What was the point of going to Arnold-land, if you didn’t also plan to go to Copenhagen?
After all, New Brunswick is there talking climate change.
Update: Darrell is on his way to Denmark, too.
Volatile Update: Charest is going. So is Gord Campbell.
“Steve” Update: And of course Steve is going carrying an argument backing Alberta that looks suspiciously, conspicuously familiar.
So far, not a peep from the Government of Newfoundland and Labrador.
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In his decision Monday, Judge David Orr found former Liberal cabinet minister Jim Walsh guilty on two of three of the charges against.
Orr found Walsh guilty of fraud and breach of trust by a public official. Orr found Walsh not guilty of frauds against the government, a bribery and corruption charge.
He’ll be back in court January 6 for sentencing.
Walsh recently filed for bankruptcy in Alberta where he currently maintains a residence.
In 2006, the province’s auditor general found Walsh had filed expense claims beyond approved limits totalling almost $300,000 in the period between 1998 and 2003.
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Listening to Tom Marshall blame the current provincial government budget deficit on the federal government’s changes to Equalization last winter brought to mind an old story which hasn’t been properly told.
You may recall that in November 2008, Premier Danny Williams called a surprise news conference one Monday evening to proudly announce that the provincial government no longer qualified for Equalization.
Everyone cheered.
Williams himself used the news as a key part of a party fund-raiser a few days later.
Some people made a video of the speech.
The whole thing made the national news.
Then in January there was the great meltdown on top of all the other Equalization meltdowns.
What didn’t make the news was that the provincial government had actually been working a plan – all along – that would have kept the provincial government receiving Equalization in 2008 and 2009. There’s nothing new in that. Successive provincial governments have ensured that Equalization decisions worked to bring the provincial coffers the most cash.
The start of the tale is the 2007-2008 mid-year fiscal update, issued in December 2007. The document has mysteriously disappeared from the provincial finance department’s website, but as BP quoted it when the update first appeared:
…the province can optimize cash revenues in 2007-08 by electing to move from the fixed framework Equalization formula to the new formula [O’Brien] this year…
The provincial government made a decision on the formula in March 2008 but by that time, they’d changed position:
We conducted a thorough review of this updated information, and determined that it was no longer in the long term financial interest of Newfoundland and Labrador to elect the new formula for 2007-08. … Provincial analysis indicates that, based on the legislation as amended, we would expect to receive an overall positive impact on the Newfoundland and Labrador treasury of over $300 million for the five-year period ending 2011-12…
That’s actually consistent with something the Premier told Jeff Gilhooley in March 2007. Danny Williams said the provincial government planned to flip to O’Brien in 2009 in order to maximise revenues. And Williams noted the same decision in his November 2008 scrum.
How lucrative that plan could have been only came to light in January 2009 when the federal government unveiled a budget originally readied on a contingency basis the previous December.
The number marked with a red exclamation point in the picture at right is next to a line labelled “EQ[ualization] previous year (Actual FF or pre-cap OB)”.
“Previous year” would mean 2008.
That means that in making the calculation for 2009 to show how much was being lost, the finance officials actually showed how much the provincial government had been hoping to collect in 2008, the year the Premier had already declared the provincial government would no longer receive any Equalization.
And just to reinforce the point, that newser took place the better part of a year after the provincial cabinet decided to delay switching to O’Brien in order to maximise its Equalization cash.
Now in November, the Premier answered a direct question from a reporter directly. He said the decision had not yet been made. And that was strictly true. Of course that was after saying the province would no longer qualify for Equalization, supposedly under any circumstances.
In the event, the provincial government made an election in early 2009 and received $116 million in Equalization.
That’s right. In the year the provincial government supposedly no longer qualified to receive it.
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While gross domestic product in Newfoundland and Labrador is now forecast by the provincial finance department to shrink by 8.5%, finance minister Tom Marshall today forecast he expected to receive $520 million more than budgeted last year in oil royalties.
That’s pretty much typical of the incongruity between what the “mid-year” financial update said about the economy and Marshall’s prediction of higher than expected revenues.
