NL Hydro intervenes in Hydro-Quebec FERC application

The way some people talk, you’d think this was the first time Newfoundland and Labrador’s energy company had intervened in the United States over wheeling rights for electricity from Labrador.

Well, for those who think that, guess again.

The year was 1997 and then-mines and energy minister Rex Gibbons announced:

"Hydro's objective is to secure the province's right to transmit electricity from Labrador to North American markets on terms that are open and non-discriminatory. … This is consistent with FERC's Order 888, requiring that `Customers in the United States should not be denied access to cheaper supplies of electric energy, whether such electric energy is from a domestic source or a foreign source'."

As it turned out, NL Hydro cut its first deal with Hydro-Quebec a couple of years later to sell surplus power from Churchill Falls.  The first deal was a straight sale to Hydro-Quebec.  The price at the Quebec border was basically the same as the price obtained at the US border or farther south, after all the wheeling and other charges were taken into account. As you can see from this 2000 backgrounder, NL Hydro has been on top of the whole issue for some time.

Curiously enough, the situation hasn’t really changed all that much in 10 years or so, despite all the chest thumping that’s been going on lately. NL Hydro gets roughly the same price per kilowatt hour from the April deal that it got from the previous deal  - signed in 2004 – that saw the power sold to Hydro-Quebec at the border.

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The Transmission Skirmish: more documentation

The Telegram’s Rob Antle did a bang-up job of shedding some extra light on the ongoing skirmish between Newfoundland and Labrador Hydro and Hydro-Quebec over transmission of electricity through Quebec.

So far all anyone has had has been the Premier’s characterisation of the whole affair.

Well, for the record, here is the link to what appears to be the ongoing kerfuffle as it appears before the Quebec energy regulator agency, the Regie d’energie.

But if you scoot along to the United States Federal Energy Regulatory Commission – better known as FERC – you’ll find there a copy of a decision taken last November.  This is one of the documents cited in Antle’s piece.

Now the interesting thing is that all of this fuss happened before last spring’s announcement of a deal to wheel power through Quebec and sell it to Emera. Newfoundland and Labrador Hydro will pay Hydro-Quebec $19 million annually in wheeling charges on the block of power.

The Premier was fulsome in his praise for the deal at the time:

“This is truly a historic and momentous occasion for the people of our province, as never before have we been granted access through the province of Quebec with our own power…”.

Curious that he is now talking as if that whole deal never happened and that the provincial energy corporation can’t ship a watt of power through Quebec.

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A new look and some changes

Welcome to the new look for Bond Papers.

There’s less than a month to go before the fifth anniversary so what better time to spruce things up with a fresh look.

Right smack in the centre is the stuff you come for.  That hasn’t changed. Some of the posts may be a little out of whack – especially in the bigger images on older posts – but hopefully that won’t distract too badly.  Those will get fixed as time permits.

The side columns will take a while to re-populate.  Some of the widgets and gadgets will be back. Some new stuff may appear. The whole thing is a work in progress so bear up while the renovations are underway.

E-mail subscribers should still get their daily dose via feedburner. Otherwise, RSS is readily available.  You people who do google searches every day for Bond Papers should just save the time and click on the little orange symbol.  it’s so much easier.

If there’s something missing you’d like to see, just drop a line at bondpapers  at hotmail dot com and your humble e-scribbler will see what can be done to meet your request.

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When Worlds Collide

There is one Steve who is dear, oh so dear to the Premier’s heart.

We speak, dear friends of Danny Williams former law partner – Steve Marshall – who apparently came out of his self-imposed Internet retirement this week to leave a comment on a column by Telegram editor Brian Jones.

Now others have taken a few smacks at Steve as you can see from the stuff after his little rant, but for this post let’s look at his words from another angle or two.

For starters, there is nothing in Brian Jone’s column that should leave Steve evidently so overwrought that one would suspect a youtube video cannot be far behind.

Besides, if the wind beneath Steve’s wings is really enjoying the “the highest of approval ratings from us out here in that real world”, Steve should hardly be so distraught he must not only pen a comment criticising a Telegram editor for a column but also drag in another fellow who wasn’t mentioned in the column, and who does nothing more exciting than clack out a few words on a small corner of the Internet.

No, he wouldn’t.

So what gives?

Simply put, Steve is like Tony the Tory.

He is a barometer, if you will, of the mood in certain circles.

The mood is evidently quite black.

You can tell it is black not only because Steve is haunting the comments sections again but also because Steve uses all the classic Fan Club arguments – hugely popular, tireless toiler for the peons like us blah blah blah – and the usual direct personal attack using equally shop worn invective against those who are, in Steve’s World anyway, defilers of the Kingdom.

Yes friends, those of us who dare to speak our minds do not live in what Steve considers the real world.

Yet consider this: for the past three years or so, your humble e-scribbler has faithfully and regularly warned that provincial government spending was unsustainable.

What with the known pressures on spending for health care that are already here and will grow, with the changes in the work force and all the rest, it would be folly to raise government spending to incredible heights in such short period based solely on highly unpredictable oil prices and without doing something significant to pay off debt. That is a opposed to masking it with an assets and liabilities statement about the “net debt”.

That’s what has been one of the major themes here in what Steve would regard presumably as the unreal world.

These are views that Steve would likely characterise as being “negative, pessimistic, constant, repetitive and downright boorish”.

And incidentally, your humble e-scribbler was not alone in his wicked contentions. The Auditor General said the same thing, in slightly different words. According to finance minister Tom Marshall, even one of the province’s bond raters even asked about sustainability.

