Watching Tom Hedderson

The Department of Tourism, Culture, Recreation and Personal Promotion for the Minister is running a series of cheesy televisions spots on Rogers Cable in the St. John's area and likely on Rogers cable outlets across the province.

In the St. John's area, the spots are running in support of a summer replacement show for Out of the Fog that is similar in format and which has sucked up so much of the local Rogers budget that the usual broadcasts of the annual regatta were scrapped this year.

The spots don't appear to be part of the usual tourism promotion; heck, they wouldn't be part of any credible promotion designed to get people to travel around the province and see the sights.

You won't find reference to these spots in the tourism marketing strategy. The in-province approach lists these objectives:

- to increase resident in-province travel and expenditures by motivating residents to vacation in-province.

- to increase resident knowledge of activities and attractions that occur during all, spring, and winter seasons as well as the summer period.

- to increase frequency of travel by motivating residents to take additional and more frequent short trips during the shoulder seasons as well as their annual summer vacation. Increase focus on the shoulder seasons.

- to provide value-oriented advertising opportunities for tourism operators.

The spots feature cabinet minister Tom "The Watch" Hedderson purportedly kayaking and doing other stuff he clearly doesn't do in his real life.

As much as the marketing gurus are likely to come up with a bunch of excuses for wasting the money explanations for this particular advertising concept, I doubt very much ordinary people would accept the idea that seeing a politician most of them barely know looking incredibly stiff and uncomfortable would support these objectives.

The reality is that these spots just don't fit into the professional ad campaigns we've come to expect from our tourism marketing campaigns. No one should blame the agency of record (AOR). The new AOR has turned out some decent spots and worked to apply the marketing strategy. Their stuff can be found a Tourism Newfoundland and Labrador under the title "Beauty on Film" in the "Sights and Sounds" section.

The "Watch Tom Hedderson Float in a Kayak and Pray to God it Doesn't Flip Over" campaign isn't on film and it is far from beautiful.

Bad enough that the Williams administration has been wasting a great deal of its advertising dollars over the past couple years on this kind of bumpf, just like the Grimes and Tobin crowd before them. Surely everyone has heard - and then quickly started to ignore - certain ministers appearing on VOCM talking about summer driving season, as part of VOCM's usual summer advertising, moreso than doing anything substantive for the public and the government.

Bad enough that over the past 10 years all members of the House of Assembly and cabinet ministers have gone back to the hideous Peckford era practice of spending tax dollars to send messages of greeting to this and that group featuring little more than their smiling mugshot.

Basically, what we have running on Rogers is nothing more useful than some personal promotion for the minister at taxpayers expense. Since it's television, we have to ad in the production costs of the different spots and the ad time to see it is one of the most useless and at the same time most costly of these personal promotion for politicians.

The spots should stop immediately since they represent an entirely inappropriate way to spend public money.

Over the past few weeks, Newfoundlanders and Labradorians have been treated to one too many stories of politicians - Liberal and Conservative alike - who, over the past decade have spent public money to their own individual benefit. They've watched the stories spill out and the politicians fumble with excuses and inadequate responses. Now they can share Tom's "watch" fetish.

Tom and his colleagues should know that the public are watching closely.

They shouldn't assume the public is liking what they are seeing.

48 hours

And still no word from the provincial government in response to Monday's ruling on Ruelokke v. Government of Newfoundland and Labrador.

In the meantime, it seems the rest of us are just supposed to sit around listening to Roxanne on the iPod.

No interest, indeed

There is something oddly appropriate about the headline on a release from natural resources minister Kathy Dunderdale advising that the Stephenville Mill will be scrapped but assuring us that she and her colleagues are still working dilligently on a "strategy".

The headline: "No interest expressed in Stephenville mill".

The confirmation of government's position is in a quote from Joan Burke, education minister and the member of the legislature representing Stephenville: "Perhaps now that this matter is settled, we can all fully concentrate our efforts on diversifying and strengthening our economy..."

The only problem with Burke's position is that it is exactly the opposite of what she and the Premier told the people of Stephenville repeatedly over the past couple of years. From Williams election pledge that the mill would not close right down to the prospect of expropriating the property, Williams and his minister made great promises.

