In the court of public opinion (repost from The Persuasion Business)

These originally appeared in two parts on July 23 and July 24, 2007 at The Persuasion Business.

Part One

You don't have to be Conrad Black or Brian Mulroney to find yourself facing a legal battle and at the same time face a battle over your reputation in the court of public opinion.

Cases involving large companies, alleged injuries to members of the public, alleged wrongdoing by politicians or other prominent people usually attract news media attention. It's true in Chicago with Conrad Black and Los Angeles with OJ, Paris Hilton or the latest flavour of the moment.

Yet, it is equally true even in a relatively small place like Newfoundland and Labrador. Max Ruelokke, currently the head of the offshore regulatory board, found himself speaking with reporters on a legal action to resolve a dispute over his appointment to the job he currently holds. Ruelokke, a senior executive in the private sector and former public servant likely never expected to find himself at the centre of a political controversy but that's where he wound up.

These days, though, any case is liable to make the news. Even in appeals courts, cases that would normally draw yawns have earned news coverage either because there was something peculiar about the subject matter - a bizarre constitutional challenge on a fisheries violation, for example - or because one of the lawyers was particularly colourful in his arguments before the court.

Parties involved in a court proceeding - especially one that is likely to make news - must deal with the court of public opinion just as they deal with legal aspects of whatever matter they may face in a court of law. Reputations are at stake and as several high-profile cases - like Mulroney and Airbus - a successful co-ordination of public relations strategy with legal strategy can have a profound influence on the outcome.

It's not just a matter of having a lawyer make comments to a reporter. Most lawyers, even the ones who make a habit of granting interviews, run on whatever innate abilities they have. But being knowledgeable in the law and persuasive in a courtroom or in a boardroom doesn't necessarily guarantee success in the other, less formal and often more combative court. The rules are different. That's where counsel comes in. Just as no one with half a clue would walk into court without a lawyer, no one - including lawyers - should wander into the court of public opinion without experienced counsel.

Part Two

There are at least five reasons to deal with reporters and, in the process, co-ordinate action in both the court of law and the court of public opinion.

It's called litigation public relations.

1. Preserve the presumption of innocence.

This may be the cornerstone of our legal system, but often the first allegation made in public is the one that sticks.

Far too often people and organizations facing allegations will decline public comment. Just as silence is consent, silence in the news media usually implies agreement with whatever is being said about you.

Consider any of the high-profile cases currently taking place in Newfoundland and Labrador. Current and former members of the House of Assembly face allegations about improper spending of public funds. Charges have been laid against one - and he continues to decline comment of any kind - but all are supposed to be innocent until proven guilty.

Ask anyone about the case and see how many are willing to maintain the presumption of innocence after the onslaught of allegations from the Auditor General. In a court of law, allegations are subject to scrutiny and cross-examination. Weaknesses in an argument, faulty work, or in some instances a lack of credible evidence may win an acquittal.

Eventually.

In the meantime, those allegations are all that are available publicly. And every time there's another news story, the allegations get repeated sometimes without direct refutation.

For example, take the case of the former director of finance in the legislature who faces a civil action brought against him by the provincial government to recover money he is only - at this point - alleged to have inappropriately obtained or which he is alleged to have approved for others. His lawyer filed a statement of defence to the claim, until now the only comment of any substance made on his behalf and it is 13 months after the first allegations were made.

The CBC coverage of the filing is accurate and apparently thorough. But look at the amount of space devoted to the allegations in a story on the statement of defence.
The same could be said of a radiologist in Burin accused - merely accused - of misreading radiology reports. Find someone who hasn't heard of the case. Find someone who doesn't believe the guy is guilty of screwing up more than 6,000 reports.

Silence implies guilt.

2. Provide accurate, factual information about the case from the client's perspective, or as may be the case, correct inaccurate information.

The basis of solid legal argument and solid public relations argument is fact. Nothing persuades better than a consistent, logical and simple series of factual propositions or statements.

It isn't spin. Spin is misrepresentation, which is a slightly more polite word for a falsehood. Spin erodes credibility which undermines reputation which rots relationships.

In all cases, but especially when the allegations are emotionally charged, it may be important to defuse emotionalism with facts.

Sometimes allegations may involve inaccurate information or a news report may include inaccurate information from any source, including third parties.

The inaccuracy may come from a comment or it may result from the context, like the example of a health authority announcing the suspension of a radiologist immediately before an announcement of a public inquiry into breast cancer screening problems.

If the subject is complex or the issues involved are arcane or intricate - like how claims were processed and who approved them - important details will be omitted or simply misunderstood.

3. Provide reporters with background information not necessarily related to the case so that reporters may understand the legal proceedings.

Reporters are usually bright people but even reporters who have covered legal issues for years before may be unaware of important aspects of the process.

A key part of any public relations job is translating complex issues into accurate but understandable language. Legal cases are no different than engineering or mathematics. Keeping the level of comprehension high fights against inaccuracy and the resulting wrong impressions.

Lawyers and others may often need to provide background information to ensure reporters get the story right.

A few years ago, I dealt with reporters covering a high-profile set of charges. My client was not directly involved.  Reporters were obviously having some difficulty understanding the circumstances under which bail is granted in Canada. The lawyer representing the accused didn't provide any information - simple background - and when I referred the reporters to the two Crown prosecutors on the case, both lawyers declined any comment.

Reporters were evidently frustrated and they were directing questions anywhere, including in my direction. As a result, I gathered some information, consulted a couple of solid sources and gave them a bit of background. Doing that helped direct questions away from my client - where attention shouldn't have been focused anyway - and also helped reporters understand the circumstances that likely influenced the judge's eventual decision to grant bail with some fairly stringent conditions.

The sad part of that episode was that both the Law Society guidelines and guidelines for federally-appointed courts on media coverage of court proceedings all encourage exactly that type of comment by lawyers even those directly involved in litigation.

4. Know what to say and when; know what not to say and when not to say it.

As important as it is to say something, it may also be advisable to hold back some information for the courts or even to avoid making some comments at all.

Ask Conrad Black's attorneys about that last bit when it comes time to sentence the former media baron.

More likely though, it may be generally inappropriate to lay out in detail every aspect of a defence or a prosecution, of an allegation or a response, in public before making the comments in court. That's something lawyers will know.

