Great Gambols with Public Money: Muskrat Falls version #nlpoli #cdnpoli

While she is telling others to stand by for tough budgets and tight times, Premier Kathy Dunderdale is planning to spend more than $3.0 billion in accumulated oil surpluses to build the Muskrat Falls dam.

Now that is no surprise to SRBP readers nor is it a surprise to people who’ve been paying attention to information disclosed as part of the public utilities board hearings into the project.

Nalcor boss Ed Martin confirmed it on Tuesday in a call to Randy Simms on VOCM’s Open Line.  Here’s the relevant bit of the Simms and Martin exchange:

Randy Simms:  Government of Newfoundland?

Ed Martin:  And the Government of Newfoundland will also be putting some equity in as well. They’ll transfer cash to us to put in as equity.

Simms didn’t ask how much, but the amount is right there in Nalcor’s answer to a question from the PUB.  CA/KPR-NALCOR- 20 includes a table that lays out the “Stakeholder Equity”. The only Nalcor stakeholder is the provincial government.

Note that it shows financing for the generating facility is 100% equity.  The amounts shown in the column “Plus Equity Contributions” adds up to $2.853 billion. That’s the cash transfers Martin was talking about.

On the other side, the ledger shows another $460 million in equity – cash, that is – and that represents 25% of the cost of the transmission line.

What’s most interesting is that Martin didn’t discuss 100% equity with Simms, even though the Nalcor submissions to the PUB discuss it repeatedly. Martin said:

The 60 / 40 is generally what it is going to be. That may end up being 57 /43 or whatever. But it will be around that.

60% debt.

40% cash, that is equity.

Still, it would likely be safe to start from the premise that Nalcor’s calculations and the provincial cabinet’s endorsement of this project is based on having very little public debt, except on the transmission lines.  That’s a pretty wild assumption, of course, given the provincial government’s miserable experience with delivering capital works projects on time and close to budget. 

Still, if they think they can do it, Nalcor and the provincial government might be tempted to believe they can get the whole thing for cash on hand with only a few hundred million in borrowing.  As Martin noted, Nalcor will use other revenue of its own – like from the equity stakes – to add more cash to the pile if need be.

That would also explain how they think they can keep electricity rates low.  Without much of a debt load to repay, they can just cream of any profits. If things are worse than expected, the provincial government just won’t make any money back on the project at all.  They’ll tell the punters that their great dividend from oil and gas is discount electricity.

You can see that kind of thing in Ed Martin’s closing remarks:

But any cash that goes into this project, any returns that come from it, are staying in the province and results in 100% ownership of an asset for the people of Newfoundland and Labrador, essentially forever.

Sounds wonderful.

Sounds marvellous.

Sounds fantastic until you realise that  Martin knows that this project won’t sell electricity anywhere but inside the province. 

That means that the people of Newfoundland and Labrador will pay for the Muskrat Falls project up front with their billions in cash from oil.

Then they will pay for all the electricity that comes from it, including the stuff shunted off to Nova Scotia for free.

In effect, the people of Newfoundland and Labrador will be paying themselves back for the money they borrowed from themselves in the first place.

In order to make that work and to keep the electricity prices at a rate people wouldn’t scream about, the provincial government and Nalcor plan to let the people of the province pay themselves back over the course of a half century.

Now you can understand that all this makes a bitter lie of the claim by project proponents that this project will have a revenue stream and pay for itself.  The only “revenue” is what the ratepayers will pay annually for their electricity.  As SRBP noted before, people will be forced to pay for the costs annually plus a profit because that’s the way the public utilities board sets electricity rates.

Don’t miss the point though - Muskrat Falls is not a revenue stream:  it is a tax on the people who own the resource in the first place.

One can scarcely imagine or a more cynical political gambol with public money.

- srbp -

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And this surprises you because…? #nlpoli

Politics in Newfoundland and Labrador is about what the social scientists – like political scientists, for example -  would call clientelism.

You may have heard it called patronage.  Regardless of the word you use, the purpose is the same:

That isn’t just about giving party workers government jobs.  It’s basically one element of a system in which citizens trade their status as citizens for that of being the client of a particular patron.  The patron gets political power and the ability to dispense benefits of some kind.  In exchange, the client gives the patron support.

In healthy democracies, the people govern themselves.  They vote to elect some of their number to oversee the government.  The citizens expect those representatives to deliver public works and services fairly to all on the basis of need. There is no question that the representatives work for the citizens and must be accountable to them.

For people who don’t live in healthy democratic societies, elections are a game in which they can “lose their vote”.  What that means is that they could bet on the loser and as such not have any right to anything. People in those societies do not expect to see schools and hospitals built or roads paved in their area because it is their right to receive them.  They expect them only because they voted for the party that won the election.

And, implicitly, they expect to be punished when they lose their vote.

There are no ideological or philosophical differences between political parties.

Liberal, Conservative, New Democrat.

Red, Blue, Orange.

All the same.

Elections become little more than a case of auctioneering votes.  Danny Williams himself raised the sale of votes to a new level in his now infamous begging letters to Ottawa. And what he was doing, in a sense, would hardly have shocked politicians from the Quebec of old that Williams was so fond of bashing. It’s doubtful he ever got the joke in that.

Patronage is how things have been in this province for a very long time.  The only difference since 2003 is that the patronage is as unrelenting as the general indifference to it.

Road paving?  Decided by a political staffer in the Premier’s office, an approach termed “normal” by the Premier of the day.  The money was allocated in arbitrary amounts according to what way the electoral district had voted. Blue districts got one amount.  Red ones got less.

The Premier of the day loses a by-election and bitches because people were not grateful for all the pork he’d delivered to them.

Whether we are talking about fire trucks or backbenchers handing out cheques from government programs, it’s all part of the same political thinking that in its most naked form delivered us the House of Assembly pork barrel funding scheme. Tories, Grits and Dippers all swam in the trough.  Some of the newer ones elected after 2003 went at it worse than the crowd who’d been there a while. And they were unapologetic.

