinating on the federal wingtips.  Again.

 

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Political Darwinism

How appropriate in this week of celebrating the guy who pointed out natural selection to the rest of us that the federal Conservatives should demonstrate that, in fact, some people are doomed to political extinction.

There should be a special category for political Darwin Awards.

Those would be the people who cooked up a scandal with some guy and his trusty tape recorder and released bogus “transcripts” all in an effort to bring down the government and claw their way one inch at a time toward power.

Then, when caught in a wee political and potential legal problem over a politician on his deathbed and offers of financial help that some think look suspiciously close to being bribes, these scandal-and-tape Neanderthals scream conspiracy when someone turns up with a tape of their boss talking about said dying pol and said cash.

The source of this latest example of antediluvian politics, of course, would have to be Pierre Poilevre.  The Prime Minister’s parliamentary secretary claimed in the Commons last week that it had been proven in court that the tape in question was doctored.

Not so, of course, as anyone who has followed the case would know.

Had that part been proven, as Poilevre claimed,  it is highly unlikely the federal Conservatives would have so quickly rushed to withdraw their law suit against the evil Liberals over the whole Chuck Cadman business in the first place.

Then again, no one ever accused Pierre of being the sharpest Clovis point in the pile.

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Nurses, government do the power dance

First, government tried threatening the nurses with an imposed settlement and back-to-work legislation in hopes of frightening them off their strike vote.

Then, when that didn’t work, they tried to lure them back to the table now with a significant change of position.

Then, when the nurses didn’t cancel their strike vote and return to the bargaining table immediately, the Premier and finance minister said they were disappointed the nurses’ didn’t accept the government’s olive branch. The even tried to bring up the financial scare issue of the looming deficit.

There are a few of things to bear in mind:

1. Nurses accepted the olive branch.  They just are going back to the bargaining table with a strike mandate in their back pocket, not when the Premier and finance minister would like.
2. It’s polling season.  Don’t under-estimate that timing issue as a motivating factor for an administration that spends an inordinate amount of time massaging polls. The provincial government had plenty of time to deal with this issue before now.  Their panic at having the government pollster in the field while the nurses carry on a strike vote isn’t a reason for the nurses to simply stop everything.
3. What happened to the bubble?  Before Christmas everything was rosy according to the Premier, finance minister and the government’s favourite economist.  Bond Papers readers knew better. It seems a little disingenuous for government to be singing the deficit tune now.
4. Back to the table now interrupts the strike vote.  The Premier and finance minister – both experienced lawyers – know that if the nurses interrupt their strike vote now, they’d have to start from scratch later on.  That would give government an additional six weeks or more if talks failed this time. Nurses lose by going back to the table prematurely so they aren’t likely to do it. Claiming they aren’t interested in talks sounds a little precious  - even desperate - at this point.
5. Did you hear the eyelids slamming shut?  Government’s tactics in dealing with the nurses have been clumsy, to put it mildly.  Jerome’s year-end deadline passed as if it was nothing.  His threat to legislate vanished this week.  It’s hard for the nurses to feel any sympathy for the provincial government when it has stuck to its hard line all this time.  It’s harder again for nurses to take government seriously when they first of all make threats and then don’t carry them out.  This week nurses heard Jerome Kennedy’s eyelids slamming shut as he blinked, big time.  That may not have been his intention but that’s what nurses saw. No on is surprised they are carrying on with their strategy;  it seems to be working just as government’s obviously isn’t.
6. Bad jokes don’t help.  Danny Williams didn’t help matters with his widely reported, cheesy joke about not wanting to get sick and have to face the province’s nurses in a hospital. He needs to throw away the guide to public speaking and joke telling Roger Grimes left him.  That’s tongue in cheek, by the way.  Williams lambasted Grimes for telling an off colour joke when Grimes spoke to American bankers a few years ago.   The little jest at nurses expense delivered to an audience at a national conference in St. John’s is every bit as bad or worse.

This might turn out to be the most interesting year in recent memory.  The provincial government may have finally found a group that can’t be bullied or intimidated or even fooled for that matter.

The Premier should call up his predecessor and get some better advice.  Brian Tobin tackled the nurses and didn’t come out of it all that well off.  And Danny Williams and his wannabe replacement Jerome Kennedy should remember:  nurses won’t forget.

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Experience counts: Gerry Byrne

Humber-St. Barbe-Baie Verte member of parliament Gerry Byrne’s letter to the editor of the Western Star appeared today.