But consider the alternative: the need for disclosure in the court of public opinion.

In their book, Buck up and suck up, James Carville and Paul Begalla recount the initial stages of Whitewater. Bill and Hilary Clinton - being lawyers - instinctively approached the allegations like lawyers. They hired lawyers.

And the lawyers did what lawyers do: they said nothing, admitted nothing. They advised against saying anything. The lawyers acted in what they perceived as the clients' best interest based on what works in their world. However, as Carville and Begala point out, "stonewalling is the biggest, brightest red flag you can wave to a reporter."

Closer to home, consider the piece of information withheld from the public on breast cancer screening, apparently on the advice of lawyers. It's easy to trace and entire public inquiry to the furor created by just that one earnest and well-intentioned piece of advice based on experience in one court but used in the wrong one.

Openness breeds confidence. Stonewalling breeds something else.

5. Everyone follows the news and vice versa.

We'd be naive if we didn't understand that everyone watches television, listens to the radio and reads the newspapers or surfs the Internet.

Stories can't be contained any more by the fact they happen in a town with only a single daily newspaper, a couple of radio news outlets and a couple of television stations. For anyone doing business outside his or her own community, odds are that media coverage will reach. In addition to dealing with immediate legal problems, widespread media coverage may make it hard to carry on business elsewhere.

Equally, while it may have been possible once to pull stakes and move to another province or even another country to start again after a legal disaster, those days are gone. What will drag along behind is not just the legal disaster, but virtually every comment made - accurate or wildly speculative - and if the person or business happens to gain some prominence in the new local, old ghosts may return to haunt.

In the immediate world of a litigation though, we'd be equally naive to believe that judges and prospective jurors don't follow the news and we'd be just silly to think they also don't start forming some opinions based on what they hear initially. They are human.

Rather than vacate the field to whatever allegations are made, presenting factual, accurate comment in news media can influence a case. (Making wild and silly comments can produce the opposite, but that's another war story)

Consider the case of Max Ruelokke. Appointed to chair the offshore regulatory board by a process established by federal-provincial agreement (the 1985 Atlantic Accord), Ruelokke faced a situation in which the provincial government delayed issuing the order in council making the appointment official.

As it turned out, Ruelokke had to sue the provincial government to get the job he won on merit, but in the process, he faced public criticism from the Premier. Ruelokke didn't seek the limelight, but he never shied away from it either. He accepted interview requests and presented himself calmly and consistently. He was impressive, even as the whole process dragged on for months.

Would it have made a difference if he kept his mouth shut? Hard to say. Ruelokke had a strong case anyway, one the judge hearing the case described as a "slam-dunk" even before final summations.

Had Ruelokke lost his temper in the face of some of the comments made against him, he may well have damaged his case. By maintaining a cool demeanour and dealing simply with the facts, Ruelokke may well have helped confirm that he was simply a professional executive entitled to the job he had been awarded in a fair process.

Ruelokke's calm persistence in the face of the Premier's bluster may also have helped persuade the Premier to abandon his futile legal fight.

One sign of the impact Ruelokke had? After the case was settled, the Premier whined about Ruelokke being "in everyone's face" throughout the process, although Ruelokke had appeared in interviews on only a handful of occasions.

Ruelokke's response was characteristic of his overall performance:

"I have not gone seeking the attention of the media. I have not failed to respond, however, to media on my views on what's happened," he said.

That's the essence of litigation public relations.

- srbp -

The Johnny Cab Minister (repost from The Persuasion Business)

This post originally appeared February 27, 2008 at The Persuasion Business:

Johnny Cab is a clever character in the 1990 movie Total Recall.  It's an automated taxi, voiced by veteran character actor Robert Picardo. You may recall him as the doctor on Star Trek: Voyager or as the witch Meg Mucklebones in the cult-hit Legend.

Taxis in the movie are entirely controlled by on-board computers.  To give them some semblance of normalcy, Johnny Cabs have robot drivers consisting of just a head and torso.  The computer is programmed with stock taxi driver lines like "Please state your destination" or "Helluva day."  If you don't ask a question to answer one that fits into the programming, the Johnny Cab will fall back on one of its stock lines.

You hear the same sort of thing with some people being interviewed by news media. Either they've had no media training, bad media training or the good training they had never took. No matter what the question, they refer back to their talking points or scripted lines. That's all the say.

Talking points are a standard feature of interview preparation.  A media relations officer will give three or four major points or ideas for the person being interviewed to make.  There should be some background or detail to expand on the point.  no set of talking points will ever be complete but good preparation means that someone being interviewed can make the points they want and nothing should be asked that comes as a surprise.

If the media person is doing his or her job, they already know the subject inside and out.  He can anticipate questions and provide sensible answers that convey meaningful information. The person being interviewed should also have more information;  he or she should be knowledgeable about the subject. If they aren't the interview will be incredible and the whole idea is to present credible, believable information from someone who knows what he or she is talking about.

After all, a media interview is a stock part of the persuasion business.  You want to gain support - not from the interviewer but from the audience -  and the way to do that is to present information in a way that people can relate to and understand.

A couple of times over the past week or so, provincial environment minister Charlene Johnson has wound up sounding like a Johnny Cab Minister.

In an interview with CBC's Ted Blades, Johnson was asked repeatedly over the course of a seven minute interview why her department didn't conduct regular structural inspections of 125 bridges over which thousands of people on the island pass ever week. She really never answered the question.  She fell back on her talking points, referring to a single bridge closure in 2006, or referring to her department's reliance on public complaints to know when a bridge needed some expert attention.

Now it's not like Blades was asking a bizarre or overly aggressive question.  Johnson herself said that public safety was paramount, that a human life was very important.  Blades' question gave Johnson a chance to give a concrete example or a convincing statement of how her department would put that sentiment into action.  After all, actions speak louder than words in the persuasion business.

Johnson could have easily said that the report from Transport Canada had caused her to re-examine the policy.  She and her officials would now work with the public works department and incorporate her hundred odd bridges into the others inspected annually by another department.

Her talking point  - her aide memoire - would have been something like this:  "Public safety is extremely important. It's so important that even though we had thought our policy was working, it isn't.  Now we'll be doing regular inspections."