These sorts of societies thrive on the myth of the strong leader.  They cannot govern themselves, so the story goes and as a result, they need some strong man  - or woman – to do their thinking for them.

So prevalent is this sort of thinking in Newfoundland and Labrador that people don’t see it as odd at all. The news media seldom raise an editorial eyebrow.

So safely entrenched is this approach to politics that cabinet ministers these days can be pretty brazen about it.  Here’s how Fairity O’Brien put it before the last provincial election, defending the government against accusations of patronage spending:

okay, so the question here in my district is, and I am only speaking for myself, do you want four more years of what you’ve just experienced in the last eight, or do you want to sit in the Opposition, or whatever it may be…

Or if that wasn’t enough for you, here’s Darin King, as reported by the Great Oracle in the Valley:

A cabinet minister is unapologetic for the rash of pre-election spending announcements coming from the government. The MHA for Grand Bank, Darin King, announced some money for health care recently. There has been a steady stream of news releases, most announcing money that had already been allocated in the budget, over the past several months.

On VOCM Open Line with Randy Simms, King said he is dedicated to bringing in as much money as he can to his district.

No one should be surprised, therefore, if the patrons decide to slap a vassal that is getting a bit uppity. The provincial government secured the silence of many the “advocacy” group these past few years with dollops of public cash for this program or that one.  The FFAW was no exception.

Now that things have gotten a little tense in some circles and the FFAW and the NDP are playing rough, Darin King the fisheries minister has decided to stop the FFAW’s funding, as CBC reports.

And what’s more, Darin is pretty clear about why:

“It’s very, very tough to build a working relationship with a group that continues to criticize,” King said.

Now on one level this is just political sookiness from a gang of politicians who’ve never had to govern through a really tough period in their lives. Not that you’d know that, of course, for all the whining, moaning, bitching and complaining they and their Old Leader used to get on with.

But fundamentally, what King is displaying here is all the arrogant sense of entitlement to power, position and patronage that he and his colleagues have had since Day One. King is displaying the customary attitude of his party since 2003 to free speech.

They don’t like it.

The Telegram’s Russell Wangersky had a timely column, as it turned out, in the Tuesday edition of what was once the People’s Paper. He reproduces a relatively innocuous comment from a reader who wanted the letter published but only without a name attached to it.  The writer feared he would face some sort of payback.  As Wangersky put it:

The perception the letter-writer has, though, is clearly that reasoned debate is not without clearly perceived consequences in this province. Would there be retribution? I honestly don’t know. But there clearly should be a discussion about the fact that such a fear exists, if nothing else.

The provincial government admittedly has a long reach here: many are employed by it or have family members employed by it. Many businesses depend on the provincial government for some or even most of their business.

The fear of retribution is not new: whether it’s a reality or not is hard to know for sure. I know businessmen I’ve talked to in the province — and I’ve said this before — who are willing to talk a lot about Muskrat Falls in private, but who will never speak publicly.

Eight years of quisling hunts and savage personal attacks on “traitors” take their toll.  Don’t be surprised if some members of the legislature may well be finding that groups that once welcomed them to meetings and events are now routinely disinviting them.  They represent the wrong party.

So Darin King cut off the FFAW’s government funding because they’ve been too critical publicly.

If this surprises you then you are either a hypocrite or a very recent immigrant to the province.  This is old news.

- srbp -

Cost per Vote: the Rural/Urban Divide #nlpoli

In looking at by-elections in Newfoundland and Labrador, the second and third phases offer a neat cluster of by-elections in urban (metro St. John’s) and rural (everywhere else) districts.

Break those out and you get some information that shows the relative strengths and weaknesses of the parties, depending on where a by-election occurred during the period between 201 and 2011.

For starters, here is a reminder of the cost per vote results for the three major parties in all three time periods (phases).

Now let’s take a look at the second phase, that is, on the by-elections between the 2003 and 2007 general elections.

Three by-elections took place in what we can consider to be urban.  They are Signal Hill-Quidi Vidi, Kilbride and Ferryland.  The rural by-elections took place in Exploits, Placentia-St. Mary’s, Port au Port, Humber Valley, and Labrador West.

In the urban by-elections, the Conservatives average  cost per vote was $8.98.  The Liberals CPV was $15.71 and the NDP CPV was $18.17.

As much as we all assume that the New Democrats’ base of support is metro St. John’s, these CPV figures suggest otherwise.   Now part of that high cost is attributable to the fact that the Tories hotly contested the seat when Jack Harris left for retirement in 2006. 

But when you average the figure out the average cost per vote of the other two, you get  $15.70. That almost exactly the same as the Liberals and their political infrastructure in the metro St. John’s area just shrivelled up to nothingness by 2007.

CPV is not a measure of actual effort of course.  Parties in Newfoundland and Labrador don’t have to report all their efforts.  Volunteer workers, for example, don’t show up as an expense in and of themselves.  They show up when the party or the campaign has to foot their travel and accommodations bills. 

That’s the kind of thing that happens to the Tories in rural Newfoundland. The Conservative Party itself spent more than $26,000 on campaign worker travel in the Labrador West by-election (2007). The by-elections in Ferryland and Kilbride cost the Tories only about $15,000 and $18,700 for example.

Labrador West essentially comprises two towns that are spitting distance apart.  You would not have to spend $26,000 on travel unless you were flying people in from other parts of the province to work the by-election. Scan the by-election finance reports and you’ll see exactly the same kind of phenomenon in other Tory campaigns in rural Newfoundland. 

Some call it “by-election-in-a-box” but what the Tories really do is maintain a team of campaigners they can drop into augment the local candidate’s effort.  In addition, the Tories have a pattern of tapping into a regular pool of donors to help finance the given by-election.  And again, it is part of a pattern of adding to the local campaign.

Contrast that with the Liberals, for instance.  In any by-election, Liberal candidates are basically on their own.  Sure there are some people who work by-election to by-election, and sure the party headquarters may toss some cash to a campaign. 

But on the whole, Liberal candidates couldn’t count on the party for much of anything during the second and third phase by-elections.  Two noteworthy exceptions to this were the Straits-White Bay North North and Terra Nova both of which took place in 2009 (Phase Three). 