Here’s a summary of the 2009 economic performance to date in Newfoundland and Labrador, as presented by the finance department:
Some quickie observations:
Apples and oranges comparisons: Most of the economic information presented in the update compares performance over a calendar year while the budget works on a fiscal year.
To illustrate how this can have a distorting effect, consider that oil production in the first three months of calendar 2009 remained at 2008 levels of 10 and 11 million barrels per month. However, during fiscal 2009 thus far (starting in April) , monthly production has averaged about 30% below that. The first three months artificially inflate the average for the calendar year compared to the fiscal year.
Triple the year-to-date oil revenues and then some: As BP reported earlier, oil royalties in the first half of fiscal 2009 (Apr to Sep) totalled about $488 million. September’s royalties were 60% below the monthly average needed to hit the spring budget projection of $1.3 billion on an accrual basis. Overall, royalties are running about 15% below forecast.
The fall update now projects oil royalties at $520 million higher than forecast. That’s 40% higher than forecast, despite the prediction that the value of oil production will be down by 45% and that production will be down by at least 20%.
Oil royalties are function of price and production. Even if the royalty rate is higher in 2009 than 2008, lower production and lower average prices should produce lower royalties.
As it is, the revised oil royalty is only 8% below 2008’s figure despite a projected 45% drop in value and a 20% drop in production.
A missing chunk: On page nine of the budget speech from last spring, then finance minister Jerome Kennedy blamed the deficit on two things: the impact of the stock market on pension investments (about $380 million) and lost Equalization revenue owing to changes in the formula for 2009. That part was supposed to account for about $414 million.
There isn’t a single word about the pension plan investments and their current valuation in the update.
Hmmm.
Read the fine print: While things might just turn out to be as rosy and wonderful as the budget forecast, it might be useful to bear these words in mind. They come from page five of the budget update document itself:
However, at this time, there are four months remaining in the fiscal year, and there are many factors and uncertainties which may impact year end results.
Uh oh.
This wouldn’t be the first government that blew smoke to try and keep consumer wallets open through a rough patch. There are plenty of things in this budget update that don’t add up. Maybe they aren’t supposed to unless you realise that this update was less about the facts and more about the torque.
Whatever happens, we’ll know for sure in the spring.
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Fans of the old soap Another World will remember that hideous storyline from about 30 years ago, as lampooned by Codco or Sexton and Malone.
Well, the relevance will become clear in a minute:
1. The used to be a thing dating from the 1970s called the Lower Churchill Development Corporation. LCDC was a partnership of the federal (49%) and provincial (51%) governments to develop the Lower Churchill hydroelectric project.
2. The current provincial administration spent the time between 2003 and 2008 looking for a cash commitment from the federal government to build the thing.
3. The feds – at least the Steve Harper version – may or may not have committed to some sort of loan guarantee, but if they did that likely came with equity strings attached. No biggie of course since LCDC contemplated the feds have a 49% share. There was no reason why that number couldn’t be scaled back if the provincial government didn’t want to share that much.
4. Then in 2008, the provincial government decided to trash the LCDC and give the water rights on the Churchill River to NALCOR. They didn’t repeal the old LCDC Act, oddly enough, but natural resources minister Kathy Dunderdale said the government had decided to go a different route with the whole project. Well at least “different route” in the sense that the company created to develop the project would still exist on paper but have its water rights stripped away.
5. But now we are told that federal cash is essential for the project to continue. Well, it’s hard to tell if that little VOCM story means cash or just inolvement in some other way. This is starting to sound like the Great Myth of Pearson’s Refusal.
How exactly does anyone keep track of all the shifts, changes, twists and turns in the saga?
It’s tough.
But worth it.
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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 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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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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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.
High prices and better royalty rates on Hibernia didn’t offset oil production declines in September for the Newfoundland and Labrador offshore.
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]
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
Premierc.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 5H1Dear 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 Scotiacc. Premier Ghiz
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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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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 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:
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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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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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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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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”
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.
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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