And if hit with the question again or asked how they might have thought no inspections was a good idea, her response would be:  "You know, we all make decisions that make sense at the time but experience shows something else. So now we are inspecting these bridges and we'll do regular inspections by civil engineers to make sure the bridges are safe.  Public safety is that important."

But that's not what she had and, even though she is a cabinet minister responsible for running a department, she couldn't stray from the confines of her programming.  As a result,she sounded incredible, insincere, or at the very least laughable.

She did much the same thing in an interview on Wednesday with Chris O'Neill-Yates on the collapse of a paper recycling program in St. John's for want of $100,000 a year in operating cash.  A request to the provincial recycling agency was turned down even though, as CBC had earlier reported, the Multi-materials Stewardship Board had a surplus of $2.0 million last year.

Johnson couldn't commit to reconsidering the policy of not funding operating grants, even though she is the environment minister and recycling is a key part of government's waste diversion policy.  Nope.  better to send it to the dump, supposedly, as Johnson had earlier said when confronted with the issue.
And when asked about possibly reviewing the mandate of the decade-old recycling organization, Johnson talked about the board's "wonderful" work and the need to give news media a briefing on what "wonderful" work they were doing.

Yes.

Wonderful work.

Even though, as a result of an old policy, a recycling project has collapsed and tons of recyclables are now going to the dump instead of to the recycler where they are supposed to go as part of the government's waste diversion, management and reduction policy.

It doesn't make sense.

But it was in the talking points.

And when you are a Johnny Cab Minister, the programmed talking points are all you've got.

-srbp-

Invented story: political appointee and CBC attack government’s political opponent

While it isn’t clear if the provincial status of women council started the ruckus but there’s no doubt that political appointee Linda Ross is part of a manufactured attack on opposition leader Yvonne Jones.

CBC’s Here and Now broadcast a portion of a comment by Jones in the House of Assembly last week:

My next question is for the Premier, and I see she is all dressed up in her finest today, Mr. Speaker, to go down to see Stephen Harper this afternoon. Mr. Speaker, I should remind the Premier of the Little Red Riding Hood story… I should remind her of the Little Red Riding Hood story because I would not want the wolf to devour her because there are no woodsmen left to rescue you.

CBC then showed a portion of an interview with Linda Ross, president of the Provincial Advisory Council on the Status of Women PACSW), who criticized Jones for her supposedly sexist comments. 

Kathy Dunderdale was minister responsible for the status of women in 2009.  She issued the news release announcing Ross’ appointment to the provincial government position.

Only problem for both Ross and CBC is that the video clip left out the zinger in Jones’ political jab. The zinger is also the part that changes the tone and context of the remarks.

Dunderdale couldn’t count on any rescue, according to Jones:

…after you closed down all the pulp  and paper mills in Newfoundland and Labrador.

What a difference those extra words make.

Of course, CBC viewers would never know it since the CBC news editors clipped the quote in a rather interesting spot.

- srbp -

Super-speedy Update:

Ross’ comments come from a letter to the editor in the Thursday Telegram. Ross’ letter selectively quoted the comments from Hansard.  CBC just followed her lead. That doesn’t relieve CBC editors of their responsibility for accuracy but it does identify clearly who torqued the story first.

And from the comments you’ll regret later department comes this bit from Dunderdale’s news release announcing Ross’ appointment:

I look forward to working with the president and board over the next three years.

Getting their stories straight

According to Premier Kathy Dunderdale:

Now, Mr. Speaker, we have recall power from the Upper Churchill that is now available for industrial use in Labrador.

That’s the power former finance minister John Collins suggested to bring to the island to help displace Holyrood.

According to Nalcor boss Ed Martin on CBC Radio Noon the very same day Dunderdale said that there is very little of that recall power that isn’t already used in Labrador.

What is left over is sold to Emera.

At a loss.

Numeracy problems

Factoid:  66% of adult Newfoundlanders and Labradorians lack the  numeracy skills (mathematics and logic) to function in modern society.

Premier Kathy Dunderdale told the legislature on Wednesday:

Unlike what is being proposed by the Leader of the Opposition, hooking up fifty or sixty ponds around this Province and costing us tens and tens and tens of millions…

Dunderdale also said that “to meet the power demand of the people of Newfoundland and Labrador in 2016, 2017, Muskrat Falls is the cheapest option to do that…”.

Dunderdale’s Muskrat Falls proposal will cost not tens and tens of millions or even hundreds and hundreds of millions.

What Kathy wants to do will cost thousands and thousands of millions.

Do the math.

- srbp -

Another cheaper, greener alternative to Muskrat Falls

Former Progressive Conservative finance minister John Collins surprised a few people this past weekend by publicly criticizing the plan to double domestic electricity rates to build the Muskrat Falls megaproject.

Now while Premier Kathy Dunderdale may have blithely dismissed Collins on Monday, for those who know him or know of him, his public comments carry great weight.

CBC Radio Noon’s Ramona Deering interviewed Collins on Tuesday.  His comments are available as am mp3 file:  click here.

Collins hits on the major flaw in the entire scheme:  domestic ratepayers will consume only 40% of the Muskrat Falls output and that’s the entire basis on which the project will be made profitable.

The Dunderdale/Nalcor scheme is elegantly simple and chilling at the same time.  It doesn’t matter what actual demand is.  It doesn’t matter if export power is given away free.  The public utilities board is compelled by provincial law to set power rates that guarantee Nalcor’s financial stability and ensure it is profitable.

If electricity consumption goes down as a result of higher prices, Nalcor can simply go to the board and get another rate increase. If demand increases they can keep making money from higher rates.  And if they happen to export power and make a buck they can keep that as well and invest it in other projects.

Nalcor wins in every scenario and the only guaranteed losers in the scheme are the poor schmucks who will be forced – by law – to pay for the entire project.  This is, by the way, exactly the opposite of the policy that built Hydro-Quebec and that guided Newfoundland and Labrador Hydro before the current administration turned it into an energy franken-corp.

Collins systematically demolishes every argument offered in favour of the government scheme.

Then he adds a potential solution of his own:  use the 300 megawatts of power recalled from Churchill Falls and send it down a new line that connects the island to Labrador. 