In it, Byrne outlines events of the past couple of weeks and states – on behalf of his caucus colleagues presumably– their commitment to the province and the interests of the people it represents. 

Byrne’s political experience shows:

Joined by our leader, my fellow caucus members and I announced our commitment to fight Mr. Harper last Tuesday together.

That commitment is inflexible; it is our tactics that will change. While we are different in many ways, the premier of my province is regarded as an ally in this fight. Our ally was told of our intentions and he has called it reasoned and just. Unlike Mr. Harper, my leader and Mr. Williams have already opened a dialogue with each other as equals under a relationship of mutual respect. Both men, I believe, are smart enough to know that playing into Harper’s hands is to let him win.

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Hydro towers in national parks: first Gros Morne, now Mealy Mountain

The proposed Lower Churchill infeed will also involve stringing an electrode from the main transmission line into the territory of the proposed Mealy Mountain National Park.

Apparently hitting one national park in the province wasn’t enough.

The Mealy Mountain park has been under development for most of the past decade. 

Gros Morne Update: From CBC -

Peter Deering, manager of resource conservation at the park, said it's important the park not be disturbed by transmission lines.

"We do not support the proposal and we are not prepared to accommodate the proposal at this time," Deering told CBC News. "One of the reasons Gros Morne was designated as a UNESCO World Heritage Site was because of its wilderness values."

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IOC expansion on hold until markets improve

Rio Tinto Group will be cutting its capital expenditure budget from US$9.0 billion to US$4.0 billion in 2009 in an effort to deal with the global economic downturn. The company will fix capex for 2010 at sustaining levels.

As a result it appears that IOC’s expansion in western Labrador will be slowed or deferred beyond 2010. That may change if markets improve in the meantime.

Rio Tinto announced its 2008 results and 2009 plans on 12 February. 

At the same time the company announced a new venture with Chinalco which will see the state-owned Chinese company obtain interest in eight Rio Tinto mines globally. 

IOC is not among them.

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Freedom from Information: Nat Res Two-fer Thursday

The province’s natural resources department had rough day Thursday when it came to answering straight questions with straight answers.

As Dunderdale herself might say, the openness “piece” was missing, “big time.”

First, there was the bizarro refusal by a department spokesperson to discuss anything to do with the expropriation compensation process because there was an expropriation compensation process.

Then the Telegram had more on the recent trip by natural resources minister Kathy Dunderdale to Ottawa.  Readers will recall the minister – also the deputy minister – turned up in the gallery of the House of Commons this week.  She got a courtesy acknowledgement from the Speaker.

There’d been no public release that she would be in Ottawa so her sudden appearance raised a few eyebrows.

Dunderdale was attending a meeting of federal and provincial ministers responsible for agriculture. She ducked out of the obligatory team photo at the end claiming she had other meetings.

She did manage to find time to scoot to the Commons though.

Other than that, all her department spokesperson would say is that she “took the opportunity to meet with a number of federal ministers who were available while she was there on issues pertaining to Newfoundland and Labrador and that is the extent of it. She is not commenting further."

No further comment.

It’s becoming the departmental mantra.

Turns out – according to the Telegram’s Rob Antle – that Dunderdale met with federal natural resources minister Lisa Raitt and the province’s representative in the federal cabinet, Peter Mackay.

MacKay's communications director, Dan Dugas, confirmed that MacKay and Dunderdale discussed a variety of issues, including unemployment in central Newfoundland. The AbitibiBowater paper mill in Grand Falls-Windsor is expected to shutter within days, throwing hundreds out of work.

That “shuttering” turned out to be today, incidentally.

As the Telegram notes, Dunderdale’s mission to Ottawa comes shortly after the Premier’s latest Equalization tirade. Maybe they kept her trip quiet in order  to maintain the appearance that things are still tense between the feds and the province.  Maybe they kept their lips zipped at natural resources to avoid building up any expectations that Dunderdale might find some way to ease the tensions or even come up with the missing $400 million from the federal budget Dunderdale’s boss had been banking on.

All in all, the whole thing is a wee bit odd.

At least Dunderdale and her handlers learned a lesson.  When in Ottawa don’t take the minister to hang out in the visitor’s gallery of the Commons. 

Leave that job to the Premier’s personal emissary, a.k.a. Our Man in a Blue Line cab.

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Expropriation bill companies report financial results

Two of the companies affected by the expropriation bill last December reported dramatic financial turn-arounds last year.