Incidentally, when people talk about the Liberal Party’s lack of organization and infrastructure, this is the kind of stuff they are talking about.  This is the meat and potatoes of politics and the Tories know how to make a fine stew of it.

 

In Phase Three, you had three by-elections in the metro St. John’s are.  Those are our urban set:  Cape St. Francis, Topsail and Conception Bay East-Bell Island.  The rural by-elections were in Baie Verte-Springdale, the Straits-White Bay North,  Terra Nova and Humber West.

The Liberals’ urban cost per vote hit $22.50 in Phase Three. Spending dropped, on average, from about $9600 to a little under $7500 and the average vote went from 612 to $330.

NDP urban spending went from $14,412 to $11, 472 and the vote went from 793 to 751.  The resulting CPV improved in Phase Three, reaching $15.27 compared to $18.17 in Phase Two.

The Conservatives CPV was $9.00.  Their urban spending went up by about $2400 and the average vote went from 2370 (Phase Two) to 2741. 

Conservative rural CPV dropped (marginally) from $23.07 to $22.25.   Tory rural spending dropped by about $6,000 and the average vote dropped by 170 votes.

The New Democrats’ CPV in rural Newfoundland was $30.82 during Phase Three compared to $16.45 in Phase Two. The NDP increased their spending, on average by $1300 but their average vote dropped by 151.  They spent 19% more, in other words, and got 36% less.

Liberal spending on rural by-elections increased by 70%, on average, in Phase Three compared to Phase Two. Liberal rural vote went up by four percent.

- srbp -

Danny and Jerome! on Muskrat Falls financials #nlpoli

Former member of the House of Assembly and Newfoundland and Labrador Hydro director Danny Dumaresque made the news over the weekend with a claim that he had a document showing that the provincial energy corporation had no luck raising $4 billion in the money markets.

On Monday natural resources minister shot back with the claim that  - according to VOCM - that the document Dumaresque had was a hypothetical situation drawn up by Nalcor itself.  VOCM also reported:

Kennedy says the project has been well received and he doesn't anticipate problems with funding.

He said.

He said.

Sort of.

What Dumaresque was referring to, most likely, was information that is also contained in an answer Nalcor provided to the public utilities board last week. Unless Dumaresque’s got something else,   this is really just part of the analysis of options that Nalcor ran.

At the same time, it isn;t something that you can just blow off with the Chip Diller assurance that everything is just fine.   As you’ll see below,  there’s a lot more in this particular bit of information than might meet the eye.

Here’s the entire document filed with the PUB with some notes and comments in between to help you understand what it is all about.

Consumer Question: In the reply to PUB-Nalcor-1 46 regarding a cost of service (COS) price for Muskrat Falls power in year 1, Nalcor states that an internal rate of return (IRR) of 8.4% was used "On this basis the cost of service in year 1 would be $214/MWh".

“Cost of service” is the usual way that the utilities board prices electricity.  As the province’s natural resources department website puts it:

Legislation directs the PUB to use cost of service methodology to derive rates, allowing an appropriate rate of return on a rate base of allowed costs. The PUB determines the allowed rate of return according to financial market conditions.

$214 per megawatt hour translates to – take a breath – 21.4 cents per kilowatt hour.  Go get your ‘lecky bill if you need to see that you are paying about half that rate right now for what you get.  When you stop hyperventilating, read on.  The question continues:

(a) Is the cost of the TL [transmission line] from Labrador included in the $214 /MWH?
(b) If so, provide a breakdown of the $214 /MWh cost between the Muskrat Falls site and the TL.
(c) Provide the in service capital costs (separately for the Muskrat Falls site and for the TL) used to calculate the COS $214 MWh year 1 price.
(d) Please provide a breakdown on debt/equity ratios/interest rates/return on equity used for the $214 MWh cost (separately for Muskrat Falls site and TL).(e) Instead of using the 8.4% IRR, can Nalcor provide the COS Muskrat Falls power price in year 1 (for the Muskrat Falls site plus TL) using the same assumptions as used for TL COS pricing regarding debt/equity ratios same interest rate for debt and the same return on equity)?

Now comes the answer:

A. (a) The cost of the Labrador Island Transmission Link is not included in $214 /MWh provided in response to PUB-Nalcor-46. The cost of service price in year 1 of operations is based on an 8.4% return on equity coupled with the sales profile for the Island to be comparable to  Nalcor’s alternative pricing model for Muskrat Falls of $ 76 /MWh ($2010, escalating at 2% annually).
(b) Please refer to Nalcor’s response to (a) above.

So right away, Nalcor confirms that the 21.4 cents per kilowatt hour they have already given as the cost of service pricing does not include transmission.

(c) The in-service capital cost for Muskrat Falls assuming an AFUDC rate of 8.4% is $3.6 billion. 

This part is a bit technical but here’s what it says.  If you use a method called “allowance for funds used during construction” or AFUDC then the cost of the dam at Muskrat Falls is $3.6 billion.

(d) The key financial parameters used in the calculation of the alternative cost of service for Muskrat Falls were 100% and an 8.4% return on equity in order to maintain comparability with Nalcor’s pricing approach and model.

Maybe that’s clear to super-duper insiders but when they asked for a group of ratios, Nalcor gave them two.  The 8.4% is clearly identified as the return on equity or profit. 
But what’s the 100%?  Good question.

(e) In an escalating supply price analysis framework, leverage of 75% debt is not finance able because the initial low sales volumes and associated revenues would result in  inadequate debt service coverage as required in capital markets. During the first 6 years of commercial operations there was insufficient cash flow for debt servicing as the debt service coverage ratio was below 1.0. For years 7 through 12, the debt service coverage ratio was below the minimum threshold of 1.4 times recommended by Nalcor’s financial advisors.

Here’s the fun bit.

This paragraph tells you that Nalcor’s analysts ran a scenario in which they borrowed 75% of the money they would need.  They also included – apparently – an entirely new pricing scheme for Muskrat Falls that would see Nalcor pass on to consumers only one third of the actual cost of producing electricity and shipping it to them.  Those costs would have to be made up somewhere else, even if they weren’t coming directly from residents of the province as ratepayers.