That idea actually makes sense and it is one that Nalcor clearly hasn’t considered.  The provincial government could fund the line using the cash reserves it already has on hand and which it plans to use on the Muskrat project anyway.  The recall power – currently sold to Emera at a loss – plus some additional wind power, plus small hydro and the seized Abitibi assets would meet projected demand on the island.

The gigantic bonus is that it would not double electricity rates in the province.  Indeed, if Nalcor used oil cash to pay for the project, they wouldn’t need to borrow very much to get the job done. As a result the project could be profitable almost instantly and at far lower cost to consumers than the Muskrat project.

If Emera and Nalcor still wanted to build the line to Nova Scotia, the transmission infrastructure would allow development of new wind power projects primarily for export during the summer months when the island doesn’t use all the power produced here.  Since the cost of those projects is far lower than Muskrat, the export power would be competitive in the export market, something Dunderdale admitted yesterday that her project definitely isn’t.

Collin’s idea is cheaper than the Muskrat scheme.  Collin’s idea is also greener since it relies on an existing megaproject. and could support development of new wind power that Nalcor simply isn’t interested in, at all.

And the two dams on the Lower Churchill?

Develop them when there is a demand either domestic or export for the power.

There are plenty of lower cost alternatives to Muskrat Falls.

You just have to want to see them.

- srbp -

Mother Corp news geniuses are NL electricity price gurus

No, this is not an April Fool’s joke almost a week late.

In answering a question on the source for government electricity price forecasts that are more than double actual experience recently, natural resources minister Shawn Skinner told the House of Assembly on Tuesday that CBC National News is his source for high-level energy intelligence:

…  The CBC National News did a survey; they project up to a 50 per cent increase in the electricity rates.

Mr. Speaker, the reason we are developing Muskrat Falls is to solve that problem, and by solving it we will be able to ensure that the rates will increase by 0.7 per cent per year as opposed to the 4 percent to 6 per cent that they are increasing now.

What Skinner didn’t say is that the recent CBC news report  he cited - dated March 30, 2011 -  actually includes the Muskrat Falls rates as part of its projection for greatly increased electricity prices by 2020.

In other words, CBC wasn’t forecasting.  The report was describing the result of the government’s proposal to double domestic electricity prices.

But wait.

It gets worse for Skinner, who seems to have misunderstood his briefing notes very seriously.

For starters, none of the story used actual demand forecasts for Newfoundland and Labrador based on its situation.  Skinner basically used possible events in Alberta  - and other places - as justification for actual decisions in this province taken before the CBC story even hit the Internet.

Then realise that the increase in electricity rates over the next decade CBC is talking about isn’t actually a forecast.  They are really just suggesting a possible  conclusion based on some of the prices being paid to producers in Ontario and other places in central Canada for some new technologies.  Even the language is obviously conditional:

…it seems to mean inexorable price hikes…

Seems to mean?

You hope someone would say “will definitely mean” before Skinner signed on to a guaranteed doubling of electricity prices for his constituents, as a minimum.  Evidently he didn’t notice the obvious problems related in the story by people on fixed incomes when faced with electricity price increases of the magnitude he is obviously comfortable with. Hint:  Perhaps someone should point out the province’s own demographic forecasts for the Minister.

So yeah, maybe, theoretically prices might skyrocket if you can judge by the biogas and other similar experimental or relatively small-scale projects CBC cited. Unfortunately their speculation is pretty much shite: they didn’t do a detailed analysis of  the total energy generating mix and what might actually happen to prices if consumption rises 23% in the next decade, as forecast by the National Energy Board.

Talk about faulty reasoning.

Even that is not the end of it, sadly.

That 35% increase in prices over the past five years or “recent years” that Skinner and Premier Kathy Dunderdale like to talk about?

Turns out it is actually a 20 year average rate of change adjusted for inflation:

Altogether, it seems to mean inexorable price hikes for a commodity that's already 30 per cent more expensive than in 1990, after adjusting for inflation.

So if you were really forecasting for the next decade based on the preceding two decades, you might want to try a 15% increase adjusted for inflation. Math geniuses will pretty quickly tell if that works out to be a 50% increase unadjusted for inflation or any other way.

And if all of that isn’t bad news consider that the La Romaine project in Quebec will produce electricity at a cost of less than half the Muskrat Falls total of 14.3 cents per kilowatt hour.  Hydro-Quebec will get its power from La Romaine for 6.4 cents per kwh.  That project is also more cost effective than Muskrat Falls, producing 1550 MW compared to the Nalcor project’s 824 MW and at about the same price ($6.2 to $6.5 billion forecast).

So if you take the province’s natural resources minister at his word, he is relying on media speculation to make serious decisions about the province’s future.

Talk about three guys and a magic eight ball.

You simply cannot make this stuff up.

As a last point, CBC can’t even get its basic facts straight on electricity generation in Newfoundland and Labrador.

The chart of current and forecast projects:

• includes Gull Island even though that project has been shelved for the foreseeable future;
• omits the Menihek power plant that sells electricity from Labrador into Quebec;
• omits an 18 MW hydro project at Star Lake seized by the provincial government in 2008; and,
• still shows Fortis as a co-owner of a power project on the Exploits even though that the province seized that as well in 2008 and turned it over to Nalcor. According to the company’s most recent annual report, Fortis is still in negotiations with the provincial government on compensation for the seizure of its assets.

- srbp -

A new Sprung Greenhouse in the wilds of Labrador

Insecurity is not a good trait in leaders.

Among local politicians it tends to come across with boasting or, in the more recent examples, with nasty personal digs at other people for supposedly having the faults the politician readily displays.

You can see this, by the way in Kathy Dunderdale.  She delights in telling everyone else how stupid, ill-informed or lazy they are.

In the House of Assembly on Monday, Opposition leader Yvonne Jones asked Dunderdale about comments made on the weekend by former Conservative finance minister John Collins. 

The octogenarian came out of a self-enforced silence just to point put that the provincial government hasn’t really explained this Muskrat Falls thing to anyone in the province.  He also took pains to criticise the logic Dunderdale’s administration is using.

Her reply?

In that article [former finance minister John Collins] also stated that he did not have much information on the project. Like her, he decides to speak and find out later.