How odd then that in the past few weeks, the Object of Steve’s Affection and his key ministers have acknowledged that provincial government spending is …wait for it… “unsustainable”.

This is what happens when unreal world lawyer/businessman Steve lives in meets head-long the world the rest of us toil in to earn our crusts of bread.

You get that sort of jarring disconnection in which Steve leaps to the defence of someone who – by his own account – would [not] need any defence whatsoever from the peanut gallery.

Then you hit that arresting moment when he winds up attacking with such vicious personal slurs the very person he supposedly defends.

And above all else, you see not so much what Steve wants you to see, but really a hint that maybe some great upheaval is about to take place; okay, well at least that some people are shit-baked their world is about to come to a crashing end.

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September oil royalties 60% below budget forecast average

High prices and better royalty rates on Hibernia didn’t offset oil production declines in September for the Newfoundland and Labrador offshore.

According to figures released to Bond Papers by Natural Resources Canada, Newfoundland and Labrador’s oil royalties for September were $40, 290, 252.18. 

That’s only 40% of the $105 million monthly average needed to meet projections in the spring budget. The provincial government  forecast oil royalties of $1.262 billion for Fiscal 2009, or about $105 million per month.

As reported in November,  figures obtained from Natural Resources Canada showed provincial oil royalties were down almost 60% [on average] so far in 2009 compared to 2008 and were running [on average] 15% below provincial budget forecasts released in March of 2009. [In September alone, revenues dropped to 40% of the average needed to meet 2009 budget projections]

Oil production is down about 29% from last year. September oil production from Hibernia, Terra Nova and White Rose totalled 6,164, 839 barrels of light crude according to the offshore regulatory board.  October production was slightly more than 6.9 million barrels, about the same as May 2009 and continuing the trend thus far for the new year.

If those trends continue for the rest of the fiscal year, oil royalties for 2009 will come in at less than $1.0 billion. Without cuts to spending or increased revenue from other sources, the provincial government will have a hard time not to exceed its record forecast deficit of $1.3 billion on a cash basis.

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[Words and a sentence added for clarity]

Graham smacks NL local preference policy

New Brunswick premier Shawn Graham has taken a poke at Danny Williams, accusing the Newfoundland and Labrador premier of engaging in cheap publicity stunts.

Graham said it is “ironic” Williams wants an open market for electricity transmission when New Brunswick companies “line up — this is important to note, they line up — behind Newfoundland providers for scraps left by local preferences on construction projects and labour needs.”

Ouch.

According to Canadian Press, Graham also said that the Lower Churchill is 15 years away from development.

All this comes as Graham released his written reply to a letter from Danny Williams and Nova Scotia Premier Darrell Dexter.  The Graham letter is below with the Williams/Dexter letter below that.

NB 1940

Dec. 4, 2009

Dear Premiers Williams and Dexter:

Thank you for your letter of December 2, 2009, regarding the potential for future energy development within the Atlantic region.

I share with you the desire to maximize Atlantic Canada's potential as a developer and supplier of clean, renewable energy for domestic and export markets. Our government is working to maximize New Brunswick's advantage as the energy hub of northeastern [sic] North America and the development of new energy projects across Atlantic Canada is a key element in fulfilling this vision.

New Brunswick is now, and will continue to be, an active partner in promoting the energy potential of Atlantic Canada. Our recent Memorandum of Understanding (MOU) with the Government of Québec does nothing to change that.

Section 3.1(b)(iv) of the MOU explicitly states that any changes to our regulatory structure resulting from agreement with Québec will "expressly contemplate open access to the transmission network in the Province of New Brunswick." The MOU also states in section 2.5 that transmission and distribution rates will continue to be regulated by the New Brunswick Energy and Utilities Board (EUB), a body comprised of New Brunswick citizens and experts in utility regulation, given regulatory powers by the Legislative Assembly of New Brunswick.

Therefore, rules are now in place that set conditions by which electricity can be moved through New Brunswick to export markets, either through use of existing transmission lines or construction of new capacity.

Under the Electricity Act of New Brunswick, any owner of a transmission system must provide market participants with open and non-discriminatory access to its transmission system. The terms, conditions and charges for this access are specified in the open access transmission tariff that was originally approved by the New Brunswick Public Utilities Board in 2003 and continues today under the authority of the EUB. This New Brunswick open access transmission tariff (OATT) is consistent with the industry standards for open access transmission in North America and sets out the obligations for both the provider of service and the transmission customer. All service is to be provided under the tariff and there is no provision for the owner of the transmission system to treat any customer in a preferential manner. In fact, it would be against the law to do so.

Entities in both Nova Scotia and Newfoundland and Labrador are transmission customers in New Brunswick and are taking or pursuing transmission service under the tariff. They have been, and are continuing to be, treated in a fair and non-discriminatory manner.

Please allow me to respond directly to the specific requests stated in your letter:

1. finalize an agreement, by February 2010, prior to signing of the definitive agreements between New Brunswick and Hydro-Québec, subject to normal environmental assessment and permitting, to construct a new interprovincial transmission line through New Brunswick to the Maine/NB border, separate from the existing NB grid.

New Brunswick has always been open to discussions on the potential for constructing additional transmission capacity to meet the projected needs of Nova Scotia and Newfoundland and Labrador. This will not change. As I have stated above, there are clear rules and processes for developing additional transmission capacity for export. If these rules and procedures are followed, additional transmission capacity can be constructed within New Brunswick to meet your future needs.

2. ensure that existing open access applications will be handled by NBSO under existing NB OATT rules until the process is complete and service agreements have been offered to Nalcor Energy or any other Atlantic Canadian companies that may seek such access before the signing of the definitive agreements between New Brunswick and Hydro Quebec next Spring (i.e., grandfathered and handled by NBSO under current rules).