That’s why they keep talking about an “alternative” pricing scheme.  Presumably they’d have to change legislation to get this in place but that’s really just the tip of the very big financial iceberg that neither Nalcor or the provincial government will discuss publicly.

In any event, when Nalcor and its advisors ran the scenario using the projected sales in Newfoundland only, Nalcor could not make enough money in the province to service the debt for the first six years after construction. 

For the second six years they made a bit more but not enough to hit the minimum recommended by Nalcor’s analysts.

Another thing to note here is that  we’ve been assured all along that this project made financial sense and that it would produce a “revenue stream” that would the project.

Yeah well, that didn’t turn out to be true.  For one thing, there are no export sales for any of this power.  The project is supposed to come entirely from provincial sources. And as this analysis shows, Nalcor couldn’t make the thing fly – even hypothetically on paper – using some favourable assumptions and a pricing scheme that was designed to make the project work.

- srbp -

Cost over-runs and delays in Placentia #nlpoli

On Monday,  the provincial public works department put a limit on the size of trucks that can go over the left bridge at Placentia.

This came after someone inspected the bridge.

Interestingly enough,  the same department had a tender call out last May to replace the bridge they just put restrictions on.

A few months later - In August, 2011 to be exact - the department cancelled the tender because the only bidder came in almost $20 million above that they budgeted.  Here’s what the release said would happen:

With the bid for this tender coming in so high, the department will immediately begin a full review of the existing bridge to provide more details around the exact condition of the current structure, and costing and potential years of service life for a rehabilitated structure. The review will also help determine whether the scope of work for a replacement structure can be revised to make the project more cost-effective.

Now being off budget and behind schedule is not new for provincial public works.  In fact, since 2003, this sort of stuff is the norm.

- srbp -

Campaign Spending and Efficiency #nlpoli

Two of the three political parties in this province are spending more, on average, and getting less, on average in by-elections.

That’s one of the things you can see in an assessment of a decades worth of by-elections from 2001 to 2011.

Last week, SRBP gave you a teaser of a look at the idea of cost per vote, as measure of campaign efficiency and effectiveness.  As the name implies it tells you how much each campaign spent for each vote it received. The information for the assessment comes entirely from financial reports and by-election vote reports issued by the province’s chief electoral officer.


There were 21 by-elections during that time.  You can break them up into three phases or time periods.  Phase One covers the by-elections between 2001 and the general election in 2003.  Phase Two covers the by-elections from 2004 to 2007.  Phase Three runs from 2008 until the 2011 general election.

The charts below show the average spending and votes received by the three main parties with the resulting cost per vote in each of the three  phases.  We’ll look at the phases individually in other posts.



From Phase One to Phase Two, average Liberal spending on by-elections dropped 64% from an average of around $37,000 to about $13,500. In Phase Three they were spending about $20,000 less per by-election than they were when they were in power.

In the shift from being the opposition to government, Conservative average spending climbed from about $27,000 to $40,700.  It’s a jump of about 51%.

The average NDP spending over the same two periods went up from $2118 to $10,069.

The NDP and the Conservatives spent more in Phase Three than they did in Phase One.  Even the Liberals, who dropped significantly by the second phase had boosted their spending by the third phase to hit $17,663 per by-election on average.

What they got for their efforts is shown in the comparison of average votes received.



The most dramatic changes are at the beginning.  Both the average Tory and average Grit vote per by-election dropped precipitously from Phase One to Phase Two.  The Conservatives went down 30% while the Liberals went down 42%.

Dipper support climbed from 132 votes, on average, to 576.

The Liberal slide continued into Phase Three.  They dropped another 200 votes and took an average 1,000 per by-election in Phase Three.



The line that stands out is the orange one.  The NDP are getting more votes and they are spending more money on average to get them.  But the cost per vote is also climbing.  In the third phase, the NDP was spending $20.23 per vote compared to $16.05 before 2003.

The Conservatives saw a huge increase in their cost per vote by the second phase.  Incumbency effectively doubled their CPV from $8.15 to $17.65.

In Phase Three, the Tory CPV was $15.70.  It’s the lowest of the three parties, but not by much. By Phase Three, the Liberals are back close to their pre-2003 CPV with $17.64.  That’s nothing to cheer about.

Those Phase Three CPV numbers suggest that all three parties have problems getting their messages across or aligning with public opinion.  Remember, the lower the CPV is, the better you are doing.

Still, you can see some indication of what came in the 2011 general election if you look at Phase Three compared to Phase Two:

• The Tories spent 8% less and got 3% more votes. They’ve got a relatively better position than the others and that helps keep them in power.
• The Grits spent 31% more and got 17% less in the vote department.  That’s all sorts of bad news.
• The Dippers spent 5% less and got 18% less in votes.  Again, that should be all sorts of news, most of which isn’t good. 

Once Elections NL releases the 2011 general election financial reports, SRBP can do a comparison for all three general elections since the turn of the century.  We can also cross reference the general elections with the by-elections to see if there are any things that turn up.

In the next post on CPV, we will take a look at the three phases broken down by urban and rural by-elections.

- srbp -

*edited to correct typos

An energy strategy or tunnel vision #nlpoli

For those who may have seen natural resources minister Jerome Kennedy’s handful of tweets selectively paraphrasing bits of the American president’s speech, here’s the whole thing, via whitehouse.gov.

Take a few minutes and listen to the speech.  Read the transcript.  The context of Obama’s words are important if you want to get the full and correct meaning. 

…high gas prices are like a tax straight out of your paycheck…

That’s the central problem as Obama lays it out right at the beginning.  High gasoline prices hurt Americans.  They hurt them at home and they hurt them at work.

Obama proposes a strategy:

If we’re going to avoid being at the mercy of these world events, we’ve got to have a sustained, all-of-the-above strategy that develops every available source of American energy.  Yes, oil and gas, but also wind and solar and nuclear and biofuels, and more.

Rather than develop just one energy source, Obama wants to develop a range of energy sources.

