Happy Full Metal Jacket Christmas

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T’was the week before Christmas… #nlpoli

And all the loyal SRBP readers who haven’t voted in the Best Political Blog category can still do so.

Click here.

When you are done there, you might sample these top 10 posts from last week as selected by the readers themselves:

1. Federal Liberals fear SRBP
2. Nalcor and the Muskrat alternatives
3. Penashue – the third smack
4. Muskrat Falls PIFO
5. Political party finance:  much more to read
6. All I want for Christmas is a paradigm shift
7. Undisclosed risk:  putting the plan into action
8. Memorable Christopher Hitchens
9. Amen, brother, amen.
10. More Muskrat Fun:  HQ, NALCO and PEI

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Muskrat Falls: the PUB review story #nlpoli

The Telegram has the best account of the unsuccessful effort by the public utilities board to get an extension on its review deadline for Muskrat Falls.

The whole thing is worth reading, right down to the bit where natural resources minister Jerome Kennedy disputes the role of the consumer advocate in the PUB process.

Then read the Telegram editorial:

But Kennedy seems to have missed the point of the PUB’s letter to him concerning its ability to do the review, because board chairman Andy Wells wasn’t actually asking for time — he was telling the government the time was needed.

The Telly-torial writer then makes a neat transition from a talk of the reason for the delay – Nalcor can’t cough up information on time - to a discussion of Nalcor’s and Emera’s problems coming up with information full-stop.

That difficulty in providing information in response to simple, obvious questions is pretty much the main reason for the growing opposition to the project. 

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Amen, brother, amen #nlpoli #cdnpoli

nottawa asks a good question about politicians, university professors and journalists and discovery of a fairly obvious point about public life in Newfoundland and Labrador since 2003.

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More Muskrat Fun: HQ, NALCO and PEI #nlpoli #nspoli #cdnpoli

The Ghosts of Hydro-Quebec and NALCO:  A pair of readers fired off separate e-mails to point out an alternate  explanation for the “anything cabinet decides they can do” clause from the energy corporation legislation than the tack SRBP took.

They both pointed to comments made over several years by different politicians about making the local energy corporation act like Hydro-Quebec.  In the province those same pols love to hate, HQ gets involved in all sorts of public works.

The HQ spending supplements what the provincial government is doing and, as some of those pols noted, helps to keep a raft of what is essentially provincial government spending from the prying eyes of the Equalization cops.  The result is that Quebec gets to collect more Equalization than it might otherwise get if they transferred the HQ cash into the provincial treasury and had it counted as provincial government income for the purposes of calculating Equalization entitlements. To paraphrase one e-mail, you can also bitch at the same time about Ottawa not doing enough for your province as you collect all this extra money.

Those readers are absolutely right.  Some politicians had that as part of their goal for the energy corporation.  Usually they tied it with nationalising Newfoundland Power to create One Big Crown corporation.

Just to refresh people who might not have followed the whole discussion going back five years, the SRBP view is that Nalcor was essentially supposed to be like the old NALCO.  That was a failed Smallwood-era plan to use one giant corporation that controlled all the province’s natural resources to broker development.

NALCO with an R tacked on the end might not be able to control all resources but it would be able to assume an increasingly stronger role in economic development.  You can look at the exploration program and incentive grants created under the 2007 energy plan let Nalcor use its financial power to foster a leading relationship with smaller, cash-strapped local companies.  The fibre optic deal has Nalcor and the provincial government as the larger partner in the deal.  Even offshore, Nalcor’s exploration program can be seen as a way to step into areas where the private sector isn’t interested at the moment and where Nalcor can assume a dominant role.

Basically, though, the Equalization dodge and the One Big Corp idea aren’t incompatible with the idea of having the energy corporation assume a NALCO-like role in the economy.  The two ideas fit together rather neatly.

In a related story, federal New Democratic Party leadership contender Thomas Mulcair showed up in Prince Edward Island garnering supporter for his campaign.  Part of the story in the Guardian included this rather curious reference by a prominent Island Dipper:

"Tom supports policies which are good for P.E.I. including federal support for the Lower Churchill development which will give us a third electric cable and support for a moratorium on hydraulic fracking."