It is a key principle of the EUB that all parties seeking access to use our transmission system be treated in a fair and non-discriminatory way. This request by Nova Scotia and Newfoundland and Labrador would require that preferential treatment be given to specific companies in contravention of the law. This could also jeopardize our standing under U.S. Federal Energy Regulatory Commission (FERC) rules as an exporter of electricity to the United States. I am sure you will agree that this would be contrary to all of our interests.

In accordance with these rules, New Brunswick held an auction in 2008 for excess capacity on the new transmission line connecting New Brunswick and Maine. I note that Nalcor Energy did not bid for capacity at that time. Should Nalcor or any other company require transmission capacity through New Brunswick, long-term firm reservations for transmission capacity can be secured via a request for such capacity or through an open season bid process.

In fact, it is my understanding that Nalcor Energy has been working for some time with the New Brunswick System Operator on a system impact study for a transmission route via New Brunswick. I encourage you to continue with this work. This process, as I have indicated, is compliant with the OATT rules and will remain under the New Brunswick Energy and Utilities Board's oversight, now and into the future.

I believe that the process for negotiating transmission lines must be open and transparent. All parties must have a clear understanding of the rules being applied, with assurances that these rules are applied fairly to all. For this reason, New Brunswick must ask that all parties, including the governments of Nova Scotia and Newfoundland and Labrador, respect these rules and be prepared to make application in good faith within the process.

I understand that you are advancing these requests to promote the interests of your respective provinces. I share with you the desire to build a stronger, more prosperous and self-sufficient Atlantic Canada. I am confident this can be done if we work together and respect the rules designed to ensure fairness for all.

Yours truly,

Shawn Graham
Premier

c.c.: Honourable Robert Ghiz, Premier of Prince Edward Island

09/12/04

And the one that started it:

December 2, 2009
Honourable Shawn Graham
Premier of New Brunswick
P.O. Box 6000
Fredericton, NB E3B 5H1

Dear Premier:

Atlantic Canadians are well served when our provincial governments work together to gain the best possible opportunities for the region as a whole as well as the separate interests of each province. This is particularly true in the energy field, where better connections improve the economic opportunities for each and all provinces in Atlantic Canada It is why our two governments favour a significant improvement in transmission capacity with New England and thus the rest of North America.

We were pleased that the recent Council of Atlantic Premiers meeting in Churchill Falls provided an opportunity for all four premiers to discuss potential impacts of the Memorandum of Understanding (MOU) between the Government of Quebec and the Government of New Brunswick.

We are writing to seek further clarification and to make two specific requests.

We understand your position that New Brunswick’s open access transmission tariff (OATT) will continue to be offered in a fair and nondiscriminatory [sic] manner after the transaction with Quebec is completed. In this regard, you suggest that other Atlantic Provinces will have the same open access to and through the New Brunswick transmission system as we do today.

Assurances that the Federal Energy Regulatory Commission (FERC) of the United States will enforce the OATT and ensure non-discriminatory access to New Brunswick’s transmission infrastructure do not allay our concerns regarding open access. It is through New Brunswick’s regulatory authorities, which have jurisdiction in the Province, that this access can be guaranteed and any issues resolved expeditiously. That is why our governments seek an outline of the process and mechanisms that New Brunswick will employ to guarantee this access.

How will New Brunswick assure other energy producers in New Brunswick and in the other Atlantic provinces that they will have the same level of open and non discriminatory access to the NB transmission system (i.e., to existing surplus capacity or existing capacity with appropriate system upgrades), and to new energy corridors?

Reviewing the MOU, we are concerned with the provisions that eliminate a truly independent system operator, require conformity to the Quebec regulatory system, create difficulty in changing these laws in the future, and narrow the scope of the energy hub from the region to the province. These provisions may enable Hydro Quebec to hinder transmission development, whether it is expansion of the existing system or the development of a new corridor if it is not seen to be in Hydro Quebec’s own interests.

Newfoundland and Labrador’s experience of dealing with a system operator that is imbedded within Hydro Quebec has show that this model can significantly delay decisions (4 years or more) even under an OATT process. It is this experience that leads us to believe the proposed move by Hydro Quebec to take over the NB System Operator (NBSO) role will likely lead to similar outcomes.

I trust this information helps you to understand in greater detail our concerns about the future of open access in New Brunswick, and its effect on development of Atlantic Canada’s renewable energy resources. That is why we are asking the New Brunswick government to:

1) finalize an agreement, by February 2010, prior to signing of the definitive agreements between New Brunswick and Hydro Quebec, subject to normal environmental assessment and permitting, to construct a new interprovincial transmission line through New Brunswick to the Maine/NB border, separate from the existing NB grid; and

2) ensure that existing open access applications will be handled by NBSO under existing NB OATT rules until the process is complete and service agreements have been offered to Nalcor Energy or any other Atlantic Canadian companies that may seek such access before the signing of the definitive agreements between New Brunswick and Hydro Quebec next Spring (i.e., grandfathered and handled by NBSO under current rules).

Thank you for your consideration on this matter.

DANNY WILLIAMS, Q.C.                                         DARRELL DEXTER
Premier of Newfoundland and Labrador    Premier of Nova Scotia

cc. Premier Ghiz

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Long term work force trends hard to see…yet

Friday’s release of job statistics for November has prompted some media stories focusing on the very minor change in employment levels across the country.

Closer to home, innovation minister Shawn Skinner emphasised the longer term trends in his comments.