They talked of having a fall-back position, a so-called Plan B.

Turns out there was no Plan B, except perhaps as expressed in the quote from Burke, above.

With this news release, the Williams administration is accepting Abitibi's proposal to demolish the entire Stephenville mill structure and restore the site as near as possible to its original state before the mill was built in the 1970s.

What this means is that government is unwilling to purchase or otherwise acquire the building and have it available for alternative uses besides papermaking. Government has deemed it better to obliterate completely any sign of the mill than to look at any form of industrial development in place of the Abitibi mill.

So what are we to make of the talk over the past few years?

Not much, apparently.

In the release, we are not even given the courtesy of some hard, factual information. We are not told that a thorough engineering and financial assessment have shown it is actually better to let Abitibi clean up the site and let someone start from scratch.

We are not told very much of anything actually.

Nope.

All we get in the news release are hoary cliches about diversification and a commitment to doing something. Accountability, transparency, openness - genuine communication - all are missing.

The one thing we can be thankful for is that Stephenville is not being handled like Harbour Breton, at least at this point. There, people have been kept hanging for two years with glowing promises and commitments, none of which have come true. At least in Stephenville, people know the thing is over and those that have not already gotten on with their lives can do so now.

It is oddly appropriate, therefore, that the release title mentions a lack of interest. The headline refers to the lack of intereest of other parties in operating the plant as a papermaking mill.

Given the content of the release, though, it would seem the headline also refers to a certain lack of interest on the part of the current administration in any of a number of things. Not the least of these would be any role the mill site itself might play in the future "economic diversification" of the area supposedly being developed by the committee of ministers that leads a task force of officials - that lives in the house that Jack built? - as they set about "exploring a number of value-added options that have been identified for the region, with technical support being provided by staff of the Department of Natural Resources."

No interest, we are told.

No interest, indeed.

Pressure mounts to appoint Ruelokke

vocm.com's question of the Day feature yesterday focused on the provincial government's refusal to obey the law and acknowledge Max Ruelokke as chairman and chief executive officer of the province's offshore regulatory board.

The numbers were running heavily against government all day, including at one point hitting 76% in favour.

The Premier's Office e-mail tree mustn't be working very well these days. Their ability to fill up call-in lines is weakening and in this case, even a last minute deployment - after 9:00 PM - couldn't swing the votes in their favour.

The final vote remains 54% in favour of Ruelokke.

Danny got 28%.

It's not the only such vote Danny has lost and believe when you are told that Williams pays serious attention to these things. Why is incomprehensible, but he takes this sort of rigged voting very seriously. Gets kinda annoyed when he is beaten at his own game.

Churchill Falls background

It's hard to find a concise summary of the facts surrounding the Churchill Falls development.

One of the best ones is in the Supreme Court of Canada decision Re Upper Churchill Water Rights Reversion Act, [1984] 1 S.C.R. 297.

This is a famous case among the nationalists, pseudo-nationalists and a few other assorted types hanging off the end of the bar at the Ship.

There's a really brief summary of the whole affair on the Wikipedia site, but the SCC summary is also pretty short and it is factual. It stands as one of the sorry results of the windmill tilting Brian Peckford did on a number of issues only to lose badly in the courts.

The financial summary from the judgment is interesting especially in light of the number of times people like to run around claiming that Quebec owns Churchill Falls or Quebec has control of our natural resources and wants control of the Lower Churchill as well. These people conveniently forget that when it appeared CFLCo would fall into bankruptcy, Hydro Quebec entered into the ongoing recall/resale of power agreements beginning in 1998 designed solely to forestall CFLCo from becoming 100% owned by Hydro Quebec. The political fall-out from such a development would have been disasterous.

Hydro Quebec with its technical knowledge and financial support - most importantly in the form of performance guarantees - was crucial to the overall successful completion of the project.

In light of what is going on these days, it is always useful to get some background information that is reliable. In that same light, I am eagerly awaiting the revision of a paper recently completed by Memorial economics prof Dr. Jim Feehan on the negotiation of the 1969 contract.