Manulife reported a loss of $1.8 billion in the last quarter of 2008. Sun Life Financial reported an earnings drop from $2.2 billion in 2007 to $783 million in 2008.

Both companies either had original interests or acquired interests from other companies in hydroelectric developments, laid out in Schedule E of the expropriation bill:

1. The "Acknowledgement and Consent Agreement (Water Use Authorization)" dated 24 April 1997 between the Star Lake Hydro Partnership, the Mutual Life Assurance Company of Canada ; and the Crown, and all amendments including the Supplementary Acknowledgement - Crown Water Use Authorization dated 9 May 2001 and assignments of them.

2. The "Acknowledgement and Consent Agreement (Crown Water Power Licence)" dated 24 April 1997 between the Star Lake Hydro Partnership, the Mutual Life Assurance Company of Canada ; and the Crown, and all amendments including the Supplementary Acknowledgement - Crown Water Power License dated 9 May 2001 and assignments of it.

3. The "Hydro Consent and Acknowledgement Agreement" dated 31 July 2002 between the Exploits River Hydro Partnership, Clarica Life Insurance Company, and Newfoundland and Labrador Hydro and assignments of it.

4. The "Agreement for the Purchase and Sale of Power and Energy" dated 18 September 2001 between Abitibi-Consolidated Inc. and Newfoundland and Labrador Hydro, and all amendments, including the Assignment dated 31 July 2002 between Exploits River Hydro Partnership, Abitibi-Consolidated Inc. and Newfoundland and Labrador Hydro, and assignments of them.

5. The "Restated Agreement for Non-Utility Generated Power and Energy" dated 24 April 1997 between Abitibi-Price Inc. and Newfoundland and Labrador Hydro, and all amendments, including the Assignment dated 24 April 1997 between the Star Lake Hydro Partnership, Abitibi-Price Inc. and Newfoundland and Labrador Hydro, and assignments of them.

6. The "Acknowledgement and Consent Agreement" dated 25 April 1997 between the Star Lake Hydro Partnership, the Mutual Life Assurance Company of Canada ; and Newfoundland and Labrador Hydro, and all amendments and assignments of it.

7. The "Acknowledgement - Power Purchase Agreement" dated 24 April 1997 between the Mutual Life Assurance Company of Canada, in its own right and as agents for the Canada Life Assurance Company, the Maritime Life Assurance Company, Sun Life Assurance Company of Canada, the Standard Life Assurance Company and Industrial-Alliance Life Insurance Company, the Star Lake Hydro Partnership; and Newfoundland and Labrador Hydro, and all amendments and assignments of it.

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Freedom from information: no comment on process because the process exists

On January 8, your humble e-scribbler sent an e-mail to the natural resources department seeking some clarification of issues related to the Abitibi expropriation in December.

One of the questions sought clarification of the expropriated hydro assets:

5.  The legislation is explicit in section 5 in that the water rights, land and assets of both Star Lake and Exploits River partnership are forfeit to the Crown. Section 7 voids all the agreements and licenses associated with those projects.

At the same time, the Premier indicated in the scrum outside the House that Fortis, for instance, would continue to "maintain ownership".

Those two things can't exist in the same space.  If the Crown has expropriated the assets of the projects, the former proponents can't still have ownership of those assets.

Are you able to clarify this for me: Who owns the expropriated assets - dams, generation equipment, transmission facilities etc?  A written statement is fine or if there is someone I could speak with, then I am at your disposal.

The response – received yesterday – was that the department would offer no comment beyond what was in the public domain already since compensation discussions are outstanding.

Nothing.

Zip.

Zilch.

So who is the government in compensation discussions with? went the reply.

No further comment beyond what is the public domain came the response.

Fascinating.

Confusion is preferable to information.

And…

Denying comment because of “outstanding” compensation talks isn’t comment – now we know there are outstanding talks – but actually telling the public if talks are underway, who is party to the talks and all the other stuff that logically flows from the fact that you just confirmed talks exist or are at least “outstanding” is comment…

and is therefore verboten.

Surely the parties to the talks know they are talking or going to talk.

So finding out that they are in talks wouldn’t come as a surprise to them nor would it materially affect the talks to say something even as ambiguous as “the companies subject to the expropriation” when asking who was talking or with whom talks were outstanding.