And to Jones on one of the questions:

Therein lies the danger of going down this road, Mr. Speaker, because her ignorance is so vast.

John Collins, incidentally, is no slouch. He and his colleagues at the time – including Bill Marshall – understood very well the economics of Lower Churchill hydro-electric power. They knew that the thing should only be developed if export markets paid for the project.  The smaller of the two dams – Muskrat Falls – would then come along as a bit of a freebie to give power to the island or anywhere else it could be sold profitably.

Collins also knows that the province already had the federal government on the hook for the project through the Lower Churchill Development Corporation.  That was the provincial Crown corporation created in a deal between Frank Moores’ administration provincially and Pierre Trudeau’s federally in 1978.  Danny Williams and Kathy Dunderdale scrapped it in 2008 only now to have to go cap-in-hand to Ottawa looking for a promise of far less than what they would have done through LCDC.

Anyway, the funny thing is, of course, that whenever Dunderdale actually does explain anything even in a very simplistic way,  she usually confirms what Jones has been saying.  The project doesn’t make economic sense and taxpayers in the province are going to be shafted with enormous electricity bills and public debt.

Some electricity might go off to other places but the sale of it will be subsidised by local taxpayers.  That’s the opposite of what every provincial administration since Joe Smallwood wanted to do.  They wanted to have the exports subsidise the costs for people in Joe Batt’s Arm and Quirpon.  Kathy wants the people of Grey River to pony up so some people in far wealthier places have cheap power.

Do not simply believe that because it is written here. 

Look at what Dunderdale said in the House on Monday.  She admitted that the Muskrat Falls project will produce power that is too costly for export:

Mr. Speaker, Nova Scotia needs power. They need power and they can provide it to themselves for 10 cents or 11 cents a kilowatt hour. They are not going to buy it from us, Mr. Speaker, for 14.3, so we have to go into the market and sell at what the market can bear.

If that wasn’t bad enough, Dunderdale makes it clear she has no idea of basic economics when she tries to claim that this export of discount power will actually lower the cost of producing electricity and reduce the price paid by consumers in the province:

Now, Mr. Speaker, we can let the excess water spill out over the dam and not get anything for it, but we can sell it where there is a market and we can decrease that 14.3 cents further for the people of Newfoundland and Labrador.

Right off the bat, everyone will recall that Dunderdale has already stated that the project is being paid for based on forcing domestic consumers to bear the full cost and Nalcor’s profit on the project.  That’s the basic premise of her statement and it is something Dunderdale and others in her administration have said from the time Danny Williams announced this deal;  it works without a federal loan guarantee or exports.  Local ratepayers will carry the cost and, if need be, the provincial government will drop oil money into the thing as well.

Then consider that the figure of 14.3 cents per kilowatt hour is actually the low-end estimate for the cost of producing power at Muskrat Falls.  It isn’t the price consumers in the province will pay.  It’s the cost.

And it is the lowest cost estimate.

In an interview with CBC Radio’s St. John’s Morning Show last fall, Dunderdale figures of between $143 and $165 per megawatt hour to produce power at Muskrat Falls.  That translates to between 14.3 and 16.5 cents per kilowatt hour.  If that’s what it costs to produce power just at Muskrat Falls, then the cost to domestic consumers will actually much higher than that.

But here’s the thing, if it costs 14.3 cents to produce the electricity, it will cost more than that to ship it to market. Those power lines cost something to build so those loans have to be paid back.  At the same time there are maintenance costs and so forth.

So right off the bat, just getting the power from Labrador to the border of the province will likely cost more than 14.3 cents.

If it goes to Nova Scotia, that’s one thing but since they already get 35 years of free power under this deal, then let’s push it a bit beyond.

Maine?  New Brunswick?  Ontario?

Take your pick.

Then start adding on the costs to send power down the lines to those places.  Wheeling power through Quebec already costs Nalcor something like $19 million annually in wheeling fees under the April 2009 deal, for example.

Incidentally, on that deal, the provincial energy corporation is actually losing bags of money because the price they get for the power is far less than the cost of making it and shipping it.

So with Muskrat Falls, 14.3 cents per kilowatt hour to produce the juice becomes the better part of 20 cents of cost just to get the power to some place like Ontario  by the time you whack on the handling charges. The farther you ship it, the more expensive it becomes and the more the consumer will have to pay just for Nalcor to break even.

Now go back and look at what Dunderdale said about export markets:

They are not going to buy it from us, Mr. Speaker, for 14.3, so we have to go into the market and sell at what the market can bear.

Right.

Nalcor will sell power on export markets for less than it costs to produce it and get it to market.

Talk about a recipe for disaster.

It’s essentially the problem Brian Peckford and his colleagues ran into with the Sprung greenhouse.  They spent about a buck and a half to produce each cucumber which they then sold for about fifty cents in local grocery stores.

Some basic math and you can see pretty quickly that they lost a dollar on every cuke. 

Lucky for them and taxpayers in the province that the Sprung fiasco only cost about $23 million before the government had to shut it down.

Muskrat Falls is supposed to cost at least $6.2 billion.  That assumes that their estimates are accurate and that they can build the power lines and the dam for less than what they would have cost in 1998.

And that doesn’t allow for the fact that since 2003, this administration routinely delivers projects that are years behind schedule and 70% or more over budget.

This could very well wind up being  a gigantic Sprung greenhouse in the wilds of Labrador. 

And if it does, we won’t need Kathy Dunderdale to us all who was stupid.

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Dunderdale admits to cheap power exports #nlpoli

As your humble e-scribbler told you before Christmas, the provincial government plans to build the Muskrat Falls project based solely on what the captive market in Newfoundland and Labrador will be forced to pay.

In response to a question in the House of Assembly, Premier Kathy Dunderdale admitted people outside the province will get Muskrat Falls power subsidized by ratepayers in this province:

Mr. Speaker, the cheapest energy that can be provided to the people of Newfoundland and Labrador is 14.3 cents a kilowatt hour. That is as cheap as we – we cannot bring it in from Nova Scotia cheaper, we cannot bring it in from Quebec cheaper, we cannot build it any cheaper in Newfoundland and Labrador; 14.3 cents still gives Nalcor a 9 per cent internal rate of return, so we are still making money.