And then he points to the need for efficiency and conservation:

We need to keep developing the technology that allows us to use less oil in our cars and trucks, less energy for our buildings and our plants and our factories -- that’s the strategy we’re pursuing.  And that’s the only real solution to this challenge.

Conservation is a route that the current Conservative administration and Nalcor specifically reject as part of a package of ideas to meet the province’s energy needs.

Just like they specifically reject balanced budgets and reducing the debt as a way of reducing the debt.  Sounds stupid when you say it like that, but that is their policy. They want to keep spending more than we are taking in.

Their solution to the province’s energy needs is a megaproject that will increase the public debt.

Go on a little further in the speech and you’ll see something else:

We’re taking every possible action to develop, safely, a near hundred-year supply of natural gas in this country -- something that experts believe will support more than 600,000 jobs by the end of the decade.

Newfoundland and Labrador has enough natural gas offshore to run a Holyrood-sized electricity plant everyday, all day for a century.

The gas is cheap and it’s readily available. A natural gas plant that could produce more electricity than Muskrat Falls would cost less than half as much. 

The natural gas plant would produce electricity when we need it and more besides.  Muskrat Falls will produce its peak in two months of the year when we don’t need it and no one else will buy it.  In the mid-winter when we need the electricity, Muskrat Falls won’t be able to meet provincial needs and supply the commitment to Nova Scotia.

When you are an energy-rich province with abundant natural resources, you use the cheapest ones to meet your own needs.  The only people who don’t want to develop natural gas offshore Newfoundland and Labrador are the oil companies…and their best friend, the provincial government.

Obama calls it the “all of the above strategy”.

The provincial government in Newfoundland and Labrador has an idea.

They’ve got a vision.

Unfortunately, it’s tunnel vision.

- srbp -

Adams is at it again #nlpoli

Energy analyst Tom Adams is at it again.

He’s sent a bunch of technical questions to the consumer advocate to ship along to Nalcor about the Muskrat Falls proposal.

Let’s see what happens.

- srbp -

Release the budget now! #nlpoli

Headline on a news release issued on Wednesday by the provincial government:

Budget 2012 Investments Will …

And in the first paragraph, you get this line:

Budget 2012 will allocate $1.4 million…

So if they can announce some budget details in February, they can release the rest of it, too.

No excuses.

Let’s have it.

- srbp -

Own goal: Muskrat Falls edition #nlpoli

Jack Swinimer is a resident of Holyrood.

He’s a  retired bank official.

He’s also a big Tory supporter who calls open lines shows regularly to talk up his team or, more importantly, talk down anyone else.

With Muskrat Falls on the go at the public utilities board, no one was surprised to see Swinimer on the line-up for the last day of the board’s public hearings on the set-up question Jack’s pals sent over to the board.

Jack admonished the board not to be swayed by ex-politicians, bloggers and…wait for it…open line callers.

Not content to blow his own foot off with that one, Swinimer also decided to tried some facts and logic.

Sadly for the enthusiastic Swinimer, his other comments got no further than the open line caller thing.

Jack used his career in banking to solemnly declare that borrowing money to build a thermal replacement for Holyrood would be a bad idea.  On the other hand borrowing for his friends’ favourite would be good.  Muskrat Falls would pay for itself, he declared because it would generate revenue.

Sadly for Swinimer, nothing could be further from the truth.  Either Muskrat Falls or a thermal replacement for Holyrood would generate revenue and “pay for itself”.  That’s because both projects would sell their power in Newfoundland and Labrador.

Swinimer went off the rails because he paid attention to his Tory talking points and ignored those other sources, all of whom have explained – in detail – how Jack’s pals propose to generate “revenue at Muskrat Falls. 

Some of the sources Jack ignores have actually demonstrated why no one is interested in buying Muskrat Falls power:  It’s too expensive, especially when compared to what they get from really cheap and plentiful …yes, you guessed it…natural gas.

Jack also claimed that while natural gas might be useful one day, right now it isn’t available.  He didn’t cite any evidence to back his claim.  He just stated it as if it was true.

Too bad for Jack that natural gas is available today and it is cheap.

Cheaper than Muskrat Falls.

Tune in later this morning when Jack will likely be on open line again.

Don’t ignore him.  Jack’s comments are always interesting, even if they have an alarming tendency to blow up in his own face.

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$#*! politicians do: pancakes edition #nlpoli

A year ago, he was running down politicians who host town halls for their constituents.

He called himself a s#*t-disturber for saying it.

Now that he’s got the job, noob Bloc-NDP member of parliament Ryan Cleary is all there for hosting them.

What does that make Ryan now?

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Cost per vote: by-elections #nlpoli

One measure of campaign efficiency and effectiveness is comparing the amount a campaign spends for the number of votes it receives.

It’s called cost-per-vote.

Here’s a comparison of the cost per vote for each of the three political parties in a string of by-elections over the past three years.  From left to right, they are:

• Straits-White Bay North
• Terra Nova
• Topsail
• Conception Bay East-Bell Island
• Humber West

Basically you judge CPV this way: the lower the number, the better. No matter whether your party is the incumbent or one of the outs, you want to spend as little money as possible to get your votes in the box.  That just reflects a basic notion about spending money efficiently.  Money, like people and time, is precious.

Just so that you don’t get turned around here, we are not talking about winning or losing.  Spending the most per vote doesn’t necessarily guarantee success at the polls. In fact, you can spend the most per vote and get clobbered.

In the four by-elections they won, the Tories spent the least amount per vote compared to the other parties. In three of the by-elections, the variation was marginal. In Humber West, for example, the Conservatives spent $21.50 per vote compared to the Liberals $23.48. The New Democrats spent $28.29.

In the one by-election in this series they lost (Straits-White Bay North in 2009), the Conservatives spent $30.96 per vote compared to $19.61 per vote for the Liberals.  The NDP spent $37.50.

Take a look at the three by-elections in between those two extremes and you’ll see other extremes.  The Tory CPV  in Topsail was a mere $6.15.  In Terra Nova it was $11.53.

