Average annual real GDP growth lower since 2003

The province’s real gross domestic product has grown at one third the average annual rate of the period from 1997 to 2003, according to figures compiled by Statistics Canada.

GDP  - the value of all goods and services produced in the province - grew by 3.0% annually, on average, from 2003 to 2008.  But between 1997 and 2003, GDP grew by an average of 8.9% a year.

Labour productivity increased by 6.4% annually, on average between 1997 and 2003.  However, between 2003 and 2008, productivity increased by 2.1% annually, on average.

this sort of concrete information should make anyone think twice about all those goofball commentaries claiming there was something they called the Danny Williams Effect driving the economy to unprecedented heights.

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Muskrat Falls = expensive power

In an interview with CBC Radio’s St. John’s Morning Show on Monday, deputy premier Kathy Dunderdale told listeners that Muskrat Falls power will cost between 14.3 and 16.5 cents per kilowatt hour to produce in 2017, the year of first commercial power.

Jeff Gilhooley: And how much – I’ve only got a minute left here unfortunately – I didn’t hear that in the announcement on Thursday, what is the new power going to cost us?

Kathy Dunderdale: The new power is going to cost us about $165 a megawatt hour.

Gilhooley: And how does that compare with what is coming out of Holyrood now? Any idea?

Dunderdale: Ah, I wouldn’t be able to give you that comparison right off the top of my head, Geoff, I don’t have those numbers before us, before me, but in terms of when we bring that on in 2017 that’s the cost in 2017, $165, or excuse me it’s $143 a megawatt hour. Anything that we would do other than Muskrat Falls would be either the same cost at that time, but escalating right up through the roof over the next 10, 15, 20 years.

The provincial government has not released any information the models they used to forecast prices for alternatives to building Muskrat Falls.  As such, Dunderdale’s claim about prices escalating through the roof is as reliable as her claim about the death of the Rhode Island memorandum of  understanding.

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Technicolor Dreaming Update:  In an interview with CBC’s supper hour news program, Dunderdale said that government’s price estimates for electricity include a PIRA forecast of crude prices being 50% above current levels by 2017-2020.  That would put crude at prices above US$120.

Double Down Update: nottawa takes this a step further and offers a link to a comparison of electricity prices over the past decade.  The Williams Muskrat Falls proposal is based on the idea electricity prices will double within the next 10 years.

Lower Churchill opinion: The End

The votes are tallied and despite an overnight dump of about 20,000 electronic “votes” the forces desperate to goose the VOCM question of the Day in favour of the Premier’s Lower Churchill proposal came up short.

If they weren’t obsessed with this sort of trivia, imagine what they could have accomplished.

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NL posts lowest productivity in Canada in 2009

Figures released on Friday by Statistics Canada show that Newfoundland and Labrador posted the largest drop in labour productivity in the country in 2009.

Productivity fell by 8.7 percent.  The second biggest drop was 4.1% in Saskatchewan. According to Statistics Canada,

Real output was down for the first time since 2004, because of a sharp downturn in oil and metallic mineral extraction. At the same time, hours worked fell by 6.3%, also the largest decrease among the provinces.

Real gross domestic product as down 14.5% from the previous year, but total compensation was up 2.4%, hourly compensation was up 9.4% and unit labour costs were up 19.8%. In each case those figures were the largest for the 10 provinces.  Only the territories saw higher increases in unit labour costs and hourly compensation.

Broken down by the goods and services sector, the figures showed higher losses in the goods producing sector.  That’s consistent with the declines in oil and mineral production in the province.

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No US market for Lower Churchill power: NL deputy premier

A VOCM news story running this weekend contains the following comments attributed to the province’s deputy premier, Kathy Dunderdale:

Dunderdale says the power Nova Scotia is buying from Newfoundland will be used domestically and nowhere else.

Dunderdale says the price that Nova Scotia is paying for the power is higher than market prices in the United States. She says there is no market for Nova Scotia to take our power and sell it elsewhere.

