11 December 2009

Can a bowtie be far behind?

Newly minted tourism minister Terry French seems to have a thing for Joe Smallwood.

Consider this bit of his answer to a question about the province’s tourism budget:

Do you know how many awards we have won in marketing in this Province? We have not won one, we have not won ten, and we have not won twenty - fifty-one awards.

French couldn’t have nailed the Smallwood trademark any better if he’d practiced it for hours with Kevin Noble.

There is no truth to the rumour that French was spotted recently in the mall looking for bowties.

But he might have asked Santa for one.

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Electro-Jihad: the national view

From CBC’s The National and the panel review of 2009, comes Chantal Hebert’s assessment of the most under-reported story being the Hydro-Quebec/NB Power deal. 

You’ll find it about half way through that vid.  A specific clip should turn up shortly and that link will go up instead, but for now you have to scan through the full vid of The National. [Update:  and here it is.]

The thing is splitting the Atlantic provinces, according to Hebert.  It raises questions about national policy in several different ways. Andrew Coyne and Rex Murphy quickly chimed in to add to the assessment.  All noted the absence of any federal party leadership on the issue since it has implications for national economic policy and the free flow of goods and services across the country. 

Chantal Hebert hit a particularly sore point that remains under-reported within the under-reported story, namely the split within caucuses over the issue.  The Liberals especially have a problem with Quebec and New Brunswick members of parliament going one way and the Newfoundland crew taking “their orders from you-know-who” in Hebert’s words.

How true that is, and if the panel had noticed Michael Ignatieff ’s comments when he was in St. John’s a couple of weeks ago, they’d have seen a much bigger problem facing Ig and the federal Liberal caucus down the road a ways.

Meanwhile, in another corner, you-know-who is leading his provincial Conservative troops back to their ideological home in the Conservative party after a brief sojourn in the petulant box.

Wonder what that means for some of the crowd in the Liberal caucus who’ve been taking their orders  - as Chantal put it – from “you-know-who?”

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Rorke’s other Drift

The present advocate reviewed the case again - and I cannot speak for the advocate, only what was given to me - he felt that the review was unnecessary but would continue based on the actions of the previous advocate.
That’s child, youth and family services minister Joan Burke during Question Period in the House of Assembly on December 10

She’s referring to retired judge John Rorke and a review of a tragic death in Labrador initiated by his predecessor. 

Now all these high-fallutin’ legal notions might be more than a humble e-scribbler can grasp but surely it is just dead wrong for someone to state an opinion on an investigation before it is concluded.

Wouldn’t this be like the judge saying  - before any evidence had been presented - that he could see no reason in wasting everyone’s time on this and entering a verdict right off the bat?

And it would be even worse  - wouldn’t it? - if, having made such a preliminary judgment, he then communicated that observation to someone outside his office.

Now if Judge Rorke, as he used to be, has reviewed the material collected to date and has reached a conclusion, he certainly has the power to do so and cease any further inquiry into the matter.

It’s spelled out clearly in the law:
18. The advocate, in his or her discretion, may refuse to review or investigate or may cease to review or investigate a complaint where…e) in his or her opinion the circumstances of the complaint do not require investigation; …”.
How very peculiar that the former judge would persist in a review which he had already decided was unnecessary and that he could stop on his own authority.

How very peculiar indeed.

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Fortis/ENEL Expropriation, one year later

Outside the legislature on Wednesday, Premier Danny Williams had this to say about the legal and financial problems that are still hanging around after last December’s seizure of assets by the government under a hastily compiled expropriation bill.

The expropriation will come with a purchase price, but Williams said he now plans to deduct the cost of severance and environmental cleanup from the final amount.

"So, if the possible environmental exposure and, or, the severance were X amount, and the amount that the assets were valued at were substantially less, well, then obviously there would be no payments of cash from the government," Williams said.

One of the great unreported facts of this expropriation – unreported by the conventional media, that is – is that the expropriation didn’t just affect AbitibiBowater.

Nope.

Included in the seizure were assets of Newfoundland and Labrador-based Fortis Inc and an Italian company called ENEL. 