What Joe Byrne seems to be talking about is actually not a Lower Churchill project at all.  It’s a plan to run another line from the mainland to PEI.  There’s an SRBP post on it from January 2011 when the conventional media reported the federal government wouldn’t fund the project as a green initiative.

Other than that, the only time anyone talked about PEI and the Lower Churchill in the same breath was in 2005.  Back then a British Columbia company was looking at the idea of running a cable to PEI  directly from Labrador.  If memory serves, Nalcor was also thinking about the same option.  Apparently it never got to the point where anyone discussed it officially with the people running Prince Edward Island.

Of course with the Emera deal, there’s no reason to run another bunch of underwater lines to PEI. 

However, if the Islanders are happy to pay outrageous prices for electricity, the gang at Nalcor would be happy to speak with them.  They have just the thing you are looking for.

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Federal Liberals fear SRBP #nlpoli #cdnpoli

Well, not just the Sir Robert Bond Papers but all bloggers.

Idiots.

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Undisclosed risk: putting the plan into action #nlpoli

The provincial government is dropping $11.3 million to string fibre optic cables from Goose Bay to western Labrador.

The federal government will plunk in $3.0 million with $9.7 million from Bell Aliant.

Of the provincial total, Nalcor Energy will cover $8.3 million.

Just do the math, though.  The provincial government has 47% of this project.  Both the federal and provincial government shares combined cover a majority interest in the project.

If that doesn’t hit you funny, it might be striking you a bit odd that an energy company is suddenly getting involved in telecommunications.  Here’s the quote the people who put the news conference together made up for the Nalcor representative:

“This is one of the many benefits that Labrador will see from the Lower Churchill Project,” said Gilbert Bennett, Nalcor’s Vice-President, Lower Churchill Project. “Nalcor is investing in this project to ensure that critical infrastructure required to build and operate the Muskrat Falls development is in place in Labrador.”

“This is one of the many benefits that Labrador will see from the Lower Churchill Project,” said Gilbert Bennett, Nalcor’s Vice-President, Lower Churchill Project. “Nalcor is investing in this project to ensure that critical infrastructure required to build and operate the Muskrat Falls development is in place in Labrador.”

Not that Nalcor is bullshitting the public or anything,  but of course, they are bullshitting. Nalcor has been on a heavy marketing campaign for Muskrat Falls for several months now in all sorts of ways.  If they gave money to put new public toilets in a town somewhere, the news release would credit the whole thing to Muskrat Falls.

So yeah, on the crudest level, this is just another version of Nalcor’s publicity efforts for Muskrat Falls. 

On another level, this is part of a trend the provincial Conservatives have been pushing since 2003.  A key part of the whole effort has been to allow Nalcor – a state-owned, politically directed agency – to use public money to assume an increasingly larger role in the provincial economy.

Weird as it might sound for a Conservative government, that’s part of what is going on here.  You can understand it better if you look at what the party does as opposed to importing labels or ideologies from other places.  Progressive Conservative is just a label.  In practice, the political parties in Newfoundland and Labrador aren’t ideologically based at all.  That’s why people can jokingly refer to the Danny Williams Tories as the first NDP government the province ever had and not really be making a silly joke at all.

This sort of project is why the province’s ruling Conservatives inserted clauses in the energy corporation legislation in 2007 that allowed an energy company to do anything the cabinet wants it to do. It was a pretty dramatic change from the old law that governed the provincial hydro corporation.

In fact, this clause was so far away from one one would expect for an  energy corporation that most people likely blew it off as being just a meaningless oddity.  The whole thing stands out, though, because the clause survived through some pretty significant revisions from the first version of the energy corporation laws in 2006  to the ones that currently govern the corporation dating from 2007. 

Cabinet obviously meant for the new corporation to take on anything at all.  They didn’t need a way of funnelling provincial government money to the private sector.  They already have dozens of ways to do that.  They also didn’t need to do this for Muskrat Falls. They’ve been running Churchill Falls, for example, since the 1970s with good old copper telephone lines. 