The issue should be the subject of a book, but the paper - when the revised version is released - should be an important contribution to our understanding of a controversial, but often misrepresented episode. In any event, the information contained in the SCC decision is a tidy summary until someone writes the definitive book on the entire Churchill Falls affairs.

Extract:

In order to finance the project CFLCo was required under the provisions of the Power Contract to raise $700 million out of an estimated total cost in excess of $900 million. In addition to bank loans of between $100 and $150 million, CFLCo borrowed $100 million by the issue of General Mortgage Bonds, pursuant to a Deed of Trust of which General Trust of Canada was Trustee, known as the General Mortgage Trust Deed, which was executed on September 1, 1968. It was amended by a supplemental Trust Deed dated May 15, 1969. Pursuant to the Trust Deeds CFLCo assigned and charged all its assets and rights under the Statutory Lease and the Crown leases to the Trustee. The Lieutenant Governor in Council for the Province of Newfoundland consented to this assignment on August 1, 1968.

The bulk of the financing came from the sale of First Mortgage Bonds. CFLCo borrowed $540 million on the security of Series A bonds and a further $50 million on the security of Series B bonds. These funds came from lenders outside the Province of Newfoundland and largely from the United States. The Royal Trust was constituted Trustee for the bondholders under a First Mortgage Trust Deed entered into by Royal Trust and CFLCo on May 15, 1969. As security, CFLCo assigned all its assets and rights under the Statutory Lease and Crown leases and all its rights under the Power Contract. General Trust intervened in the Trust Deed as Trustee under the General Mortgage Trust Deed, granting priority to

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the First Mortgage Bonds, Newfoundland also intervened in the Trust Deed confirming its consent to the assignment by CFLCo of its assets to the Royal Trust, which consent had been given on May 12, 1969 by an agreement, known as the Financial Agreement, between the Royal Trust, CFLCo, and the Province of Newfoundland. This agreement was made pursuant to and given the force and effect of law by The Churchill Falls (Labrador) Corporation Limited (Financing) Act, 1969 (Nfld.), c. 76, (the Financing Act).

At the time of the hearing of this appeal [early 1984], according to the statement of facts which forms part of the record, there remained owing by CFLCo in respect of the above-described borrowings $98 million in General Mortgage Bonds, $458,620,000 U.S. in Series A First Mortgage Bonds, and $45,804,000 Cdn. in Series B Bonds. It is against this background that the Power Contract between CFLCo and Hydro-Quebec was signed on May 15, 1969. It is a lengthy and detailed document. Under the contract CFLCo agreed to supply and Hydro-Quebec agreed to purchase virtually all of the power produced at Churchill Falls for a term of forty years, which was renewable at the option of Hydro-Quebec for a further term of twenty-five years. The price to be paid for the electricity was to be based on the final capital cost of the project. Provision was made for CFLCo to retain a fixed amount of power for use within Labrador by its subsidiary Twin Falls Power Corporation. In addition CFLCo could recall on three years' minimum notice up to 300 megawatts (MW) to meet the needs of the Province of Newfoundland.

The importance of the relationship between CFLCo and Hydro-Quebec to the success of the Churchill Falls development is made evident by a reading of the Power Contract. Each party was to be responsible for the construction of transmission lines on its side of the Quebec-Labrador boundary. To ensure compatibility of the two systems, the

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contract provided that transmission lines and related facilities were to be built according to Hydro-Quebec's specifications. Hydro-Quebec was given a supervisory role over CFLCo with respect to maintenance of the development and also acquired the right to operate the plant in the event of CFLCo's failure to do so. For its part Hydro-Quebec agreed to make funds available for the completion of the project over and above the $700 million to be raised by CFLCo in exchange for mortgage security. If CFLCo lacked the funds necessary to meet debt service payments, Hydro-Quebec agreed to advance the necessary monies in exchange for debentures and shares of CFLCo. The Quebec utility also agreed to pay the difference between six per cent and any greater rate of interest payable by CFLCo on its obligations. Although Hydro-Quebec owns only 34.2 per cent of the issued shares of CFLCo (the remaining 65.8 per cent owned by Newfoundland and Labrador Hydro, a Newfoundland Crown corporation), a voting trust arrangement provides that no substantial changes in the financial or other obligations of CFLCo can be made without the consent of 75 per cent of the shareholders. [Emphasis added]

Good advice likely unheeded.