The former was involved in a hydro project that supplied power to the former Abitibi mill at Grand Falls-Windsor and sold the rest to the provincial energy corporation.

The latter was involved in a hydro project at Star Lake that had absolutely nothing to do with supplying anything to the mill.  The Star Lake generating plant was built in response to a call for proposals by the province’s energy corporation about a decade ago. The plant supplied power to the grid to reduce emissions from the diesel plant at Holyrood.

Now if you take the Premier’s comments at face value you get a truly amazing thing and one that is unlikely to be swallowed that easily by the companies involved.

If there are any environmental liabilities related to the Abitibi mill, it would be quite a stretch to suggest that ENEL and Fortis somehow have any responsibility for them given that their operations were not for running the mill.  ENEL has got a real case in this respect, one would suppose.

By the Premier’s construction a company like ENEL could undertake legitimate business activities based on a government contract entered into in good faith by all parties only to find itself, in less than a decade, not only without the assets it paid for but without any compensation whatsoever for the government seizure.

And the excuse for stiffing them is that they somehow gained a liability for something they had no responsibility for in the first place.

This is one of those moments where you’d wonder if the Premier would be quite so calm about it all if someone were trying to pull the same stunt on him.

Meanwhile, one wonders if the rapprochement between the provincial Conservatives and their federal cousins might possibly have something to do with trying to get Ottawa to protect the Newfoundland and Labrador treasury from the fall-out of last year’s seizure.  The federal government has to deal with the international repercussions – like the NAFTA challenge Abitibi filed – but there doesn’t seem to be anything stopping the feds from recovering their costs once the international bits are settled.

Of course, all of this really makes a mockery of recent efforts by the provincial government to win sympathy for its case against Hydro-Quebec.

If the Americans really started to care about it all anyway, might those same New York financiers who supposedly listened sympathetically to the luncheon speech a couple of weeks ago feel quite so favourably disposed to the Premier’s cause if they got the full story on how Fortis and ENEL got screwed over by the Premier’s seizure?

This expropriation business is a long way from settled and the bills are a long way from being paid.  Something says some of the bills won’t be settled in cash, either. 

Payback will be a mother.

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10 December 2009

“The overriding and paramount consideration…”

[One of the fundamental changes we have to make, Mr. Speaker, is our legislation. We have to review the legislation; we have to amend it. One thing that is fundamentally flawed with the legislation, Mr. Speaker, is the fact that it does not focus on the best interests of the child.]

Mr. Speaker, the previous government received a report in 1997, and on page 59 of that report it outlined what the focus should be in the legislation. In not one place did it say it should be in the best interests of the child. Do you know what? You took it, you brought it in and now we are left with the problems. [Update:  Paragraph added to give full context to the citation]

That was child, youth and family services minister Joan Burke evidently feeling a bit flustered at having to answer questions in the House of Assembly in her department. 

For some unknown reason, Burke blurted out that claim.

The only problem for Burke is that it isn’t true.

The 1998 Child, Youth and Family Services Act has a clause under a section titled principles.  The clause – number seven – states categorically:

General principles

7. This Act shall be interpreted and administered in accordance with the following principles:

(a) the overriding and paramount consideration in any decision made under this Act shall be the best interests of the child; [Emphasis added]

If there are indeed problems in Burke’s newly minted department it is most definitely not because the 1998 legislation lacked any direction about how the best interests of the child should be factored into departmental decision-making.

Let’s hope that was just a flub under pressure and not symptomatic of Burke’s grasp of her new department’s responsibilities.

How much more wrong can she be? Update:  labradore cites two other sections of the CYFS Act that also mandate the best interest of the child take paramountcy.

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And people used to listen to Milli Vanilli, too

In his most recent column, Telegram editorial page editor Russell Wangersky highlights a concern of his, namely the practice in the prime minister’s office of pumping out huge volumes of still and moving images of the prime minister and pushing them into newsrooms across the country.

But the concept of having political staffers take over or contract out control of the reins of one part of the media has some interesting repercussions.

Which part? Editorial control over images of the prime minister.