That’s pretty much what you need to do if you want to see what is really happening.  The major problem is that at this juncture it is very hard to see what the trends are, at least within the province.

Look at it this way:  in November 2008, the number of people working full-time or part-time in the province was about 218,000. The figures used here are seasonally adjusted, by the way so that we can get an accurate comparison.

A year later, the number is 215,300.  That’s up about 3,000 from September and October.  Before you get excited that the trend might be upward, just remember that there were fewer people in the province working in November 2009 than there were in either March or August and November’s employment is only a couple of hundred ahead of July.

Now look at it another way:  the average size of the work force in the period from April to November (i.e. the current fiscal year) has been about 213, 000.   Scan back through the monthly numbers from Statistics Canada (linked above) and you can see the monthly numbers go up and down slightly around that steady number.

The trending really isn’t clearly up or down.

Then there’s the comparison across the country.  Year over year, every province saw a drop in employment except for Nova Scotia, New Brunswick and Prince Edward island.  They weren’t anything to write home about, of course, with increases of 0.3% in both Nova Scotia and New Brunswick.

At –1.4%,  Newfoundland and Labrador wasn’t the worst, but it is on par with Ontario, Alberta, Manitoba and British Columbia, all of which suffered year over years drops in employment ranging between –1.1% and –1.8%.

That’s a far cry from the assurances last year being tossed out by some people that the province would escape the ravages of the recession because of some magical bubble.  The province has been hit proportionately in some respects and certainly on par with the impacts others have felt in some other respects.

Oil royalties are below even the pessimistic projections of the current budget forecast.    Overall, royalties are down 57% from last year.  Oil production is down as well, on the order of almost 30%.

The fishery has had a rough year.  Forestry is way down with the closure of the oldest paper mill in the province and mining is also suffering the effects of the recession. Vale Inco is still closed at Voisey’s Bay due to a labour dispute.

Things will turn around.  They haven’t yet, but they will. They always do.

No one can say, though, how long it will take for things to turn around.  it may be as little as a year away;  it may take longer.

But if you look at the employment trends, well it’s really pretty hard to say which way things are going. 

That’s why, when it comes to the province’s mid-year financial update and planning for next year, a little prudence might be in order for a change.

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What makes news: the recycled edition

News – by definition – is supposed to be new.

New, as in not the same as something before.

The CBC news from yesterday on the latest jihad from Newfoundland was that the guy driving the jihad was in Calgary.  But once you get beyond that, there is not a single thing which is new.

Not even the words, as CBC showed in its coverage online.

The reason is pretty simple.  The CBC story filed on Calgary has only a single quote from what was said out west:

"We have the best green project in North America right now on the sidelines. It could mean a lot of work for Newfoundlanders and Labradorians , Nova Scotians, New Brunswickers, Prince Edward Island, Quebecers, and Ontarians," said Williams. "This is a mega project, of several billion dollars, that is very, very important — not only to us as a province but also to the region. So that's another reason here, to give people the details of exactly why that project is being stalled by Quebec."

That’s hardly news.  The favourite refrain for the provincial government is that the Lower Churchill is “the best green project in North America”.  It’s a hollow, meaningless piece of marketer bullshit, but it is a sold as the hills. 

And after you get beyond the first four paragraphs the rest is recycled filler:

December 4  story:

“We are in a situation where Ontario, which is probably at its most vulnerable moment in its history, will be on its knees on a go-forward basis. That's not a good situation for the country. ”

October 29 story:

“We are in a situation where Ontario, which is probably at its most vulnerable moment in its history, will be on its knees on a go-forward basis. That's not a good situation for the country. ”

December 4:

"Quebec is a province that receives roughly $16 billion a year in transfers from Canada as a have-not province. So, the irony here is a have-not province that receives significant largesse from the rest of the country … is now going around and buying up energy assets."

October 29:

"Quebec is a province that receives roughly $16 billion a year in transfers from Canada as a have-not province. So, the irony here is a have-not province that receives significant largesse from the rest of the country … is now going around and buying up energy assets."

December 4:

"If [Quebec also] acquires P.E.I. and Nova Scotia [power], we will find ourselves in a situation where one province will have energy control of the entire Maritime provinces," said Williams. "It will be attempting to strand Newfoundland and Labrador. So good, cheap, competitively priced energy can't be offered to that whole region.”

October 29:

"If [Quebec also] acquires P.E.I. and Nova Scotia [power], we will find ourselves in a situation where one province will have energy control of the entire Maritime provinces," said Williams. "It will be attempting to strand Newfoundland and Labrador. So good, cheap, competitively priced energy, can't be offered to that whole region.”

December 4:

"[The Lower Churchill project ] will be developed, and it will be developed on our terms, and as I've said before, over my dead body am I going to hand this over to [Quebec Premier] Jean Charest and Quebec."

October 29:

"[The Lower Churchill project ] will be developed, and it will be developed on our terms, and as I've said before, over my dead body am I going to hand this over to Jean Charest and Quebec." [Note the minor editorial change]

December 4:

"If [Quebec also] acquires P.E.I. and Nova Scotia [power], we will find ourselves in a situation where one province will have energy control of the entire Maritime provinces," said Williams. "It will be attempting to strand Newfoundland and Labrador. So good, cheap, competitively priced energy can't be offered to that whole region.”

October 29:

"If [Quebec also] acquires P.E.I. and Nova Scotia [power], we will find ourselves in a situation where one province will have energy control of the entire Maritime provinces," said Williams. "It will be attempting to strand Newfoundland and Labrador. So good, cheap, competitively priced energy, can't be offered to that whole region.”