Muskrat Falls wouldn’t be the only new industrial venture that could use fibre optic communications.  There are some new mining businesses likely to start in Labrador soon that could claim a far bigger interest in these cables than Nalcor.

And for what it’s worth, Muskrat Falls might not even happen.

What’s going on here is a continuation of the policy laid down by the Conservatives early in their mandate.  They want to assume greater and greater control over the provincial economy.  Today,it’s fibre optic cables.  Tomorrow, it might well be another administration of any partisan stripe getting Nalcor into fish processing or marketing.

As your humble e-scribbler put it in 2006:

Williams' new Hydro corporation returns to an older model based on government subsidy and government dependence. Beyond the attractiveness to some businesses of relying on whatever contracts they can secure from the new Hydro corporation, the political and financial muscle of the state-owned company will likely make it considerably more attractive an investment than a private sector venture, since it will always carry with it a government guarantee of its operations and expenditures. The end result will almost inevitably be a weakening of the local private sector.

Weakening the private sector is one result.

Another is ensuring that local taxpayers pay the full financial cost and then some. Under the Electrical Power Control Act and the public utilities board legislation, the utilities board must set provincial electricity rates to ensure the financial viability of the provincial energy corporation.  The company can never lose.

It’s that same combination of powers, incidentally, that Nalcor is using to finance the Muskrat Falls project.  Local taxpayers will be forced – by law – to pay whatever rates Nalcor needs to ensure it recovers its costs, makes a profit and maintains its credit rating.

It was an undisclosed risk in 2006, but then again, that’s what the Lower Churchill is all about.  It’s what a 2009 Emera deal was all about. Heck, it’s what the provincial Conservatives have been all about since 2003.

No wonder they dropped it out there a couple of days before Christmas.

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All I want for Christmas is a paradigm shift #nlpoli

Here’s the difference between a province that is successfully tackling the challenge of labour shortages compared to one that is hopelessly adrift.

Saskatchewan is open to people from anywhere.

In Newfoundland and Labrador, meanwhile, the emphasis in every discussion seems to be on keeping local people in or figuring out – as with apprentices – in how to lure them back. 

Check that article from the Telegram – first in a series – and notice how fast they turn to talking about a labour shortage. That’s really code for “there won’t be enough of ‘us’ to get the work.”  Part of that sentiment goes unspoken, namely that letting more of “them” in would be, at worse, undesirable socially and culturally or at best an admission of some sort of ethnic failure.

In Saskatchewan, they don’t spend any time fretting that all this prosperity will mean a loss of the old.  They don’t seem to be quite so bothered dividing the world up into “we”s and “they”s.

All we need in Newfoundland and Labrador this Christmas is a massive shift in headspace for some people.

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Unsound financial management – the Dunderdale acknowledgement #nlpoli

It’s not hard to find the toad of truth in the swamp otherwise known as the ruling Conservatives’ record on public spending since they took office in 2003.

You can find it because since 2009 they like to admit every now and then that their spending habits are “unsustainable."

As nottawa reminds everyone, Premier Kathy Dunderdale has now acknowledged that:

“[o]ur spending at the rate that we've been doing over the last eight years — and it has been very necessary for a number of very good reasons to do that — is not sustainable in the long run.” [CBC online story]

But when Mark claims that “[u]p to now, Tories (and others) have disagreed with that assessment” he is not exactly right.

In 2009, Paul Oram was the first Tory cabinet minister to acknowledge publicly that “unsustainable” thing.

As your humble e-scribbler noted at the time, those words must have received the blessing of the Premier’s Office since cabinet ministers under Danny Williams couldn’t break wind without permission from Hisself’s posse.

Fnance minister Tom Marshall.chimed in with an unsustainability admission.*

And then they just kept up the same old habits.

It’s not surprising therefore that the public sector unions just won’t react to Kathy Dunderdale’s comments that the unions must not expect big wage increases in the upcoming round of negotiations.  Local CBC has been pounding away for a couple of days trying to make a story out of this but so far they’ve come up with zip.

The unions know the sad Tory record of saying one thing and doing another.  They also know that the Tories are still in a pre-leadership phase.  Danny’s gone.  Kathy’s a fill-in. 