Dunderdale says the power will be used in Nova Scotia to replace coal-fire generation and to meet their energy targets.

Of course, if there is no market for Nova Scotia’s Emera to sell Muskrat Falls power in the United States, there’d be no market for this province to do it either.

That’s pretty much what your humble e-scribbler’s been saying about the Lower Churchill as well.

Meanwhile, from a PostMedia News story on last week’s Muskrat Falls announcement, comes an assessment by energy analyst Tom Adams:

However , Tom Adams , a Toronto-based energy consultant, says the once-rich markets of the Northeastern U.S. are now awash in cheap natural gas and demand there is also depressed by U.S. economic woes -- making it difficult, if not impossible, to sell much of the power from the Lower Churchill at feasible prices.

As a result, Adams says the economics of shipping electricity from the remote reaches of Labrador south by sub-sea cable simply won't work. He says Thursday's announcement wasn't a firm deal at all, but merely a "lobbying campaign" by Newfoundland and Nova Scotia for a "federal handout."

"There is a lot less here than meets the eye," he says.

Turns out Newfoundland and Labrador’s provincial government had the same thought.

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Unpublish update:  Good thing the copy is here because VOCM disappeared that story from its website. See the comments section for more.

Crude at US$60 in 2011: forecast

Now there’s a thought sure to frighten the bejeebers out of any ruling political party headed toward an election and a leadership racket, planning on spending voters into a stupor along the way and knowing the oil production on which it depends for revenue is also on the downward slope.

It’s only one projection mind you. 

Capital Economics forecast that crude prices will head downward in 2011 as the Untied States economy recovers.

The National Post reported at the end of October:

Julian Jessop, analyst with the London-based firm, predicts the price of a barrel of oil will slide to US$60 a barrel by the end of 2011 as the U.S. dollar recovers and global demand disappoints. This would be the same level as prices in the first half of 2007, before oil went into a bubble that touched highs of almost US$150 a barrel in the summer of 2008.

Interesting thought, that.

Very interesting indeed.

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We are all Newfoundlanders

The global economic problems are weighing heavily on some brows, so heavily in fact that some are musing on the idea that “nous sommes tous des terre-neuviens”.

We are all Newfoundlanders, via le monde.

Quand on sait que les Chinois et les Japonais détiennent respectivement 883 et 865 milliards de dollars de bons du Trésor américains, on n'ose à peine imaginer ce qu'il resterait de la paix mondiale si les Etats-Unis faisaient défaut sur leur dette. Ou la réaction des investisseurs étrangers qui possèdent 70 % de la dette publique française si celle-ci n'était plus remboursée. On se sentait déjà un peu irlandais ou grecs. On se sent un peu terre-neuviens aussi.

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Lower Churchill Opinion: the Battle of Shallow Valley

Helms Deep, it ain’t.

The struggle between the clicks overnight changed the results of the VOCM question of the day.

The VO computers have registered over 45,000 votes and the “No” side is back on top.

The Reform-based Conservative socks have evidently been busy, but not quite busy enough.

Don’t be surprised if they redouble their efforts after a night’s sleep, a case of Red Bull, a few hot pockets and some cold packs for their wrists. The Old Man would be mightily displeased if Gerry Phelan had to report a loss in so vital a test of political strength, especially during poll goosing month.

Updated:  verb tense corrected and a set of related links added.

Edward R. Murrow Flashback Update:  It’s like da blitz, b’ys.  As of 1300 hours local on Sunday, the QOTD is showing about 46,500 votes and the numbers are still running heavily for the “Hates It” forces.

At this rate, the “Loves It” crowd will have to push the total vote to over 100,000 to get the 70/30 split they drove for on Saturday.

That would be an all-time vote record and could well crash the VOCM system for only the second time in the history of the idiocy.

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Related:

• Lower Churchill Opinion: and then, like magic …
• Lower Churchill Opinion – Falling down on the job
• How the Tories get 28% more votes thanks to CRA
• Now that’s really suspicious
• The media and the message
• Shaping political attitudes

Lower Churchill opinion: and then, like magic…

[Note:  This was originally written on Saturday night and time-delayed until Sunday morning.  However, as events overnight changed the story, here it is with a new post to update is on the way.]