One of the reasons for this is that the Tories didn’t have to ship in large numbers of campaign workers a long distance from St. John’s in order to effect the win.  In both Humber West and the Straits, the Tories’ centrally controlled campaign system meant they had to pay cash to cover the travel and accommodations of their workers.

They didn’t have to do that in the two by-elections closest to Sin Jawns.  And not surprisingly, that’s the two where the Tory CPV was less than 10 bucks.

As noted here after the Humber West by-election, the Tories poured a heavy effort into hanging onto the seat.  Now that we have actual financial details, we can see that the Tories were relatively more efficient in CPV terms. 

But notice how close together the three parties were.

That’s interesting.

It will get more interesting when you look at the trends in cost-per-vote over the past decade and a bit.  That’s for another post.

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Related:

• Buzzfeed:  How much did each Republican candidate spend per vote in Iowa?
• The Atlantic:  the price Rick Perry paid for each vote in Iowa.
• The cost per vote in 2010 Texas state primaries.

Dip-Flop Fly #nlpoli

Twitter flame wars between cabinet ministers and Dale Kirby over Muskrat Falls.

Surely Darin, Jerome and Clyde have better things to do with their days.

Then again, maybe not.

But at the heart of the whole flare up was Lorraine Michael’s theatrical delivery of a letter to the public utilities board on Tuesday explaining she would not be making a presentation on Muskrat Falls.

Like they really gave a flying frig in the first place.

Right after she handed the envelope to someone from the utilities regulator, Michael took some questions from reporters.

Michael is in a bit of a political jam, you see.  Tuesday’s little bit of a show was a way to try get out of it.  Michael campaigned during the last federal election alongside Jack Layton.  The provincial and federal NDP supported a loan guarantee for Muskrat Falls.  Good for Newfoundland and Labrador (votes), as it seemed at the time, and definitely good for some votes in Nova Scotia.

That was then.

This is now.

In the meantime, public sentiment in the province has shifted against the project.  Lots of people - lots of significant people – have turned up lots of significant problems with the deal. While Michael went along with the whole thing back in 2011 when she was the lone Dipper in the provincial legislature, she now has a caucus to contend with.  Some of them don’t like Muskrat Falls.

Hence the softening of official Dipper support for the project.

But Michael still can’t get away from the unions.  They love the project.  Lots of public dollars to employ lots of unionised members and potential union members. 

Want to know how strongly the union support the project?  Check any comment by federation of labour boss Lana Payne. And when the unions want something, their political wing – Lorraine’s bunch – will have a hard time opposing them.  All of this allows for big internal divisions in the NDP caucus and that’s without getting into the egos and the ambition.

Part of what you saw in the Twitter fight on Tuesday was the Tories pounding on a wedge issue: the NDP position on da Falls.  And they were hammering the wannabe leader, Dale Kirby.  He gets on Tory nerves, big-time, for a whole raft of reasons.  There were lots of school-boy taunts about getting him in the House where people would see the Dippers for what they are.  Yada, yada yada, blah, blah, blah.

All that bravado doesn’t get away from the fact that the only caucus more fractured than the Dipper one is the Tory crew.  They’ve got splits over the fishery and the budget and Muskrat Falls.

What’s more, Kathy Dunderdale has no control over her cabinet, let alone her caucus. One day after she says that people have to put their egos aside and stop playing the blame game so everyone can sort out the fishery, former fisheries minister Clyde Jackman is out there playing the blame game on province-wide radio. 

So amid all the bluster and fury on Tuesday between the Tories and the Dippers lots of things were not as they seem.

Go read Lorraine’s letter, for example.

In effect, it is a submission to the commission review of the Muskrat Falls project.  You see, if Lorraine really didn’t want to participate in the whole exercise she just wouldn’t have shown up in the first place.

Instead she says that a presentation wouldn’t allow her to outline the NDP concerns. Then she outlines them without having to face any questions from the panel or Nalcor. 

Oddly enough, the Liberal Party’s natural resources critic managed to sit in front of the commission and lay out substantive concerns.

In the letter, Michael states the NDP criteria for a successful project;  economically viable, environmentally sustainable and beneficial to the province. Like anyone would propose an economically foolish and environmentally destructive project that would screw taxpayers to the wall.

And in the letter itself, she doesn’t say that the provincial NDP think the whole idea of the project is nutso.  Lorraine basically says that there isn’t enough information and that there should be time for a more detailed review.

“We are not yet convinced…”

She doesn’t say “not convinced”.

Lorraine says not yet convinced.

The Big Tories who have come out against the project are saying they want a proper process.  That’s so they can’t be accused of betraying the party.  No one can mistake their meaning though, even if the actual words are soft. They know Muskrat Falls is ludicrous.

The NDP use coded language, too.  But notice the difference between the Tory code and the Dipper code.  With the NDP, you really can’t see an unequivocal rejection of the project.  Lorraine left a hedge in her letter, the letter that is a submission to the review while claiming it isn’t a submission.

The one thing you can’t mistake though is the political turmoil in the province at the moment.  If any of it erupts into the open, this could be an amazing year in local politics.

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The Others, a.k.a the Ghost and Mrs. Dunderdale #nlpoli

Regardless of any change in the cost of other forms of energy,… we will have stability in this province that few parts of the world could depend on with the same reliability.

Did Premier Kathy Dunderdale say that? During the provincial election last fall, she told The Scope that Muskrat Falls is:

…i the way forward that will provide us a new energy we are going to need to run the place, but it will stabilize those energy prices because we don’t have the volatility of oil anymore.

In January 2012, she told the St. John’s Board of Trade that:

Our government firmly believes developing the hydro-power resources of the Lower Churchill is the key to a sustainable future for our province over the long term. Muskrat Falls is a venture that will pay for itself through lower energy costs, new export revenues and new opportunities for economic development here at home.

Maybe natural resources minister Jerome Kennedy tweeted it one day:

Hydro avoids the volatility of oil.

Might have been Nalcor’s Ed Martin:

Muskrat Falls translates to lower and stable rates for customers.

None of them did.