If they thought about it for a moment, they’d also know that the local economic boom the Tories like to praise themselves for is actually a function of public sector spending.

That’s right.

It isn’t oil.

It’s a massive increase in the number of public servants since 2003,  fantastic wage increases, and unprecedented increases in  public spending. Roads and buildings are just part of it.

That unsustainable public spending is what has been sustaining the provincial economy. Under the Tories, the provincial economy is considerably more fragile than it’s ever been before. 

Any effort by the Tories to get their spending under control – to get it to sustainable levels - will put a chill through the place.  That will inevitably lead to a chill in the local economy.  The chill won’t just hit St. John’s where most of the public servants and the construction industry lives.  The chill will be felt everywhere and that will put a chill on the Tories’ political standing.

All that is the answer to Doug Letto’s questions in his essay on the “massive obstacles” Kathy Dunderdale is facing:

Can she and the government say no? Consistently?

No.

And no.

And everyone knows it, including Kathy.

Muskrat Falls, incidentally, is nothing more than the best example of a party addicted to unsustainable public spending.  The project will increase the public debt to new record levels but that is irrelevant to the province’s Tories.  They want all those jobs to keep the economy humming.

You can easily find the toad of fiscal truth in the swamp of Tory financial mismanagement since 2003. The truth is – as Kathy admitted herself – their spending is unsustainable.

The part Kathy didn’t say is that she won’t be able to do anything but keep it up.

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* Changed wording to clear up sentence meaning in the context of the post.  Original post had wording left over from earlier draft.

Muskrat Falls PIFO #nlpoli

Q:  When is an independent review not independent?

A:  When the project proponents control the timetable for completing the report.

Or, as voice of the cabinet minister reports:

The provincial government will not be granting the PUB another extension for its review of the Muskrat Falls project. Last week, Natural Resources Minister Jerome Kennedy moved the deadline from December 31st to March 31st. But Kennedy says he is not even considering the second request by the PUB to extend the deadline to June 30th. He says the report needs to be completed so it can be debated in the House of Assembly.

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PIFO = Penetrating Insight into the Fracking Obvious

Penashue - the third smack #nlpoli

Turns out that his campaign spending was the third smack troubled Tory cabinet Minister Peter Penashue took.

First, there was the story that Penashue porked out his campaign manager with an appointment to the offshore regulatory board, something for which his campaign manager was spectacularly unqualified for.

Then there was the story that Penashue had personally called federal employees in his riding to assure them their jobs were safe from cuts or relocations.

Now it turns out that, during the federal election,  Penashue was the top spender in the province.  He shelled out $115,000 compared to only $37,000 spent by his main opponent, Liberal Todd Russell.

Why is this a smack, you ask?

Well, for starters, Penashue is likely to be a source of continuing political controversy, nay even scandal.  He won the seat by only 79 votes despite spending $60,000 on advertising alone.  That means Penashue is a lot less secure in the seat than he might otherwise seem.  People who are insecure tend to do things like his first two smacks that will leave him open to further political scandal. The more he tries to shore himself up, the more likely he is to shag up.

And then there’s the question people will be wondering about, given the way politics tends to go in the Big Land.  People will wonder how you spend $60,000 on advertising in Labrador.  And for the rest of the cash, people will wonder what else Peter spent his cash on given the way politics goes in the Big Land. 

Three stories in such a short space of time?

Count on more.

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Memorable Christopher Hitchens (II) #nlpoli

“The noble title of "dissident" must be earned rather than claimed; it connotes sacrifice and risk rather than mere disagreement.”

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Nalcor and the Muskrat alternatives #nlpoli #cdnpoli

Nalcor’s capital works submission to the public utilities board for 2012 included a last-minute addition of an upgrade to the power lines that connect the Avalon peninsula to the rest of the island. The submission is dated September 22.

That’s really important because the Bay d’Espoir/Exploits generating complex has a large surplus of electricity.  Nalcor can’t get that electricity to where it’s needed because the existing lines across the Isthmus of Avalon are at capacity.