December 4:

"Quebec is a province that receives roughly $16 billion a year in transfers from Canada as a have-not province. So, the irony here is a have-not province that receives significant largesse from the rest of the country … is now going around and buying up energy assets."

etc etc

You get the idea.

Now if you look at some other stories from other news outlets, you have to wonder yet again what all the fuss is really about.  Natural resources minister Kathy Dunderdale repeats that the provincial energy corporation will pay for transmission through other provinces now and in the future.

Okay.

So since that is already happening with NALCOR through Quebec in a sale to Emera, what’s the fuss?

That’s a good question.

And the lovely people who keep writing stories at CBC and other news outlets in New Brunswick and across the country about this latest jihad based on recycled stuff from before might find some real news if they actually asked that “very, very” good question.

After all, as Danny Williams said himself : 

It's unfair to "play one region of the country off against the other"…

If you look for a story, you can see it.

But you gotta look first.

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The NB Power deal: AIMS releases comment

The Atlantic Institute for Market Studies today released its assessment of the NB Power/ Hydro-Quebec memorandum of understanding. 

The author is Gordon Weil, an energy consultant in Maine with decades of experience in electricity issues.

The conclusions:

• The cash price of $4.75 billion to be paid by Quebec to New Brunswick is subject to reduction if the Lepreau nuclear generator does not return to service and because of additional debt that New Brunswick must assume.
• NB Power customers will receive significant rate relief in the initial five-year period following the sale of NB Power’s assets, but the promised additional benefits are considerably more speculative and will be received over a period extending more than 30 years. The initial benefits may be as much as $1.25 billion.
• Transmission and distribution rates will be based on actual cost plus several surcharges and can be expected to increase after the initial period much more than they have in the past.
• NB Power will retain and close, mainly at its own cost, five major generating stations with the future of the nuclear facility in some doubt. HQ will acquire only the Mactaquac hydro station, three combustion turbine facilities and possibly the Lepreau nuclear facility.
• HQ will obtain, manage and control the NB Power transmission and distribution system, which can enhance its ability to exploit its own generation resources.
• The size of the HQ power supply and its control of an extensive transmission system may cause anti-competitive concerns for entities outside of the two provinces.
• Utility regulation in New Brunswick will be required to follow the Quebec regulatory system and be subject to specific legal requirements limiting its discretion. Such a transfer of regulatory control is unprecedented.
• New Brunswick customers will continue to deal with NB Power, the HQ subsidiary.
• Full impacts, both positive and negative, will depend on a host of variables that are impossible to forecast with reasonable certainty.

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Cutting to the heart of the matter

If Shawn wants to shut Darrell and Danny up pretty fast, here’s a draft reply designed to do just that. 

It’s called the “Money talks.  Bullshit walks” letter.

Dear Danny:

Thanks for your letter of December 2, 2009 which you allowed Darrell to sign as well.

It is with great pleasure that I learn of your plans to build an electricity transmission line across New Brunswick, subject to environmental and other provincial laws.  As you are aware, the line will be subject to the same open access transmission rules that apply to every other transmission provider.

This is a welcome show of confidence in the economic future of New Brunswick.  All four Atlantic provinces can succeed but only when political leaders display the maturity it takes to refrain from histrionics and fear-mongering.

I look forward to seeing your application to the various regulatory authorities, the deeds of sale for the land and the firm contracts in place to begin construction by February 2009, 2010 which is the date included in your letter. I take it from your letter that you both already have the cash and the markets for the power and that the Lower Churchill will start construction very soon afterward.

Thanks again for letting me know of your plans for bringing new economic activity to New Brunswick. I look forward to seeing your deposit cheques clear the banks before February.

Sincerely (but not holding my breath)

Shawn

Some of it might have to be edited a bit, but you get the point.

 

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Too bad wishing didn’t make it so

There are times you have to feel sorry for Ed Martin. 

The fellow was hired out of a successful career in the oil industry to try and create a professional, competent energy company on behalf of the people of Newfoundland and Labrador. 

After four years, he’s managed to create a company with a pretty good reputation in the oil patch locally.  There’s plenty of knowledge and expertise behind the blue windows on the Arterial.

Too bad for Ed that he and his gang are saddled  with a bunch pulling his strings who are viewed in some quarters as being like a crowd of petty potentates of some mythical banana republic.

Take, for example, this latest charade on Churchill Falls.

Ed Martin knows that left to his own devices he could deliver the goods on an energy deal. Martin isn’t the kind of fellow who would take a battleaxe to the head of someone he wanted to do business with.  When asked by Hydro Quebec and the Lower Churchill last August, Martin was the consummate professional:  confident, factual and assertive.

Even in the most recent version of the story to come dribbling from the government benches, this Article 1375 thing looks more like a political lash-up than a serious idea.  if you believe it, after three years of carrying on discussions of its own with lawyers and other geniuses, the provincial government decided to share the fruits of its labours with Martin.  Ed then got a separate legal opinion and off went a letter.

We must note at this juncture that Kathy Dunderdale established without question on Wednesday that her retraction of the “we are planning to sue everyone” story was bogus.  Well, it was a big clue she was going to deliver a nose puller anyway when she came down to the scrum accompanied by government’s chief lawyer at the time,  but now anyone can say with confidence that if there was inaccurate statement of facts in 2008 by Kathy Dunderdale, it wasn’t that the government was considering legal options related to Churchill Falls. Let’s just put it that way.

What Kathy and the former chief lawyer for government told the legislature on Wednesday constitutes an admission that, for all practical purposes,  cabinet runs NALCOR and its various subsidiaries.  The board of directors is irrelevant.  There are notional walls between the interlocking directorates of NALCOR but ultimately the thing is, a la Nigeria, pretty much a government department not a stand-alone corporation.