Mr. Speaker, Nova Scotia needs power. They need power and they can provide it to themselves for 10 cents or 11 cents a kilowatt hour. They are not going to buy it from us, Mr. Speaker, for 14.3, so we have to go into the market and sell at what the market can bear.

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PC exec voted to remove “Federal Conservative Party” from party constitution in 2008

Minutes of a September 2008 executive meeting of the provincial Progressive Conservative party show that the members voted unanimously in favour of a motion to recommend deleting the “Federal Conservative Party” from the provincial party constitution.

The change went to the 2008 fall annual general meeting for a vote of delegates.

According to the minutes:

“Considerable discussion was held on this topic and everyone in attendance agreed that probably this should have been done years ago and enthusiastically endorsed the initiative.”

Those in attendance at the meeting included party president John Babb, cabinet representative Tom Hedderson and caucus representative Ed Buckingham who – if last week’s rally is any indication - now like the federal Conservatives a whole lot more than they did then.

Interestingly enough, the party constitution made public during the recent leadership racket still lists some federal party positions as being “affiliated” with the provincial Conservatives.

And bizarrely enough, Danny Williams claimed that he led a Reform-based Conservative Party, in an interview with the National Post in late 2010.  Williams said his party was “ideologically more right-wing.”

More right wing than what?

You.

cannot.

make.

this.

stuff.

up.

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PC Party voted $180K for 2008 anti-Harper campaign

The provincial Conservative Party executive committee approved a motion to spend up to $180,000 of party funds on the Anything But Conservative campaign in 2008 according to minutes of an executive committee meeting filed with Elections Canada and released under federal access to information law.

At the start of the September 8, 2008 meeting, party president John Babb “made reference to a Provincial Executive Meeting in November 2006 on issues of confidentiality and asked that we keep all matters discussed at this meeting confidential between members of the Executive.”

The minutes show that party treasurer Jim Oxford  - appointed by the Williams administration to the public utilities board in August 2009 - moved a motion to fund the ABC campaign “to the maximum amount of $180,000.00”.

According to the minutes, Oxford “felt it was incumbent on all of us [on the Executive] to lend the Premier full support in this campaign effort.’

The executive passed that motion unanimously along with another motion to register the provincial party as a third party under the “federal Government Elections Act.”

 

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Kremlinology 34: The enemy of my enemy and other weekend amusements

Danny Williams sat in his office in the Paramount Building – converted from an old movie theatre where the roof collapsed in the 1970s – and shot a video message he intended the Dunderdale Party to show at a dinner on Friday night during their two day coronation of a new leader.

They didn’t show it.

Timing problems they claimed.

So Danny’s people “leaked it” to CBC who duly posted it and have made it the centre of their weekend online coverage of the Dunderdale Party coronation.

With the story out there, Dunderdale party organizers claimed the thing was intended for a closed-door party meeting on Saturday or that it would be shown there instead, depending on which version of the story a reporter got.

Note the reference Danny makes to a similar weekend convention where he can show his appreciation.  That plus the party makeover will give you good clues to the problems Dunderdale and her handlers likely had with the idea of Danny being around.

Then think about her dismissive line from earlier in the week about the rift between Danny and his hand-picked successor: something about how transitions can be hard sometimes. The picture should be getting clear to you now as to what this has been really all about.

The leak to CBC is interesting because when Danny tried to slip out of the country for secret heart surgery, his fans attacked CBC for daring to report it.

Only problem was, someone dropped a quarter on Danny and leaked the story to NTV who dutifully broke it.

Not CBC.

NTV.

That didn’t stop the Danny Boys – what do you call members of the Dunderdale Party? – from lacing into the Mighty Ceeb anyway and any time they could.

Now CBC is Danny’s bud for pushing out stories that cause some grief for the Dunderites. 

Dunderheads?

Whatever.

Speaking of that period of great unease with Tory circles that culminated with the secret heart surgery debacle,  wasn’t it interesting to see Trevor Taylor hosting the coronation supper Friday evening for Kathy Dunderdale?

Trevor’s sudden departure and the reaction within provincial Tory ranks are what triggered the series of posts in the Kremlinology series on what seemed to be some pretty significant problems within the provincial Conservative party machinery. 

Turns out that Tony Ducey had a right to be worried.

And if all that wasn’t enough for you, just look at the line from Dunderdale’s speech as teased out by the CBC at the end of their video post.

Talk about your tells.

"Whether you're from Port aux Basques or Cartwright, St. Anthony, Port de Grave or Quidi Vidi, your district is one we are targeting in 2011 and we need your help to make that happen," Dunderdale told delegates, identifying the five areas of the province currently represented by Liberal or NDP members of the house of assembly [lower case in original].

With Danny in place, the provincial Conservatives could be on the offensive in the five seats they didn’t already hold.

With Danny gone, they don’t have that political luxury any more.  The Dunderdale Party doesn’t have Danny’s polling numbers.  heck even Danny didn’t have Danny’s polling numbers, last going off for sure.

The Dunderdale Party is likely going to be on the defensive in a dozen to 15 seats this fall.

You can get a good clue on that by the nasty reaction in some quarters this past week and this past weekend to Dunderdale and to the Stephen Harper visit.

Dunderdale likes her brave talk but how she delivers her lines tells much more.

That will have to wait for another kremlinology instalment.

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dunderdale2011.ca - The Dunderdale Party

People used to joke about how the provincial Conservatives under Danny Williams were a one man band.

Joke no more.

To coincide with the coronation this weekend, the party former known as the provincial Progressive Conservatives have done a makeover on themselves to match the rather dramatic Stacy and Clinton job Kathy Dunderdale herself went through while she was out of the public eye for about a month or so.

Gone is the web address that include any reference to the PC Party.

Now it is “dunderdale2011”.

The logo you see in the upper right hand corner – where eyes go first on an English language webpage – is the graphic that goes with that.  The number 2011 is vertical with the word Dunderdale right next to it.

Basically they are running with Kathy as the drawing card, just like before now they ran a Big Giant Head of Danny everywhere.

That’s an interesting choice given that Kathy isn’t Danny and it is still way too early to tell if she actually has the stuff to carry the party through the election.