______________________________________________

The poll goosing army got its act together.

A little over 12 hours after your humble e-scribbler pointed out that the Old Man’s retirement scheme wasn’t polling too well at voice of the cabinet minister, things changed.

From a little over 7200 votes on Saturday morning there were an astonishing 25,413 votes later on.  Suddenly 70% of the universe is loving the retirement idea.

Here’s what the results were at about 10:30 Saturday morning:

This is a just a reminder that someone in the province’s reform-based Conservative Party pays way to much attention to this sort of trivial stuff. 

No one has documented the whole foolish business as consistently as labradore.   In January 2008, for example, labradore noted the gigantic number of votes on question of the day polls that were important to the Premier (or mentioned him by name) versus some other topics.

In October 2009, he noted the same trend with the new VOCM website even though some technical changes made it harder for some dork to sit at a computer and mouse click his way to premature carpal tunnel all to make the Old Man look better.

Now that one is interesting because it makes it pretty clear that the vote total earlier on Saturday was actually higher than the average already.  The late night total was more in line with the ludicrous numbers from the old-style VOCM website.

Meeker on Media has also done a few posts on it.  One titled “Vote fixing” appeared in 2008.  It’s been re-dated as a result of the recent switch to a new layout at the Telegram website.

After Meeker blogged about one technique for rigging the poll, someone must have tried it.  The resulting click duel wound up crashing the VOCM poll system. Meeker’s comments at the time are worth repeating because they show a similar pattern of insane click counts as we’ve seen so far on November 20:

I saw some irony in the question. I also noticed that, at the time (about 12:30 pm), there were almost 2,000 votes at the site, with 63 per cent disagreeing.

My prediction was that, if the Yes votes made a sudden resurgence, the Trained Monkeys would immediately start clicking No and the voting numbers would go into the tens of thousands (they usually like to maintain a 70 per cent share of the vote).

And my prediction was correct. People did want to play this game. Within an hour, the number of votes had doubled, and the Yes side was out in front. At 2:30 pm, I had to go to a meeting, and at that point the Yes side was still leading, with 55 per cent of 10,000 votes cast.

That's right, ten thousand! It was wild.

When I got home later in the evening, the No side was winning. Votes at that point were around 25,000, and they were back around 60 per cent.

While I was talking live on the radio with Linda Swain, the number of votes was actually increasing by the thousand, as the minutes went by. The last tally I saw was 53,000 votes, with No holding at about 60 per cent.

This poll question will be up all weekend. It’s going to be fun watching to see what happens by Monday morning when the VOCM will likely change the question.

In the meantime, as you look at this an laugh, just recall that someone has obviously been organizing this intense idiocy for the past seven years. 

And then Danny Williams complains about what he could get done if he wasn’t distracted.  Well some of us have been saying that for years. 

When this sort of foolishness turns up again, you have to wonder how much could have been accomplished if all the rest of his Fan Club actually did real work instead of obsessing with this sort of trivia to the point they spend an unhealthy chunk of a November Saturday making sure VOCM  news told the right story in its QOTD report on Monday

Incidentally, just for fun watch and see if the comments section of this post starts turning into a laundry basket full of Conservative sock puppets (right, not exactly as illustrated).

Odds are good it will happen just like they all turned up on the earlier one about poll goosing.

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Offshore board announces results of bid call

From the Canada-Newfoundland and Labrador Offshore Petroleum Board (19 Nov 10):

“The Canada-Newfoundland and Labrador Offshore Petroleum Board
(C-NLOPB) announced today the results of the 2010 Call for Bids NL10-01 (Jeanne d’Arc Basin )for exploration rights in the Newfoundland and Labrador Offshore Area. Bidding closed on November 17, 2010 and successful bids were received on both parcels offered totalling $16,300,000.