The problem is actually a bit more complex than that.  As Nalcor’s supplementary capital works submission puts it:

The heavy loading on the eastern portion of the system is coupled with the incentive to provide least‐cost power to customers by minimizing Holyrood production and maximizing production from hydroelectric resources located in Bay d’Espoir and west. Constant monitoring of the load on the eastern portion of the system is therefore required. Thermal load limits on the lines must be strictly enforced to avoid unacceptable line sag and/or potential conductor damage. Further loading pressures will be placed upon the Bay d’Espoir East system with the addition of the Vale processing plant at Long Harbour and has already occurred due to the loss of load and net hydroelectric generation increase attributed to the closure of the Abitibi Bowater paper mill in Grand Falls-Windsor. (pp. 1-2)

On top of that consider that the existing power lines are all part of the major island electrification projects completed between 1965 and 1968.

The estimated total cost of the new line would be $209 million.  The PUB submission anticipates work starting in 2012 with completion in 2017.

As it turned out, Nalcor and the PUB have deferred consideration of the new transmission line.  Both the Board and Nalcor are involved in extensive regulatory reviews, including Muskrat Falls.  And, as a December 6 Nalcor letter to PUB lawyer Maureen Greene notes, it “is our understanding that the Muskrat Falls Review is of high priority to government.”

There are a few things to note about this:

• Shifting priorities:  When discussion of this line came up a couple of years ago in questioning in a House of Assembly committee, Nalcor officials told the committee that it wasn’t thinking about upgrading the line because the Muskrat Falls project would take care of it.  Evidently something has changed.  That’s most likely…
• Muskrat Falls delays:  The public utilities board hearings are taking way longer than Nalcor expected.  Even if they finish by the end of the current fiscal year (March 31, 2012), anything beyond a complete blessing will cause further political problems for a project that can’t afford any more political problems. Or, it could be …
• Muskrat Falls will die:  Nalcor could also be hedging its bets against the project being canned altogether.  The capital works supplement includes this line in the rationale:  “Given that the Lower Churchill Project has yet to receive final project sanction…”.  Nalcor is apparently no longer willing to defer discussion of the line as they were a year or so ago.
• Muskrat Falls is a political project:  Since it started, the Lower Churchill has been driven by political demands to meet political needs. Nalcor’s reference in its correspondence to government priorities pretty much confirms that point for anyone who still believes Muskrat Falls is about delivering consumers the power they need at the lowest price.

As for the overall question of priorities, the PUB took pains in its letter acknowledging deferment of the new line that the project will require significant attention including a possible hearing.  The line is the most expensive single project Nalcor has brought forward since the company came fully under the PUB’s regulatory authority in 1996. The PUB letter states that – under the circumstances – the board couldn’t guarantee approval in 2012.

You might interpret that as a simple statement of fact.  But you might also read it as a reminder to Nalcor that if it needs to get this project done, the company might need to sort through its priorities again.

Don’t be surprised if Nalcor does just that early in the New Year.

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Memorable Christopher Hitchens #nlpoli

“To 'choose' dogma and faith over doubt and experience is to throw out the ripening vintage and to reach greedily for the Kool-Aid.”

That line – from God is not great – would apply equally to politics in Newfoundland and Labrador since 2003.

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Party Political Finance: much more to read #nlpoli #cdnpoli

The Telegram took a very light look on Saturday at the most recent figures on political contributions released by the provincial elections office a couple of months ago.

For some reason, the Telly singled out Aliant for its record of donations even though the telecommunications company is by no means the big story in the 2010 figures or indeed of the recent public record of party donations.