The Dunderdale party website has a few new features as well.  There’s a “donate” button and a “get involved” button as well as a “blog” and the promise of more social media features to come.  Those will be fun to keep an eye on especially as the way the Dunderdale party actually operates is the exact opposite of how a party would operate that relies on social media and “get involved” approaches.  That’s not to say there aren’t elements of the party who are active with Twitter and Facebook, it’s just that the political parties in this province generally don’t function as they would need to in order to rely on those methods to the maximum advantage.

And if you look at the closed circle that is the Dunderdale party – how do you get to be a member, again? – you have a gang that are the fundamental opposite of the sort of open, member-driven party that runs on social media and connecting with voters.

Interesting choices.

It will be more interesting to see how works out and how the other parties present themselves in the run up to the fall general election.

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Average NL family to pay $1000 extra per year for Muskrat Falls power: former PC finance minister

John Collins, who served as finance minister in two Progressive Conservative administrations under Brian Peckford, told the Telegram on Friday that by his rough calculation the average family in Newfoundland and Labrador will pay $1000 per year extra in electricity rates as a result of the Muskrat Falls megaproject.

Collins also said that “ to put another heavy expenditure in is going to get us into trouble.”  The story appears in the Saturday edition on page A5 but isn’t available on line.

First elected to the House of Assembly in 1975, John Collins served as finance minister from 1979 to 1985 and as health minister from 1985 until he left politics in 1989.

He told the Telegram that

“even the export of power doesn’t seem to be rendering enough to justify the cost of generating the power. The only benefit to the province seems to be closing down the Holyrood [generating plant], and  I think there are other ways of doing that.”

Collins is in favour of connecting the island electricity grid to the mainland, calling such a move an “absolute must for the future.” 

Collins also told the Telegram that developing the much larger Gull Island structure would make more sense than Muskrat Falls.  Collins referred to the smaller generator connected to the large transmission system as being like “the trappings of an elephant on a flea.”

In a letter to the Telegram that also appeared in the Saturday edition, Collins said that “[t]o date, full public knowledge of important details are sorely lacking, despite (or because of) imprecise, even contradictory, data from official sources.” [round brackets in original]

He then listed a series of questions on everything from financing to consumer electricity rates to the viability of possible alternatives to the expensive hydro megaproject.

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End of March Madness Traffic, March 28 to April 1 2011

The top 10 posts as selected by Bond Papers readers:

1. The New Dave Denine
2. No federal dough but big media “D’oh! on Muskrat Falls
3. Don’t step in the media spin:  2011 election edition
4. Election Eleven:  NL seats at the start
5. Bond Papers readers know more than provincial energy minister
6. Torque Wars:  Media, politicians and the Muskrat Falls loan guarantee
7. All good Tories flocking together…again
8. Williams knifes successor
9. Connie candidate’s mother opposes Labrador hydro project
10. Don Mills:  pollster PIFO genius

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When the Mother Corp morphs

Even CBC News is now shifting its interpretation that the Muskrat Falls loan guarantee is already in place.

In a story posted on Friday, the Mother Corp put it this way:

The federal Conservative leader told a rally in St. John's Thursday that if re-elected a Conservative federal government would provide a loan guarantee for the Lower Churchill project, contingent on three conditions.

Check out those four important words:  contingent on three conditions.

Compare that to a story they ran on Wednesday:

Multiple sources tell CBC News, though, that the federal and provincial governments have reached a deal on the terms of a loan guarantee.

or even a radio reporter’s debrief on Friday morning.

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Words and meaning

In a debrief with the Morning Show’s Jeff Gilhooley Friday morning, CBC reporter Brian Callahan told the audience that yesterday Stephen Harper committed to a loan guarantee for the Lower Churchill project “at Muskrat Falls.”

Supposedly these were harper’s exact words.

In the clip Callahan used of harper actually speaking, Harper did not say “at Muskrat Falls.”

Those words aren’t in any of the Conservative media materials.

In fact, in his speech Harper did not say “will provide”.  Harper said that based on the three criteria he mentioned, a re-elected Harper government “would” provide a loan guarantee.

That could prove to be a not so subtle distinction.

Words are important.

Meaning is important.

So where did those words “at Muskrat Falls” actually come from?

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March Traffic Madness 2011

Well a month after tightening up comments and eliminating the anonymous types, the traffic went up. 

It still running about 50% higher than September.

Take that, Bembridge scholars!

And what specific posts did these insightful people read?

1. HMV
2. Patronage, pure and simple
3. Matthews bails on board position
4. Operation Ridiculous
5. Cleary to unquit for NDP again?
6. Good Tory?  End of story.
7. Head-scratching and nose-pulling over latest twist in Matthews appointment debacle
8. Taking power without an election
9. Dunderdale boosts Tory support from last Williams poll
10. No Equalization offsets for Quebec.

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Torque Wars: Media, politicians and the Muskrat Falls loan guarantee

Some people will tell you there the federal and provincial governments have a deal for a federal loan guarantee on Muskrat Falls.  The provincial government has already met three criteria set by the federal government and Stephen Harper confirmed that in a speech in St. John’s.

That’s what you could take out of some stories from different media outlets coming out of Harper’s campaign stop in Newfoundland and Labrador.

Bear in mind though that the loan guarantee story took a couple of turns within the past 24 hours even for one single news outlet. 

On Wednesday, CBC reported the deal was done:

Multiple sources tell CBC News, though, that the federal and provincial governments have reached a deal on the terms of a loan guarantee.

Multiple sources.

Multiple unidentified sources.

Not even a hint if they were highly placed in both the federal and provincial governments.

Sometimes that happens.  You don’t even give the slightest clue as to the authenticity of the sources on which the story is based. Put it down to a judgment call.  Doesn’t mean that the comments are right or wrong, but it could put a question mark over the accuracy of the information.

On Thursday afternoon, CBC reported Stephen Harper’s comments during a campaign stop in Nova Scotia:

“The details still have to be worked out," said Harper speaking in Halifax Thursday morning. "There is a lot of discussion still to come, but it is obviously an important project."