Surely the parties to the talks – whoever they might be – know the issues well enough such that clarifying the discrepancy noted in question five wouldn’t actually affect the compensation talks.  For instance, if Fortis, Sun Life and others actually still do own stuff supposedly expropriated – as the Premier himself said - then they wouldn’t be party to the compensation talks because there’d be nothing to compensate them for.

And just to give a sense of how straightforward the questions are, here are a couple of others the government won’t comment on because of the outstanding talks:

6.  Bill 75 does allow cabinet to enter into arrangements (permissions and licenses) for the use of the assets.  Has this taken place?  If yes, what are the arrangements, with whom etc, for what term etc?

7.  Under section 10(2), persons affected by the expropriation of Schedule C assets are entitled to compensation in  a manner determined by the LG in Council:

-  Has the provincial government received representation from any parties for compensation under this section?

-  If so, who are the parties?

-  Has the LG in C  determined a manner for compensating parties affected by the hydro expropriations?

Factual questions about the process can’t be answered because the process exists.

And a government that prides itself on being open, transparent and accountable prefers confusion to factual information about a major public issue.

You just can’t make this stuff up.

-srbp-

The notional national media

Go to the Globe and Mail website.

Try and find a story from the February 11 edition by Rheal Seguin on a supposed border flap between Quebec and Newfoundland and Labrador.

You’ll to look a bit.  For some reason a story that was prominent is now buried away on the “Others” page instead of on the national politics section where it was.

The story is bogus.  There is no border dispute.  The matter was settled in 1927 and the Romaine river hydro-electric project isn’t even close to the 1927 boundary.  This is another of those Sasquatch hunter things about the Labrador border:  people keep hunting because they know it’s there but the only “proof” turns out to be fiction.

That’s because the border controversy, like the Sasquatch, is made up.

And the story is one of the problems when you drop into Newfoundland and Labrador every once in a while rather than pay attention to what is going on here on a regular basis.

You wind up hunting Sasquatch instead of looking at the case of a real undefined border – this one in the Gulf of St. Lawrence – which is impeding exploration for and development of oil and gas resources.

Meanwhile over at the National Post, a editorial on the latest federal transfer racket contains an astonishing amount of stuff that is not true.

Now Mr. Williams and his government have calculated that switching to the new formula would be better for the coming fiscal year — netting Newfoundland’s treasury and extra $1.3-billion to $1.6-billion — so they want to switch. However, in January’s budget, federal Finance Minister Jim Flaherty eliminated that option.

Not so.

The amounts quoted were totals over three years, not one.

More importantly they are estimates.

The only figure that seems to be plausibly correct is about $400 million that won’t flow in 2009 but even that is based on:

1. Estimates. 
2. Projections based on current knowledge instead of the actual financial situation in February 2010 when Newfoundland and Labrador will chose which of two Equalization options it will pick for 2009.
3. A set of choices that wouldn’t have existed at all if the current provincial government in Newfoundland and Labrador had gotten its way at any point in the recent past.

The National Post editorialist didn’t stop with those untruths.  It went farther with other things it actually labelled as true when they aren’t:

It’s true Mr. Flaherty and the Harper government eliminated the switching option without first consulting their colleagues in the Williams government. It is also true that this policy change only affects Newfoundland, even though the province is not singled out by name. And it is true the Harper government is tired of Mr. Williams and the constant bashing they take from him, all of which could lead to the conclusion that this is what Mr. Williams claims — an act of vengeance aimed at him and his province.

1. It’s not really clear that the feds didn’t consult.  The provincial officials knew something was up in November last year.  What happened after that is a bit murky.
2. The policy change affects all provinces receiving Equalization and provinces like Newfoundland and Labrador that are still affected by the program.  Ontario and Quebec aren’t going to draw as much from the federal teat as they would have under the program from 2008.  That’s been covered in other conventional news media.  Heck.  The changes are being made expressly to limit the impact on the program of having Ontario now drawing Equalization.

Now that last part – about being tired of the tirades  - is probably true. It’s quite the stretch though to go from that to suggest that this was a policy designed to screw over one province when the facts – as previously reported – show something else.

The relationship between the current provincial administration and the federal government – irrespective of political stripe – is dysfunctional.  It got that way as the result of a lot of hard work after 2003.  The dysfunction may be deliberate or it may be an accidental by-product of old-fashioned political posturing. That part doesn’t matter.  The fact is the dysfunction exists.

It can only change if the people  - it takes two to tango - who are causing or contributing to the dysfunction change their behaviour.

That change isn’t helped by newspapers that are notionally national printing bogus information as if it were fact.

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