Premier Frank Moores said it in 1974 when local politicians first turned their attention seriously to developing the Lower Churchill. No matter what happens in other parts of the world, no matter what other technologies exist, hydro-electricity would be the future for Newfoundland and Labrador.

Economics had nothing to do with it, if you follow the comments from others involved in the project.  As Philip Smith notes in his account of the development of Churchill Falls*, the Lower Churchill generated more power than the island part of the province needed in total. Environment and technology made difficult the task of running lines across the narrow gap between Newfoundland and the mainland.

The provincial government found some of the finest minds of the time, American consultants, to look at the project.  They pronounced the scheme “economically viable and socially desirable.”  Advances in underwater transmission in Scandinavia made the underwater link to the mainland a better bet than it might have been a decade earlier.

Moores was sold:

It is the intention of the provincial government to use power created from the Lower Churchill within the province only.  It is clear to us that this position is in the best interest of all Newfoundlanders.

A second consulting firm, more smart minds from Winnipeg and Montreal, took on further studies.  They predicted that there were “excellent prospects” for new industries to use the power.  Their forecasts held that the whole 1800 MW output of Gull Island would be absorbed on the island by 1988.  With the federal government helping to underwrite the project, the Canadian consultants predicted that island consumers would get the power for 14 mills per kilowatt hour, at a time when the going wholesale rate for power if sold to or through Quebec was less than eight mills.

The past weighs heavily on the mind of politicians in Newfoundland and Labrador.  They go back to it regularly.  Kathy Dunderdale, Jerome Kennedy, finance minister Tom Marshall, and the crowd at Nalcor have invoked the historical totems of Churchill Falls and Bay d’Espoir to justify their Muskrat Falls project.

What they are talking about is not the actual events, of course, but rather the imagined version of events they or others hold to be true.  They are a form of cultural short-hand.  They are metaphors for other ideas. They are coded speech.

What we are talking about here is not an academic abstraction, nor is it about competing interpretations – narratives, if you will – of local history.  Newfoundland history, as used by politicians, is a living language.

But it is a language that has no basis on reality.  It is entirely fictitious. The people who speak about the past are, like Paul Oram, fundamentally ignorant of the past.  Oram was not an historical revisionist, as the title of that old post suggested.  To be a revisionist requires a familiarity with both the events themselves as real occurrences and the competing stories of what those events mean.

Rather, Oram was a typical political actor of the modern Newfoundland stage.  History for such an actor is not about concrete events involving people who behaved in the sort of complex world in which all of us live, simultaneously at the moment.

Their history is plastic. It can be moulded to suit any need.

Their history is not, to paraphrase Calvin, an exercise in interpreting the past to suit our current biases.  Nor is history solid.  Rather, history for them is air. 

Former Premier Brian Peckford intruded into the Muskrat Falls world on Tuesday.  His letter to Premier Dunderdale is a simple thing. The second sentence of the first paragraph is the basis for his understanding of the project and the issues:

Of course, as you know, I was heavily involved in this enterprise when I was Minister of Mines and Energy and as Premier.

Dunderdale dismissed Peckford with her characteristic arrogance:

But a message from afar, about a debate that you haven’t been engaged in, or public information sessions that you haven’t participated in, then you know it’s difficult for me to deal with.

But before she got to that she started from a very curious place:

I don’t know how close Mr. Peckford ever was to the energy files here in the province in terms of a new development. I know a great deal of work went into (Upper Churchill) redress.

This is not Dunderdale admitting her lack of knowledge of Peckford. Far from it.  That is Kathy Dunderdale dismissing Peckford out of hand as knowing nothing about the subject.

If he had something useful to say, then she’d listen. But he doesn’t know anything so just pay no attention to him.

But it is Dunderdale who clearly doesn’t know anything.  She is ignorant, both in the sense of not knowing anything and in the local sense of being rude.

The Premier is profoundly uninformed of events that happened in her adult lifetime.  She can’t be posing or pretending. One must be not only completely unaware of the truth but also assured of its irrelevance in order to make such an obviously ridiculous comment with such complete self-assuredness.

What is truly remarkable about Dunderdale, Kennedy and Marshall is that they speak of history.  They tie their decisions to the past. “We must learn from the mistakes of the Upper Churchill,” tweeted Kennedy last month.  “I don't want to spend my nights wondering if I'm going to be the new Joey Smallwood,” Kennedy told an audience in Corner Brook.

For all that sort of comment, Kennedy, Dunderdale, Marshall and the others have no sense that they are displaying exactly the characteristics – arrogance and tunnel vision, among them – that led to the events in the 1960s they wish to avoid.

Such is their understanding of what our history is.

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*  Philip Smith, Brinco:  the story of Churchill Falls, (Toronto:  McClelland and Stewart, 1975)

NDP MHA not helping consumers #nlpoli

George Murphy is the NDP member of the provincial legislature best known for pushing the government gas price gouging scheme that forces consumers to pay prices for gasoline that benefits the provincial government and the gasoline retailers.

Murphy says he is on the side of consumers.

Now Murphy thinks that a jump in food prices is caused by ferry rates:

According to Voice of the Cabinet Minister:

The MHA for St. John's East says he's concerned about the latest inflation numbers from Statistics Canada, and says those numbers are linked to Marine Atlantic's rate hike. According to Stats Can consumer prices in January are up by 2.5 per cent in metro compared to last year. Murphy says the hike of 4.9 per cent in food prices can be directly traced to the four per cent increase in Marine Atlantic ferry rates.

He says it's time for the federal government to step in and keep Marine Atlantic rates low and stable so that the people aren't gouged at the grocery store.

A small increase in the cost of sailing on a ship for a few miles caused food prices to rise dramatically.

Not the fact that the food comes from places like California on the other end of the friggin’ continent, and is brought here in trucks that burn diesel fuel, the price for which is pretty high these days.

And the solution to that problem is for the federal government to pour tax dollars into lowering those evil ferry rates.

Murphy likes spending federal tax dollars to help people.

He also wants the federal government to support development of Muskrat Falls.