If the company were the company and government were the government, cabinet ministers would not spend three years and multiple trips to Montreal to look after business that should properly be left to the officers of the company.  If the company were not merely an adjunct of the government, Danny Williams and Kathy Dunderdale would not have spent five years carrying on secret discussions with Hydro-Quebec officials and politicians in Quebec trying to cut a deal on the Lower Churchill, without redress for the 1969 contract.

Should this latest bit of theatre ever get to court, Hydro Quebec will quickly and easily establish the crass political manipulations behind the little campaign about fairness.  They will be able to construct a longer chain of events and comments by the Premier and others which colour the actions of NALCOR and its subsidiary.  

At the very least they can throw up a plausible argument  that bad faith has abounded but that Hydro-Quebec has not been the perpetrator of it.  As a rule judges do not like this sort of stuff.  The current administration found out just how much judges dislike people jerking others about in Ruelokke or Henley v. Cable Atlantic.

Perhaps that is why the Premier is so shy about taking another of his cases to court.  What was it he said?  Something about the vagaries of court decisions?

Get real, people.

And at the end of it all, odds are good that -  as in the water rights reversion case -  Newfoundland and Labrador will be screwed by people playing at being lawyers and politicians.

This whole game of charades goes nicely with the question posed to Martin on Monday about the issue and the political tie-in to the legislature opening.  The simple answer for Martin should have been:  there is none.  Instead he had this enormous and intricate answer about going into decision mode, grunting, groaning and sweating before finally producing the Golden BB of a letter.

Someone, somewhere actually thought in advance of an obvious question and took the time to contrive an elaborate and prepared answer and rehearse Ed in it such that the end result all but screamed “bullshit!”

Sad that Ed should be put in such a spot.

To his credit, Martin continues to carry himself with great dignity.  Faced with the rejection by Quebec’s deputy premier of the idea of re-opening the contract, Martin told reporters:

"We made a good strong decision here. Obviously, we stand by it. We need to hear back from Hydro-Québec and, when we do, we'll determine what the next steps are," said Nalcor CEO Ed Martin.

He said Nalcor is giving Hydro-Québec until Jan. 15 to deliver an official response.

They won’t need that long. 

Martin’s HQ counterpart, Thierry Vandal, told The Gazette :

"It's more of the same," Vandal said in an interview yesterday with The Gazette.

"It's one for the lawyers."

He isn't budging from the view that "this is a valid contract and we expect it to be respected."

But you know, the more you look at this, the more you think that maybe there actually could be a successful resolution to the 1969 case and even development of the Lower Churchill if only…

if only you could just get the politicians out of the whole affair.

Too bad wishing doesn’t make it so.

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Churchill Falls and The Pantomime Horse’s Arse

Churchill Falls is many things in the province, most of them fictional. Over the past few days, people have been treated to another of its functions.

As the Nutcracker is a staple of Christmas entertainment, so too is Churchill Falls an old chestnut of local political theatre which must be trotted out and recited by whatever amateur dramatic society is running the province at the moment.

At least, the latest bunch of ersatz thespians have managed to put a few new twists into the old plotline and fill the show with 35 terawatts of new humour.

Converting principles to cash: more stuff they don’t want you to know, let alone think about

Natural resources minister Kathy Dunderdale on the potential that more oil in White Rose would be a good thing for the province’s energy corporation, and demonstrating the whole “control” philosophy:

This is outstanding news for the people of this province and it certainly proves our critics wrong. Our decision to take equity in these resource projects is already paying tremendous dividends. Our government is taking greater ownership in the development of our resources in the best interest of the people of the province, and for the greatest benefit of the people of the province.

Of course, the whole thing depends on the price of oil over time staying way up where it is now and going even higher.

Well, that and that other bit of government energy policy Kathy and her pals don’t like to talk about:

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.

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“Twisting it to suit their purposes”: CBC misrepresents DND search and rescue study

A 2003 report by the Canadian Forces’ operational research and analysis centre concluded that “the coverage offered by Gander is better than that offered by St. John’s at all distances.  Moreover there are notable differences at 400 and 500 nautical miles (nm) where the coverage given by Gander is better by 20 and 15 percent respectively.” (p. vi)

The report is available online at the DND operational research and analysis website.  It provides a detailed analysis of search and rescue issues and assesses the relative merits of using St. John’s as a primary operating base for SAR helicopters compared to  Gander.

The 2003 report concludes that  - based on all factors including weather and the likelihood of Cougar helicopter incidents - Gander is preferable overall. The existing location provides optimum coverage across the entire range of potential missions, including any involving oil industry helicopters.

The report makes no observations on deploying helicopters to St. John’s (as opposed to basing), on the use of civilian search and rescue as currently provided by Cougar Helicopters under contract to the oil companies or on other ways to enhance overall SAR capabilities.

But the 2003 study clearly rejects the idea of moving DND SAR helicopters to St. John’s.

A careful reading of the report also suggests that under certain circumstances weather conditions at St. John’s might also erase any time advantage St. John’s would have at incidents less than 100 nautical miles from shore.

Since Monday, CBC St. John’s has been presenting an entirely different – and wrong - version of the DND report on east Coast search and rescue. An online story uses the title “St. John's best SAR base for offshore oil: DND” for example and uses a December 2000 presentation apparently obtained through the federal access to information laws.

Bond Papers discussed that initial CBC report story  - and it’s inaccuracies - on Monday. The conclusion CBC claims the 2000 presentation reached is especially important since the later (2003) study used more data to develop a better picture of east coast search and rescue operations and the requirements posed by offshore oil operations.