The bids represent the expenditures which the bidders commit to make in exploring the respective parcels during Period I. If companies discover significant quantities of petroleum resources as a result of the exploration work, they may then seek a Significant Discovery Licence from the C-NLOPB. Any significant discovery licences issued in respect of lands resulting from these exploration licences will be subject to rentals which will escalate over time.

The following bids have been accepted:

Call for Bids NL10-01 (Jeanne D’Arc Basin)

Parcel 1 (139,617 ha)
Husky Oil Operations Limited (67%)
Repsol E & P Canada Ltd. (33%)
$1,150,000

Parcel 2 (29,783 ha)
Husky Oil Operations Limited (50%)
Statoil Canada Ltd. (50%)
$15,150,000

Subject to the bidders satisfying the requirements specified in the Call for Bids and Ministerial approval, the Board will issue an exploration licence for both parcels in January 2011. The licences will be for a term of nine years, with an initial period of five years.”

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Falling down on the job – Lower Churchill opinion

Not so very long ago, the Reform-based Conservative Party had an army who spent their time clicking madly to make that any question of the day on the VOCM website went the way the Premier would like.

It was all part of the machinery designed to maintain an illusion that the regime du jour is wildly popular. Incidentally, November is one of the four months of the year when the entire poll goosing apparatus usually goes into high gear.

How times have changed.

At 10:30 AM on Saturday, the VO question of the day results looked like this:

Only one third of the respondents – out of a hefty 7207 - like the Premier’s Lower Churchill deal. Almost half did not like it and, curiously enough, another 21% were not sure about it.

Not sure?

Perhaps someone is falling down on the job.

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World of Tomorrow: media studies ph.d, Ver. 2.0

In 1969, the province’s major daily newspaper proudly declared that the contract to develop Churchill Falls was a good thing:

Fears that Newfoundland came out on the short end of the stick in the agreement to develop Churchill Falls appear to be unfounded.

In fact, Newfoundland fares quite well, although it may appear otherwise on the surface.

At the same time, the paper’s John Carter did acknowledge that the “$950 million project in Labrador… probably would have come earlier had it not been for Premier J.R. Smallwood's uncontrolled outbursts of provincialism...”.

Fast forward four decades and it is clear that, to paraphrase Premier Danny Williams from Thursday’s dog and pony show, the experience of that disastrous contract has surely taught everyone in the province a few lessons on what not to do the next time.

Over at the Telegram, they learned their lesson very well about waiting until they had an actual agreement to study before heaping on the praise.  Friday’s editorial begins with these sober and cautious words:

Lower Churchill is no longer a dream. It’s a reality.

Uh huh.

Right.

And the editorial accepts every single statement by every single government official from Thursday without question at all.

Lesson learned, indeed.

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Sky Captain and the Traffic of Tomorrow, November 15 - 19

Good boy, Dex.

People are loving the deal that wasn’t.

Here are the top 10 posts at Bond Papers for the past week, as determined by what the visitors are reading.

1. The World of Tomorrow:  media studies Ph.d edition
2. Muskrat Love
3. The World of Tomorrow
4. Williams announces political exit plan
5. The World of Tomorrow:  Basic Math
6. The politics of energy subsidies
7. Lower Churchill MOU – developing
8. Hydro:  different province.  same political problem.  same political solution
9. Court docket now online
10. Full of sound and fury

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AbitibiBowater announces pensions agreement

Issued by AbitibiBowater on Friday, November 19:

“MONTREAL, Nov. 19 /CNW Telbec/ - AbitibiBowater announced today that, as part of its restructuring process, it had entered into agreements with the Government of Ontario related to funding relief in respect of the material aggregate solvency deficits in the registered pension plans the Company sponsors in Ontario and Quebec. The agreements will enable the Company to seek the waiver of the conditions, as detailed in its restructuring plans, regarding the adoption of funding relief regulations. On September 14, the Government of Quebec announced an agreement between the Company and the Régie des rentes du Québec for similar relief measures. The agreements finalized with the provinces of Ontario and Quebec provide, among other things, that the Company will meet its future pension obligations in full to the beneficiaries. 