That’s the Newfoundland Tory/Dipper scheme to force the taxpayers of Murphy’s district to pay full cost plus profit for electricity so that the private sector company that sells electricity to people in Nova Scotia can get the juice for free.

Murphy likes spending public money to help people.

You just gotta know that those people Murphy winds up helping aren’t consumers in Newfoundland and Labrador.

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Reminder: Jerry Bannister on political myths in NL #nlpoli

With the provincial government and its proponents deploying Churchill falls and bay d’Espoir as part of their arsenal of argument in favour of Muskrat Falls, there couldn’t be a better time for some old-fashioned myth busting courtesy of historian Dr. Jerry Bannister.

Wednesday, February 22, 7 pm at The Rooms

The Limits of Myth Busting:
Popular and Professional Histories of Newfoundland and Labrador

What is the relationship between myth and history? And are myths rooted in history? Join Dr. Jerry Bannister as he shares his thoughts on the role of historians and popular mythologies in understanding our province’s past.

Just a reminder.

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Partisan hypocrite? #nlpoli #cdnpoli

or just full of it?

Leo Abbass on news that no one wants to use Goose Bay as a supersonic flight training venue:

“From what we were told the base has a bright future, they're working to come up with that operational requirement,” Abbass told CBC News. “As long as they're working towards that, I'm content with that.”

For the record, you don;t have to work at finding an “operational requirement”.  It is usually so friggin’ obvious that only an idiot couldn’t find it.

Anything else would be bullshit.

A big, steaming pile of it, in fact.

Now this is not the first time that Leo has soft-pedalled a failure by his political friends to deliver on yet another of their promises to Goose Bay.

Leo’s boundless optimism about Leo’s federal friends is understandable. Their promises are sure, after all. Goose Bay doesn’t need flight training, what with those hundreds of soldiers now living and working in Goose Bay.

Or not.

And when he wasn’t cheering one crowd, Leo was changing his position from one deal to another.  The second one is the favoured one of Leo’s buddies.

Their promises are sure, too.

Nor is it the first time he has been rather obviously full of crap.

Leo Abbass:  partisan hypocrite or just full of shit?

Take your pick.

There’s no difference in the two.

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If she said that about the fishery… #nlpoli

Premier Kathy Dunderdale, answering media questions about the future of the province’s last paper-making machine:

“[Kruger are] going to run their operation in consultation with the union on how they can manage their operations here in Corner Brook so that they can compete and compete globally because that's what they need to do,” she said.

Manage operations of the plant so they can compete globally.

Sensible idea.

And the provincial government isn’t going to interfere.

Watch the whole scrum.

Dunderdale talks about the company needing to run efficient, lean operations, “especially in this kind of a climate”.  She means a globally competitive business climate in which plants are closing up because they can’t compete.

Note as well that Kathy Dunderdale acknowledges that neither she nor natural resources minister Jerome Kennedy know about running paper making operations.

Then the scrum switches to the fishery and immediately Kathy Dunderdale changes her headspace.  Suddenly she knows so much about the fishery that she needs to have overwhelming control of the industry – by her account – in order to sort things out.

Dunderdale’s premise in the fishery is that everything should continue as it is, with the government presumably dictating how much companies should take in losses each year.  After all, that’s what fisheries minister Darin King was talking about recently when he told the world that he and his cabinet colleagues had rejected OCI’s processing proposal.  The provincial government looked at the company’s financial statements and made up its own mind about how much work needed to be done in the province.

Now neither Dunderdale nor King know more about the fishery than they do about forestry and papermaking. Yet,  King insists that when it comes to the fishery, the government is interested in getting the most out of the industry for the province.

Two resource industries.

Both facing significant economic pressures that come, ultimately, from the need to operate lean, efficient operations in an intensely competitive global economic environment.

And yet the provincial government follows a policy in one diametrically opposed to the policy they follow in the other.

No need to wonder for a moment why the fishery remains in a mess.  The current provincial government is just the last in a long line of cabinets that simply lacked the political will to come to grips with the fishery problem and fix the problems.  The simplest fix would be to treat the fishery the same way they treat the forestry.

Kathy Dunderdale knows, though, that if she said about the fishery what she said about the forest industry, the dinosaurs would lace into her from all sides.  When you listen to what King and Dunderdale told reporters and how they said it, you’d be making a pretty big ass of yourself if you assumed that King and Dunderdale even thought of doing such a thing in the first place.

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The future of Goose Bay, seven years later #nlpoli

Anyone following the ongoing saga of the Goose Bay air base could hardly be surprised to find out that no one is interested in supersonic flight training in the Big Land.

People have been chasing after this idea for years, just as they have been trying for years to keep the military in Goose Bay.  They are trying not because Goose bay is militarily relevant but because some people want to keep public money flowing into the town. Go back to February 2005 and you will find a post here at SRBP on exactly that idea of trying to keep the town firmly on the public tit.

So seven years later, the future of Goose Bay remains the same:  not with the military. 

When will the provincial and federal governments, and some of the people in Goose Bay get the message?

Seems like they are all – like the provincial Liberals – destined to be clueless on this issue.

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Protesting too much? #nlpoli

FFAW boss Earle McCurdy responded on Friday to comments by OCI’s Martin Sullivan that the FFAW, among other things, had threatened to shut OCI down and had proposed closing the Fortune plant in exchange for trying to get some provincial government money to help OCI refurbish the Marystown plant.

Here are Earle’s comments as reported by CBC:

“What Mr. Sullivan is saying is a total fabrication and misrepresentation of any discussions we’ve had…”

So it is entirely false.

But at exactly the same time, it is something FFAW representatives said taken out of context?

Then McCurdy went off on another tack:

“What you do when you don’t want to debate the issues is you start making personal attacks.  About the only thing he didn’t accuse us of is child molesting. …He’s making it up. He’s smoking something. I don’t know what he’s doing. But what he should do is stick with the issues."

Sounds a wee bit fishy, if you will pardon the choice of words.  you see, the other thing you do when you can’t deal with the comments is protest noisily that you have been abused and attacked.

You can hear both interviews on this week’s On Point Saturday at 7:30 PM.

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