But even given that,  the initial review clearly concluded that :

While the modelling used in the report appeared to show St. John’s as a better location for what it terms “Cougar-related” incidents,  “since incident rates for Cougar will probably be quite small, the analysis performed on the historic data should prove greater utility in a direct comparison of Gander with St. John’s.”

CBC has been linking to a December 2000 slide show that represented an early version of the work leading up to the 2003 study.   A note at the end of the 2000 presentation – erroneously labelled ‘2003 report on SAR’ in the CBC’s pdf  – indicates that a detailed report will follow in 2001.

It was actually published in 2003, as confirmed by a simple e-mail request to the operational research and analysis communications officer.  For some reason, CBC hasn’t referred to the actual report, preferring instead to quote – and in some instances misquote  - the 2000 slide show.

Your humble e-scribbler found the e-mail address for the operational research and analysis division on line and fired off an e-mail request for the later detailed report.  A link to the publicly accessible database of reports and the title of the 2003 study came back within a few hours.

A second CBC story based on the same December 2000 pdf file also mashes sentences to create a completely false impression of what the 2000 presentation said.  In a story on reaction to CBC’s initial reports titled “Renewed call for rescue base in St. John's”, there is this paragraph:

"For a Cougar [offshore oil industry helicopter] incident … if a Cormorant deploys from St. John's, then it will be the first asset on the scene," concluded the report, obtained by CBC News through an access to information request. "Deployment from Gander will result in 48 minutes of additional waiting time."

The actual information comes from a specific slide (number 26) discussing hypothetical Cougar helicopter incidents. It involves a comparison of flying a helicopter from Newfoundland versus flying a CC-130 fixed wing transport  - with a higher flying speed than a helicopter– from Greenwood, Nova Scotia.  Both aircraft would be deployed to a SAR incident involving a Cougar helicopter.

As can be easily seen, CBC lifts out the first bullet in the last section.  The whole citation notes that for distances greater than 100 nautical miles, the Hercules would be the first one the scene. That’s hardly surprising given the relative speeds of the two aircraft over the distances involved in the DND projections.

The sentence mash-up conveys entirely incorrect and ultimately misleading information about the 2000 presentation and what it said. 

It isn’t clear why the CBC stories have been persistently misrepresenting the DND report, but there is no question that CBC has twisted the DND reports to give conclusions the reports didn’t reach.

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Related:

April 2009:  “Continuing the Cougar S-92 Spin:  CBC or Cougar”

October 2009:  “When it comes to reckless speculation”

No thanks to renegotiating ‘69 deal: Quebec

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

Okay, so like no one saw that coming.

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

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

All for a load of shop-worn hooey.

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

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

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

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

That would be Hydro-Quebec.

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

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

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

Nope.

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

You’d pull the lever.

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Dunderdale blunders again: did NALCOR lobbyists give wrong funding figures to fed’s watchdog?

Information provided on the federal lobbyist registry about lobbyists hired by the provincial energy corporation is wrong to the tune of hundreds of millions of dollars.

Plus it is also for something other than what the lobbyists are registered to lobby about.

That’s according to Kathy Dunderdale, the province’s natural resources minister.  Presumably, the information was supplied to the federal registry by the lobbyists when they registered.

The province’s natural resources minister claims that the figure $960,000 listed on a federal lobbyist registry entry as cash received by the client for government funds isn’t for fees paid to the lobbyists. 

Dunderdale issued a news release today to refute opposition claims that the provincial energy corporation was dropping almost a million bucks a year on lobbyists while at the same time the provincial government was dropping another bundle to pay for Our Man in a Blue Line Cab who is supposed to be the province’s point man for all things in Ottawa.

Dunderdale says the figure on the federal lobbyist registry was:

…funding received by Nalcor from the Government of Newfoundland and Labrador for three specific projects related to the Northern Strategic Plan, a rate subsidy for isolated and remote communities powered by diesel, and energy-related studies for the Department of Natural Resources – all unrelated to Summa. The fact that this was not a payment to Summa was evident from the website of the Office of Commissioner of Lobbying, but was misreported by the Opposition.

Okay. 

So that’s exactly what your humble e-scribbler did.

Right off, here’s one entry for the lobbying firm and here’s a picture of the section of the website where the figures are presented.

The same information is the same as the entry for another lobbyist from the same firm currently working the same file.  Here’s the bottom of the second lobbyist entry which -  incidentally -  is identical to the first:

The information on that financial line is supposed to be government funding received by the client, in this case NALCOR Energy.  You can confirm that by checking the guide provided by the lobbyist registry:

• Source and amount of any government funding provided to the client, as well as information indicating if the client is expecting to receive public funding; and…

Now if Kathy Dunderdale is right, that figure of $960,000 is related to something other than the Lower Churchill and it also isn’t related to the lobbying firm, Summa Strategies.

So why is it there?

Really good question.

Unfortunately, Dunderdale didn’t answer it in her news release.

If that wasn’t bad enough,  the lobbyist entry is about the Lower Churchill and the client is identified as NALCOR Energy, the holding company that includes all the provincial government’s energy holdings.

Under those circumstances, the entry should include  - at the very least - the hundreds of millions paid in the past two years by the provincial government to purchase oil stakes and other money transferred from the provincial government to fatten NALCOR up financially.

Dunderdale didn’t offer any explanation of that in her news release either.

This wouldn’t be the first time Kathy Dunderdale blundered badly on a matter within her portfolio.