If you want a more detailed analysis, then check these posts from SRBP and labradore:

• labradore:  “A tale of two cities”.  Compares St. John’s and Halifax and patterns of political donations. (16 October 2011)
• labradore:  “The tradition continues”  (08 October 2011) The Royal Newfoundland Constabulary Association likes to give money to the province’s Tories.
• labradore:  “A donation has been made on your behalf”.  Municipalities in the province make political donations to the governing Conservatives and the municipal politicians behind the use of public funds don’t seem troubled at the idea. (15 September 2011)
• labradore:  “The amazing, atrophying democracy (II)” 
• labradore:  “The amazing atrophying democracy” A district by district assessment of donation patterns, especially the districts where no one gave money at all. (07 September 2011)
• SRBP:  “The joy of political giving:  look for the union label” (07 September 2011)  Forget Aliant.  The single largest donation in 2010 was the 20K a Toronto-based union gave to the provincial New Democrats.
• SRBP:   “The joy of political giving:  if you want to build it, they will give”  (07 September 2011)  The province’s construction industry had a very interesting pattern of political donations.
• SRBP:  “The joy of political giving:  punch in the bake edition”  Contributions to the governing Tory party included the company that produces Republic of Doyle, and which gets quite a hefty financial contribution itself from the provincial government to help make the series.

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The Hitchens Method #nlpoli #cdnpoli

There are plenty of people out there who pat themselves on the back for telling it like it is, for calling it as they see it.

You know they do it because they relentlessly point it out to you.

They are brave.

They are fearless in delivering their opinions.

They cannot stop telling you that.

You all know them.

Closer examination invariably reveals they are full of shite.

Not so Christopher Hitchens, as Paul Wells makes plain in his obituary for a man so wonderfully described during his lifetime as a public intellectual:

His method was simple:

1. Read everything.

2. Draw your own conclusions.

…

Expanding the range of his inquiry, digging deeper, engaging with the minds he admired most. Hitchens spent much of his life offering everyone his answers on any subject, but they would not have mattered so much if he had not also been such a ravenous asker of questions.

And the world would have been so much duller a place if Hitchens had not told us what he found out in so eloquent a way.

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Dunderdale leads from the rear #nlpoli

Premier Kathy Dunderdale wants everyone in the province to get involved in the fishery debate.  Doesn’t matter who you are.  Doesn’t matter what you want.  Get in and have your say on the future of the resource we all own.

CBC’s Azzo Rezzori says Kathy is staying out of the way. [Story starts at about 9:00 of this video link]

Others would call it what it is:  chickenshit.

In a scrum with reporters on Friday, Dunderdale rattled off all the penetrating insights into the obvious one can find about the fishing industry in the province.  The Telegram’s James McLeod has a neat account of it for those who want to catch up.

Yes, Kathy, we all know the problems.  And yes, we know the solutions because, yes, they’ve been talked about, discussed, debated and ignored for decades.

Yes, Kathy, we know people are using the fishery to their own ends.  Yes, we know lots of people are being manipulated.

What Dunderdale conveniently omits is that the provincial government has a role to play.  After all, the law in this province gives the provincial government considerable power to manipulate the fishery and the people who depend on it for their living.

What Dunderdale conveniently forgets is that successive administrations haven’t been shy about doing just that.  The one Kathy has been involved with since 2003 has been one of the most interfering and manipulative administrations in a long list of them.

What Kathy deliberately omits to mention is the process – the MOU – that the Tory administration started and then rejected because they were afraid of the political consequences. 

The costs don’t frighten them.  That was just a bullshit excuse the fisheries  minister used.  Kathy has more money sitting in the bank  - doing nothing  - than some of her predecessors got in total from their own means to pay for everything the government does.

Billions of dollars.

So when Kathy Dunderdale clucks about the tragedy of manipulating people and the tired attitudes about the need for everyone people to come together to find a solution, she is being worse than the worst kind of manipulative character she laments.

Kathy has the power to change things.

Kathy has the power to set things right.

Kathy refuses to get involved.

That’s not just chickenshit.

That’s immoral.

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The Traffic the Grinch couldn’t Steal #nlpoli

Muppets, lawyers and politicians.

Problems in the fishery, bad grammar and blatant political patronage.

Just another week in the live action edition of the National Midnight Star, otherwise known as politics in Newfoundland and Labrador.

Last week’s top 10 most read posts at SRBP:

1. A bad week for Penashue
2. Change in the fishery
3. The Crowd in the Dark
4. Globe and Mail goes American
5. Danger:  Lawyer at Work
6. Muskrat Falls deal will succeed:  Nalcor boss
7. Ball takes over as Liberal leader
8. Connies pork up offshore board
9. A grain of salt
10. Yes, it IS a Muppet movie, ya wingnut

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For the record… #nlpoli

Liberal leader Dwight Ball’s remarks on taking on the leadership:

The Liberal Party has a rich history in Newfoundland and Labrador and I’m proud to be a part of it.