"The best way to ensure pension benefits continue to be paid out is to ensure a company stays in business. We are pleased that AbitibiBowater will continue to operate, that thousands of Ontarians will continue to be employed, and that existing pensioners will continue to receive their benefits," stated Dwight Duncan, Ontario Minister of Finance.

In addition, an agreement for the next five years has been entered into by the Government of Ontario and what will become one of AbitibiBowater's Canadian subsidiaries post emergence, AbiBow Canada, regarding its pulp and paper operations in the province. AbiBow Canada has agreed to apply specific measures regarding its governance and investment levels as well as the sustainability of its operations in Ontario.

"The agreement affects thousands of workers, retirees and families in Ontario and allows the Company to move towards the finalization of its emergence from creditor protection. We are all very pleased to see AbitibiBowater get back on its feet, and I am especially appreciative of the support of my colleague at the Ministry of Finance, Minister Dwight Duncan, for making this happen," said Michael Gravelle, Ontario Minister of Northern Development, Mines and Forestry.

This agreement will become effective as of the time of AbitibiBowater's emergence from creditor protection. Moreover, the parties have agreed to re-evaluate the covenants of the agreement at the end of the initial five-year term in light of the Company's situation, the conditions affecting the pulp and paper industry as a whole and the solvency of its pension plans.

"We have signed today an agreement that is a significant step toward our emergence. We are convinced we have obtained the best deal possible for all our employees and retirees in Canada, and we would like to thank the Government of Ontario for its ongoing support," stated David J. Paterson, President and Chief Executive Officer of AbitibiBowater.

The Company directly employs approximately 8,500 workers and has in the order of 20,000 pensioners in Ontario and Quebec. These agreements are subject to AbitibiBowater's and its subsidiaries' emergence from creditor protection, which is expected to occur this fall, and is subject to confirmation of its U.S. plan of reorganization.

AbitibiBowater produces a wide range of newsprint, commercial printing and packaging papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 19 pulp and paper facilities and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 70 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ.

For further information:

Investors       
Duane Owens 
Vice President, Finance   
864 282-9488
Media and Others
Pierre Choquette
Director, Public Affairs - Canada
514 394-2178
pierre.choquette@abitibibowater.com

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Aboriginal land claims remain substantial barrier to Williams’ legacy plan

Innu leader Joseph Roche may have been at the news conference announcing something or other about Muskrat Falls but, as he told the invite-only audience, the whole thing isn’t going anywhere until the Innu land claims issues are settled.

"One of the key outstanding issues now is the consent of our Innu people," Riche said.

"But we cannot do that yet, we need the federal government to resolve outstanding issues for our land rights agreement … it has been thirty years in the making and we have lost many of our elders and leaders in that time. Without this, the Lower Churchill project can not proceed." [cbc.ca/nl]

Riche was one of the invitees and the provincial government distributed a backgrounder on Innu issues.  But, as Premier Danny Williams knows already, the New Dawn agreement is stone cold dead. Riche reportedly put a damper on the excitement at the hotel news conference when he reminded people this thing wasn’t close to being a deal as far as Innu were concerned.

Chief Riche was talking about issues with the federal government, a key player the provincial government left out of the talks to this point.  That’s just one of the problems.  There is a substantial opposition within the Innu community to the project self and they aren’t interested in seeking anything happen on the river, period, full-stop, end of story, do-not-pass go and forget about the two hundred bucks.

And for those who missed it, someone seems to think that by selecting Muskrat falls as the first site, that will outflank the Innu opposition.  Elizabeth Penashue’s annual walk to Gull island doesn’t mean that Muskrat Falls isn’t as important.

The Innu aren’t the only aboriginal group with a claim that needs attention.

So far the provincial government has ignored the Metis of Labrador even though the Lower Churchill dams would be within the Metis claim area.  What’s worse for Williams is that the Metis are still smarting over his broken election promise from 2003 or his comment in 2009 that the project needed the Innu but not the Metis.