Wangersky’s column highlights different aspects of the issue beyond just pushing out large quantities of content.  There is the control over access to events such that only the PMO staffers will be there, not reporters and shooters for the news media. 

Then there’s the problem of what Wangersky terms falsification:

One picture of Harper on stage at the National Arts Centre was released earlier this year as a still of him performing in front of a live audience. It was later revealed that the photo was staged and shot during a rehearsal, but the only reason that came out is that press photographers figured out the angle the photograph was taken from, and knew that no photographer had been in the centre of the stage during Harper's performance.

Wow.

Now this is not the first time someone on the editorial side of the news world has raised issues about this sort of thing.  A couple of years ago, controversy erupted in the United States over video news releases produced by or on behalf of the Bush White House.  The VNRs, as they are called, were short video versions of a news release done in the style of a television news cast. They were all clearly labelled when they were sent out as to where they came from.

The controversy surrounding VNRs is much wider than just the Bush example, though.  VNRs were turning up in news casts as if they had been produced by a news organization like Associated Press, Canadian Press, Reuters or any of a host of others. Viewers didn’t know the difference since the source of the video was never identified.

Now from perspective of someone in the public relations business – where your humble e-scribbler toils – Wangersky’s comments come across as a bit curious.

You see, sending out photos, videos and even news releases is basically just a way of getting information into the hands of reporters and editors.  That’s all it does.  They get to read or view the material and then decide what – if anything – they want to do with it.  In and of itself, the act of sending out this material doesn’t do anything to control any media reins. 

There is nothing either new or novel in hiring photographers to shoot your event.  it’s been happening for years in civilian settings.

In some instances, such as military or coast guard situations, having a civilian shooter just isn’t always practical.

Face it, if you’re the public affairs officer at 103 in Gander, you just aren’t going to roust the Telly photo editor out of bed at three in the morning to go along for a ride to some mission off the coast. His family and neighbours might not like the helicopter stopping off in his backyard anyway. 

But aside from that and the fairly obvious liability issues, there is only so much space on the aircraft.  Any civilian shooter becomes just so much excess baggage at that point.  in a tough spot, he or she is just damn well in the way. At least if the PAO sends along the military photo tech, that person has some skills and abilities to offer to support the mission directly if the need arises.  In the meantime, the photo tech stands a better chance of getting a dramatic, high-quality shot that otherwise would never be seen .

Now some of you are already squirming that what Russell talked about in his column is different.  In some respects it is.

But in others it isn’t.  There’s fundamentally nothing different from what Russell described and hat happened 20 years ago and more in this province, back when all the newspapers weren’t owned by the same company.  All that has changed is the technical way photos and other content get to the editors away from the major centre.

The choice on what to do with the material remains with the editor.

Incidentally, that’s what the VNR problem really was:  some editors in some markets were passing off the VNR as if it was something put together at the local station or by some other news organization. 

The situation Russell described becomes a problem in two situations.  One is where the editors don’t label the content to tell their audience where it came from.  The second is where an organization like the PMO is restricting news media access solely to force them to use PMO content.

Not so very long ago, neither one of those things was very likely. If the PMO tried to push that kind of control, there’d be howling from every editorial space in the nation.  Blackball a reporter and you’d quickly find crappy stories running about your guy on the front page of every section, including sports and the comics.

As for the cut and paste job, there might be some of it but for the most part there were enough scribblers and shooters to generate the content for the daily paper or the evening news.  On the PR side of the street you could try and see how much of your copy got through the editors but the best anyone could usually do was about 60 to 70 percent on a straight-up story. Well-written copy in a news format would just sail through.  On anything controversial you would watch that number slide downwards toward zero pretty fast.

Not so much any more, though.  These days newsrooms are strapped for cash and bodies and they need to generate more content for more platforms. Even the absolutely worst government news releases full of turgid government-speak will find their way readily into a story in print or radio.  The most simple of claims – I have letters of support from all the Premiers – is unlikely to stimulate the question “Can we have copies, please?”

If it does happen but nothing shows up there really isn’t much anyone can or will do about it.  News outlets need content and in today’s environment a large, well funded bureaucracy that spits out content at a high rate of speed will easily swamp everyone and everything.  No editor has the time or money to get people look at other angles and if the reporter gets cut off, their access to content disappears.