Then there was Harper’s speech in St. John’s, impeccably timed to coincide with super hour newscasts. and obligingly carried live by the province’s electronic news media.  It was like Brian Tobin’s 1999 provincial election campaign launch but this time everyone gifted a political campaign with the kind of airtime they could never afford to buy.

The Conservatives issued a news release headlined “Harper endorses Lower Churchill Project”:

Prime Minister Harper noted that, with these criteria in mind, his Government will provide a loan guarantee or other financial support for the Lower Churchill hydro-electric project.  The project will provide Atlantic Canada with a major new source of clean energy.  Support for clean energy projects will be based on the principles of respect and equitable treatment for all regions of the country.

The criteria are:

• National or regional significance.
• Economic and financial feasibility and merit.
• Significantly reduces carbon emissions.

The backgrounder with the news release included this comment:

A re-elected Conservative Government will provide a loan guarantee or other financial support to the Lower Churchill hydro-electric project on the basis of these criteria.

Not everyone accepted the deal is done, though. The Toronto Star reported that

Harper said the federal government has been discussing the Lower Churchill project for “some time” but suggested more negotiations were needed to cement Ottawa’s backing.

“There’s a lot of discussion yet to go but I think the opportunities of the project for this country are evident,” he said.

CTV said that Harper remained “vague” about details:

However, when it comes to federal funding for the project, Harper remained vague.

"In terms of specifics, those things still have to be discussed," he said.

Even CBC couldn’t agree on what happened within its own story on the speech.  A cutline for a photo illustration said:  “Stephen Harper says his government will provide a loan guarantee to the Lower Churchill project, if it meets three criteria.” The body of the story said Harper had already committed to the guarantee.

For all the stories that have run talking about a loan guarantee,  you have to note the appearance of something new in the actual Harper statement:  “equivalent financial support.”  

Conservative briefers travelling with Harper reportedly told reporters that the loan guarantee would have “zero” cost. If it really had no cost then it would be hard to imagine why the federal government would want to provide a cash injection. 

The Toronto Sun referred to unnamed party officials who said that the federal government would “co-sign” any loans with the provincial government.  What isn’t clear at this point is how much of the project would be financed with loans and how much would be funded through bond issues or equity stakes with other investors.

What’s really in behind these media reports is a torque war among the politicians involved. 

For Kathy Dunderdale, Muskrat Falls is the key to her election campaign in October. She’s working hard to distinguish herself from Danny Williams. Delivering a loan guarantee for Williams’ retirement project with a prime minister Williams could never deal with would be exactly what she wants.

No one should be surprised to find out that Dunderdale’s people have been pushing hard to convince reporters that the thing is really in the bag.  After all, this wouldn’t be the first time in the last seven or eight years that the provincial government claimed they had something, like a loan guarantee from Harper in 2006, that local reporters dutifully reported only to have the thing disappear into nothingness.

For Harper, it’s a matter of picking up seats in Newfoundland and Labrador while at the same time not creating a political meltdown in Quebec or other provinces.  He will also have to be very sensitive to the financial implications of committing the federal government to billions of dollars of new public debt.  After all, that is what loan guarantees really mean.

They don’t come with “zero cost”.  Until the debts are paid off, they show up on the federal books as liabilities. The federal government can negotiate a fee for providing the guarantee but that can’t be high enough to basically wipe out the advantage to the provincial government of having the guarantee in the first place.

No one should be surprised that Harper’s people are trying to make this look like Harper is willing to support the project while at the same time giving him plenty of language he can use later on to justify it if the federal government doesn’t deliver a loan guarantee or other financial support.

Dunderdale’s crowd will have some sympathy, incidentally, from Harper’s local team.  After all, they want to grab as many seats in the province as they can.  Playing to the local expectations are one way of helping that cause.  At the same time, though, the federal Conservative organizers have to be sensitive to the larger issues.

As for the debts showing up on balance sheets, the same thing will happen for the provincial government as a result of any debt Nalcor takes on to build the Muskrat Falls project.

And when it comes to one of the key Harper criteria – economic and financial feasibility and merit – that could be one of the points on which the whole thing will hinge.

But is there a done deal?

Absolutely not.

If there was, Stephen Harper wouldn’t be saying otherwise.

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Related:  “Undisclosed risk:  financing the Lower Churchill”

No federal dough but big media “D’oh!”on Muskrat Falls

Multiple sources tell CBC News, though, that the federal and provincial governments have reached a deal on the terms of a loan guarantee.

That’s a line from a CBC story on Wednesday with a headline and a lede that said much the same thing.

There is a deal.

We don’t know if Stephen Harper will announce it on Thursday during his visit but, there is a deal.

Reality turns out to be more than a wee bit different. 

There is no deal at all.

Instead, Stephen Harper told reporters in Halifax on Thursday that Muskrat Falls is an important project.

But…

"The details still have to be worked out," said Harper speaking in Halifax Thursday morning. "There is a lot of discussion still to come, but it is obviously an important project."

Could be a loan guarantee.

Could be an equity stake.

Might be nothing at all.

It seems that some local media outlets fell for the heavy torque coming from the provincial Conservative administration of Kathy Dunderdale.  She’s been grinning like a Cheshire cat since last week leaving all sorts of nudge-nudge hints that something was coming.

You can see the whole thing in this section of a post at CBC’s politics blog that talked up the big changes on the provincial political scene since Danny Williams left office in an unseemly haste just before Christmas:

All of this is leading to speculation of something big from Harper's first campaign stop in Newfoundland and Labrador, expected later this week.

How big? Maybe as big as $6.2 billion. That's the estimated cost of the Muskrat Falls hydro development that would reshape the energy map of Eastern Canada. It's a joint venture between Newfoundland and Labrador's public energy company Nalcor and Nova Scotia-based Emera.

Wednesday afternoon CBC News confirmed that Premier Dunderdale and Conservative Leader Stephen Harper have reached an agreement on a loan guarantee to help with the province's financing for the project.

Dunderdale met with Harper's chief of staff Nigel Wright two weeks ago in St. John's.

The sudden rush to elect federal Tories had provincial insiders assuming the deal was done.

Sure there’s the mention of speculation but right there in the middle is the line  “CBC news confirmed that”  Dunderdale and Harper had an agreement.

Oh to be a fly on a few walls in this end of the country Thursday afternoon.

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