Other Premiers have long under-estimated the challenges of aboriginal land claims issues.  At the time he announced a memorandum of understanding to do way more that Danny Williams proposed, Premier Brian Tobin boasted he could finish a land claims deal with the Innu in 12 weeks.

That was 12 years ago. 

And Tobin’s proposal had a far more substantial basis for agreement than a terms sheet.

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Loyola off to Dublin

As your humble e-scribbler told you on August 13, Loyola Hearn is Canada’s new ambassador to Dublin.

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The World of Tomorrow: media studies ph.d edition

When there is so much official bullshit flying around, it shouldn’t be surprising that conventional news media wind up piling it higher and deeper on their own.

From the only newspaper Newfoundland nationalists care about comes a comment that ties Shawn McCarthy with the Ceeb’s Vic Adopia  for most ludicrous assertion of the day by a reporter:

He has been battling Quebec Premier Jean Charest for years over Hydro-Québec’s refusal to transmit power from the Lower Churchill project through its existing transmission grid to markets in Ontario and the United States.

Hydro-Quebec hasn’t refused to wheel Lower Churchill power.  NALCOR energy has refused to option space on the grid or start talks to build any needed extra transmission capacity.

But it gets better. 

Since April 2009, NALCOR has been wheeling Churchill Falls power through Quebec to Emera at the New York border. That deal – which came long after the Lower Churchill transmission requests involved in recent Regie decisions – prompted Danny Williams to state proudly that Labrador power was no longer stranded:

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.

But what is really amazing about the Globe piece is that Danny Williams actually spent five years trying to get Hydro-Quebec to take an ownership stake in the Lower Churchill without redress for the 1969 deal set to one side.

Oh, and just for fun, here’s what Danny Williams said in St. John’s on Thursday about whatever it was he announced with Darrell Dexter:

This is a day of great historic significance to Newfoundland and Labrador as we move forward with development of the Lower Churchill project, on our own terms and free of the geographic stranglehold of Quebec which has for too long determined the fate of the most attractive clean energy project in North America.

Historic agreement with Quebec. 

Historic agreement with someone else because Quebec wouldn’t agree.

Which is it?

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The World of Tomorrow: Basic Math

Muskrat Falls:  824 megawatts with an estimated capital cost of $6.2 billion.  That works out to about $7.5 million per installed megawatt.

La Romaine:  1,550 megawatts for $6.5 billion.  That works out to $4.1 million per installed megawatt.

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The World of Tomorrow

Wow.

Seldom has an announcement of any kind been accompanied by such a litany of sheer bullshit.

CBC is claiming that this is a deal to build the Lower Churchill and that, oddly enough is what CBC already announced in January 2008. One mainland CBC reporter debriefed his mainland colleague with the ludicrous claim that in the Churchill Falls deal  Newfoundland bore all the costs, and Quebec collects most of the revenue. The rest of his debrief was no better.

So what was announced?

Well, let’s just remind everyone that this morning your humble e-scribbler put it this way:

If this isn’t a concrete deal to start work soon, then Thursday’s announcement can all evaporate as easily as the others did.

This is not even a memorandum of understanding

Today, two companies signed something called a terms sheet.  That’s not a deal, an agreement, an agreement in principle, a memorandum of understanding or a letter of intent.

A terms sheet is – in business parlance – nothing more than a general, non-binding set of instructions to negotiators to guide their future discussions.  For all practical purposes, it has only slightly more value than an informal chat over a beer.

You can tell this is not a firm commitment by the companies to do much beyond keep talking because it has a time limit:  November 30, 2011.

When Danny Williams announced a memorandum of understanding on Hebron, he could treat the thing as a fairly solid basis of agreement.  There were details to work out and there was always the chance of things going sour.  But there was no timeline.  Everyone knew the lawyers would set to work to come up with a formal agreement, but they didn’t stick an expiry date on it.