That being said, we have much work ahead. I consider myself a team builder, and I believe teambuilding is what we need right now.

We need to reach out to Newfoundlanders and Labradorians and listen to their hopes and dreams.

I plan on spending a lot of time on the road engaging with the grassroots of our party and encouraging new interest in what we have to offer.

Additionally, we need a debt reduction plan to help rebuild the party  As a businessmen, I know the burden that debt can have on an organization and my first priority as Liberal leader will be to get our debt to a manageable level.

I like to call it the common sense approach – reach out, listen and manage debt.

These will be my priorities as I assume the Liberal leadership and help create a credible alternative to the current government. 

There will be challenges ahead, no doubt. But it is through these challenges that we will realize a better, brighter future for the next generation of Newfoundlanders and Labradorians 

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Muskrat Falls deal will succeed: Nalcor boss #nlpoli #nspoli

“I’m optimistic the project is going to succeed,” Nalcor Energy chief executive Ed Martin told the Chronicle-Herald recently.

The delay in finishing the negotiations means that, as the CH put it, “the details under negotiation are being tapered to fit with the announced terms [sheet].”

Tapered to fit.

Great image.

The article just relates some information most SRBP readers would already know.  It also contains one comment that would make you wince. The comment reflects the level of inaccurate or misleading information out there about who will pay what for Muskrat Falls power.

The cost of Lower Churchill power to Nova Scotia has never been defined.

Nalcor projects it will cost 16.4 cents per kilowatt hour for consumers in Newfoundland and Labrador. That’s up from the current rate of 11 cents but lower than the projected costs if the province were to stick with its oil-fired plants.

That first sentence isn’t true.  The term sheet signed last fall makes it clear:

• Emera gets a block of power guaranteed each year in exchange for their upfront cost of the link to Nova Scotia.  In effect, the cost of that electricity is zero cents per kilowatt hour.
• Beyond that, Emera gets the right to buy additional power for a cost of something around nine cents per kwh. That’s based on memory and subject to adjustment.

As such, Nova Scotians could actually see no change in their domestic electricity rates at all. 

The second paragraph compares apples and oranges.  The 16.4 cents figure is what Kathy Dunderdale cited in 2010 as the upper range of the wholesale cost of making electricity at Muskrat Falls.  The lower end of the range was about 14 cents and that’s the figure the government has cited consistently.

But remember:  it’s a wholesale price and – more importantly – it’s an estimate.  If Muskrat Falls goes the way of every other government project since 2003 it will be over budget by more than 50%.

The 11 cents figure is the current retail price to consumers.  it includes Nalcor’s blended cost from existing generation, most of which was paid off years ago or, in the most recent examples, for free as a result of government’s expropriation of private sector generating facilities.  That figure also includes money for the electricity distributor and a tidy profit for both Nalcor and the Fortis-owned distributor.

In the future, consumers in this province will pay all of that plus they’ll have to cover the full cost of Muskrat Falls.  That conclusion is based on repeated statements by Nalcor officials.  That’s why Nova Scotians are getting free electricity up front and why they can buy extra power at a sweet discount.  People in Newfoundland and Labrador will already have paid for it.

In addition to that, Newfoundland and Labrador consumers will now also have to pay a chunk to Emera plus a profit since Emera will now operate a portion of the provincial distribution system. Not bad, eh?

Well, unless you are a consumer in Newfoundland and Labrador.

And while Nalcor estimates all of this will cost less than the alternatives, the simple truths are these:

• Nalcor has never released detailed cost analysis of what this project will do to consumers.
• Nalcor hasn’t costed all the alternatives.  That became clear during the joint environmental review panel hearings.
• Nalcor can’t tell what this project will cost consumers in Newfoundland and labrador because they don’t know.
• Whatever they wind up paying, it will be a lot more than 16 cents per kilowatt hour and it will always be more than any export consumers.

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