In 2006 Dunderdale  was embroiled in controversy over a patronage appointee who violated the province’s public tender act. Dunderdale made repeated statements about the issue some of which contradicted other statements.  in the end, the government was forced to close the legislature early to avoid further embarrassment.

In 2008, Dunderdale said the provincial government was considering a law suit against Quebec and Ottawa over the 1969 Churchill Falls contract.  She later claimed she “misspoke”, a line she maintains to this date despite evidence the government has been considering some form of legal ploy on the contract for some time.

In September, 2009, Dunderdale gave wrong information about the failure of talks with Rhode Island on a potential sale of Lower Churchill power. She said “that they did not have the capacity to negotiate a long-term power purchase agreement with Nalcor on behalf of the Province. Nor were they able, in their Legislature, to do the regulatory changes that were required in order to wheel electricity into the state.”

According to the Rhode Island governor’s office:

As far as we can determine, there is no legislative hold up here in Rhode Island, it is more of a question of cost.  While the power generation is inexpensive, the cost of transmission adds to the final price. The possibility of purchasing power is still alive….

The salvation for Dunderdale in this case is that she scored a minor victory on what the cash was really about.

Unfortunately Dunderdale put the government’s lobbyists in an even deeper spot over the amount they apparently did report to the federal lobbyist registry.

Ouch!

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No fluff from Dean

Newbie member of the House of Assembly Marshall Dean didn’t waste any time in putting his stamp on things.

While other politicians quickly learned the art of “on-a-go-forward-basis” bafflegab, Dean gave a short and highly accurate comment in reply to a statement by Shawn Skinner.  The innovation minister made a formal statement which restated  events since the seizure of hydro assets in central Newfoundland and then finished with this insightful comment:

I would like to thank the members for their contribution and I look forward to continuing our relationship and working together into the future. Together, we can identify and realize opportunities that lead to a stronger, more diversified central region.

Here’s Dean’s reply:

Thank you, Minister, for providing me with an advance copy of the statement. It is noteworthy that there is nothing new in this statement. It is commendable to acknowledge the people who are involved in this community, who are concerned about their future. The reality is there was a failure by government to secure the mill when it ran into trouble, and what people are clearly worried about now is the long-term security of the area, and this needs to be addressed in a long-term strategy.

Thirty-five million has been paid out to the workers; however, government will be claiming this back through AbitibiBowater. This would never have happened in the first place if government had not reacted into the relentless pressure from the Official Opposition. The question now, Mr. Speaker –

…

The question now, Mr. Speaker, is: what are they going to do for the people to gain some benefit from the resource, a resource that is earning government millions of dollars with nothing going back to the people?

Citizens of Central just want a fair share on their hydro power. Another question we have, Mr. Speaker, is what about pensioners who will be losing approximately 30 per cent of their pensions if the company is declared insolvent.

Mr. Speaker, the bottom line is much of the statement is fluff, sorry. We need more of a real investment of money in Central and the people of that area need it and deserve it.

Read enough Hansard and you’ll realise how atypical that sort of blunt  - and accurate - talk is.

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The 1969 Churchill Falls Power Contract

For those who might be interested in these things, here’s the 1969 power contract between Hydro-Quebec and Churchill Falls(Labrador) Corporation in pdf format.

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Hydro Quebec has leverage on Danny Williams

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

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

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

Leverage.

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

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

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

That part was reported by the conventional media.

Then Williams went a step further.

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

According to the province’s natural resources minister:

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

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

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

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

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

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

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

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

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

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

That failed too.

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

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

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

And it isn’t fair, really.

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

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

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

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

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

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

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

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

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

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

Leverage.

It’s great when you have it.

Sucks when you don’t.

And right now Danny Williams and NALCOR have no leverage.

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CBC SAR story grossly misleading

A CBC story on search and rescue off Newfoundland and Labrador seriously misrepresents the conclusions of a study conducted by air operational research and analysis staff of the Canadian Forces.

CBC’s online story claims in its title that “St. John’s [is the] best SAR base for oil: DND”. 

The story also claimed that:

The 2000 report for DND, titled The Impact of Offshore Oil Operations on East Coast Search and Rescue, questioned whether Gander was the best location for DND to base its Cormorant SAR helicopters.

But the report itself -  linked on the same CBC web page  - tells a very different story. Incidentally, the report, really just the slides and notes for a presentation, is also erroneously dated 2003 in the pdf version title even though the document clearly comes from December 2000. 

A detailed version apparently released in 2001 is mentioned at the end of the slides but CBC makes no reference to it in either the on air or on line stories.

The DND report looked at the impact offshore oil-related flights might have on search and rescue services.  It did not question “whether Gander was the best location” for search and rescue service in Newfoundland and Labrador.   The goal of the research was to determine what impact – if any – offshore flights to oil rigs would have on search and rescue service

In order to conduct the study, the researchers reviewed information on search and rescue performance generally in eastern Canada.  They then projected the potential impact of offshore helicopter operations.  They used several scenarios to try and forecast the potential impact  because, as the study notes, there was only two to three years of data on which to base experience.

As it turned out the DND study, like offshore board projections, grossly over-estimated the number of crashes in the offshore.

The conclusions – listed clearly on Slide 37 of the presentation – show that Gander is clearly the optimal location of search and rescue service based on a number of factors including weather. 

While the modelling used in the report appeared to show St. John’s as a better location for what it terms “Cougar-related” incidents,  “since incident rates for Cougar will probably be quite small, the analysis performed on the historic data should prove greater utility in a direct comparison of Gander with St. John’s.” 

In other words, because Cougar was unlikely to have a high number of incidents, the overall experience operating from a permanent base in Gander would likely tip the scales in favour of the continued use of Gander as the operating base.

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