That’s because they had a commitment to carry forward unless something dramatic intervened.

But this thing has an expiry date clearly stamped on it.

As exciting as some people would like Thursday’s announcement to be, the reality of the it is far different.

Heck, Danny Williams didn’t even get the date right.

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Contextual Update:

• Ready for a better tomorrow:  a May 2006 post that puts the political value of Labrador hydropower in a wider context.  The post title was Brian Tobin’s 1996 provincial election campaign slogan. 

More to follow…

Muskrat Love

To help you get ready for the splendiferous announcement later today, here are some things to keep an eye on.  Undoubtedly, there’ll be more spin than a baton twirlers’ convention riding on the Mad Hatter’s Tea Party ride at Disneyworld.

Just keep your head and you won’t get nauseous.

1.  Ready for a better tomorrow.  Just remember that tomorrow is a day that never seems to get here.

There have been memoranda of understanding before that came to naught.  Remember 1998?  Brian Tobin and Lucien Bouchard dropped a half million to announce not only a Lower Churchill deal but a reworking of the Churchill Falls project as well.  Result:  Nada.

Then there was the memorandum of understanding to sell 200 megawatts of power to Rhode Island.  That fell apart because NALCOR couldn’t deliver the power to Rhode Island at a price anyone could afford.

Don’t forget Frank Moores’ big explosions on either side of the Straits.

And as we look at a likely memorandum of understanding between NALCOR on one side and the Government of Nova Scotia and Emera on the other, let’s not forget that NALCOR already has one:  signed in January 2008.

If this isn’t a concrete deal to start work soon, then Thursday’s announcement can all evaporate as easily as the others did.

2. Cost.  The lower the number the less likely it is real.  CBC’s David Cochrane mentioned a figure of $4.0 billion.

The line from Muskrat Falls to Soldier’s Pond, just outside St. John’s came with an estimated cost of $2.2 billion in 1998. That would be close to $3.0 billion today.  There’s an estimate of the Nova Scotia line that runs between $800 million and $1.2 billion. Take the upper one just to be on the safe side since proponents tend to underestimate megaproject costs big time. So just the lines alone are likely to cost more than $4.0 billion.

A 900 megawatt project in British Columbia (Site C) is coming with a $6.6 billion price tag so it is safe to work with a cost estimate for this project of around the same amount.

The 70/30 debt-equity ratio NALCOR boss Ed Martin has mused about publicly would give you a borrowing requirement of around $4.0 billion.  There’s David Cochrane’s number.  The rest of the cash would come from NALCOR’s small equity stakes in three offshore projects, unless Emera is coming on board with an ownership stake.

3.  How much is being exported?   A couple of weeks ago 60% of the project’s estimated 800 megawatts would go to Nova Scotia.  According to reports on Wednesday, 60% of the power is now coming to the island and – here’s the kicker – the island portion of the province doesn’t need it.  However, NALCOR does need the captive market in Newfoundland to help underwrite the massive project.

Keep your eye on this one because it will tell you how expensive electricity will get in Newfoundland and Labrador. As it looks now, things are lining up to prove Danny Williams was right when he said last fall that “…good, cheap, competitively priced energy, can't be offered to that whole region.” 

4.  Environmental process Day Zero:  As regular readers already know, this thing will have to go through an environmental review with a whole new section never before considered.

5.  Holyrood.  For some unfathomable reason, no one seems to want to believe NALCOR’s own words on Holyrood:

It is important to consider that whichever expansion scenario occurs, an isolated Island electrical system or interconnected to the Lower Churchill via HVDC link, Holyrood will be an integral and vital component of the electrical system for decades to come. In the isolated case Holyrood will continue to be a generating station; in the interconnected scenario its three generating units will operate as synchronous condensers, providing system stability, inertia and voltage control.

The diesel plant at Holyrood will not be shuttered, mothballed or otherwise displaced or taken offline.  To the contrary, it will run 24/7/365 but at a reduced capacity. Holyrood will be an “integral and vital” component of the province’s electrical system.

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