No content means no broadcast or paper, that is no vehicle.  No vehicle means no advertising and no advertising, no money for salaries.  It’s a vicious circle. Audiences are dropping anyway, so any further loss of revenue has huge implications.

Even budget allocations at the Mother Corp are driven to some extent by ratings. If your show has no listeners or viewers, rare is the one that can survive come budget time. No one in the conventional media is immune from either the cause or the effect.

The power balance between reporter and the ones reported on has shifted decidedly in favour of the latter. What made Paul Oram’s moaning about CBC so laughable is that whatever they did to him was but a pale shadow, a caricature of the roasting then social services minister Charlie Brett got in the late 1980s after suggesting that juvenile delinquency could be reduced if women stayed home and looked after the children. Imagine if he’d suggested paying cash bonuses for live births.

The power balance has shifted alright and it is not a healthy trend.  Refusing to use the content – as Russell suggests – won’t stop the flow.  These days, the PMO can count on competition for scarce dollars to make every confrontation with reporters an object lesson in The Prisoner’s Dilemma. 

And if nothing else, the Internet allows any organization to reach a very specific audience without having to work through the filters of reporter and editor.  How long will it be before an organization can target its external comms straight at its audiences and hit exactly who they want to hit with what they want when they want?

When newspapers, radio and television were the only game in town, people on both sides had to play nice.  These days, a government comms director who gets word the Telly is refusing to take government content will have a great laugh and then line up another call to Open Line for The Boss.

If Randy doesn’t fit the need, there’s always another reporter a blackberry PIN or e-mail away who will gladly take what you’ve got in the shop window that day.  Offer it up as a “such and such a news organization has learned…” and you can be guaranteed the hook will be well seated not just in the flesh but in the jawbone itself.

Times have changed.

The space at the Telly, for example, used to be valuable, even for Joe Smallwood in the hardest hitting days of Ray Guy.  Even a decade ago, Brian Tobin could feed stories to a reporter at the Telegram knowing that by getting its front page – as he usually would – Tobin could also pick up the two television newscasts right behind.

These days when a paper can manage to squeeze a week’s worth of copy  - and a couple of front pages - out of the Premier’s rehashed and recycled comments from an editorial board, the perceived value of that print space has dropped like the price for those old Milli Vanilli tapes tucked away in the attic.

That’s not the way it should be, but that may also be irrelevant.

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08 December 2009

So where’s the local crew this time?

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 UpdateCharest 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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Walsh guilty

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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To Have and Have Not

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.

equalization numbersA one-page analysis released by the provincial finance department in early 2009 shows the provincial government’s plan would have delivered almost $900 million in Equalization in 2008 through a combination of the O’Brien formula and the 1985 Atlantic Accord Equalization offsets clause.

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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07 December 2009

If it looks too good to be true…

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:

  • Real gross domestic product is now expected to decline by 8.5% compared to 2008.  That’s worse than the 7.7% drop forecast last spring.
  • Oil production in the first nine months of calendar 2009 is down 20.6% compared to the same period in 2008.
  • Despite that, the revised budget projection is for an increase in oil production to 101 million barrels by the end of March 2010 compared to the spring projection of 98 million barrels.
  • The value of oil production is expected to decline by 45% compared to last year.  That’s on a calendar basis. 
  • Government oil royalties on an accrual basis is expected to be $1.813 billion, an increase of $520 million over the forecast in Budget 2009.
  • The value of mineral shipments is expected to be down by 56% compared to 2008.
  • Mining employment down by 9% compared to 2008.
  • Paper production is expected to be about 47% lower than in 2008.
  • Retail sales and personal income are up slightly compared to 2008.

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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“I love you, Paige. I hate you, Dennis” - hydro project version

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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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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06 December 2009

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.

2012-movie-431x300And 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.
-srbp-

05 December 2009

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.

Oil Prices downAccording 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.

-srbp-

[Words and a sentence added for clarity]

04 December 2009

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

-srbp-

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.

-srbp-

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.

-srbp-

03 December 2009

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.

-srbp-