Offal News has an interesting positive suggestion for Danny Williams to help him out of the self-imposed jam on the offshore board.

Too bad Williams doesn't get good advice.

Really too bad he never takes good advice.

This mill will not close!

"Expropriation is still an option for the provincial government if it finds another operator for Abitibi-Consolidated's soon-to-be-shuttered paper mill in Stephenville, Premier Danny Williams says."

That was the lede for a Rob Antle story in Telegram last December.

Here's the latest plan for the Stephenville mill, as announced today in the environmental assessment bulletin issued by the provincial government:

(2) Stephenville Paper Mill Site Decommissioning (Reg. 1281)
Proponent: Abitibi-Consolidated Company of Canada

The proponent proposes to decommission and rehabilitate the pulp and paper mill site in Stephenville. The infrastructure and physical features to be decommissioned include: the main pulp and paper mill building including steam plant, maintenance shops and administration offices; paper storage sheds; effluent treatment facilities and pipelines; wood yard; industrial landfill systems on the east side of Route 490; hydrocarbon bulk fuel storage facilities; fuel and process storage tanks; water and sewage systems; transformers and other electrical equipment, etc. A summary of the Environmental Site Assessment (ESA) Phase I work is also included. The decommissioning of the site is scheduled to commence in 2006 and is tentatively scheduled to be completed by 2008. The undertaking was registered on August 7, 2006; public comments are due by September 12, 2006: and, the minister's decision is due by September 21, 2006.

The minister encourages all interested parties to become involved and to make comments known. Comments on submitted documents are invited from the public, addressed in writing to the minister, and are welcome prior to the deadline date shown.

How quickly they forget.

Stuck in a decision loop?

Rule 1: The Boss is always right.

Rule 2: If the Boss is wrong, see Rule 1.

Amateur computer programmers Geeks and nerds many microchip-centuries ago used to like setting up loops in their programs and watch what happened.

or sometimes they'd make a loop by accident and wonder why their computer stalled.

Is the Williams decision-loop slowing response to the Halley decision on max Ruelokke?

It's well over 24 hours since the decision and no sign of a response from government yet.

Could it be the government is in a decision loop?

If they appeal the decision they are guaranteed to lose. This will only increase the criticism of the Premier for fighting a lost cause anyway. Note the only public support he has on this file is from people who get regular messages from his office telling them what to say.

If he accepts Max, as he should, then the Premier has to admit he lost....that maybe he was wrong.

At no point has Danny Williams ever admitted to making an error nor has he apparently ever lost. There's always been an ability to redefine the issue so he comes out smelling like a rose.

This isn't a question of ego.

Put that aside and the decision becomes easy. Let's move on and get to the bigger issues facing the province.

Make a decision and accept the judgment and the story is gone in less than 24 hours.

Delay a decision or worse - appeal it - and the bleeding will continue for weeks and weeks.

Then you can add this bleeding to the other bleeding on so many fronts and the regular CBC Radio political updates will be re-named "The Premier Has A Bad Week, Week 52".

We don't need it. Danny doesn't need it.

We need the Premier to get back to working on the files that have a promise of success for him and for the province as a whole.

Gordo and the return of the Connie pork brigade

We've written before about the odd choice of Gord O'Connor, the former lobbyist for defence manufacturers and old-style retried general as Minister of National Defence.

Head to back to articles written in the late winter and early spring and you'll see comments on the obvious shortcomings O'Connor's defence policy which was designed to turn defence spending into pork.

Well, today's Globe has the story of the Stephen Harper administration invoking a national security clause in the Agreement on Internal Trade that allows the feds to micromanage where in the country $8.0 billion in defence spending will go.

There is a trough.

As much as the Connies used to criticize those with their nose supposedly in it, once in power, the Connies are following a long established Conservative tradition of wasting defence dollars and using defence spending as goodies to hand out for political gain.

How long will it be before Steve has the Gucci loafer closet filled, too?

Take all the time you need

The Ruelokke v. Government of Newfoundland and Labrador case ended yesterday before lunch.

The Williams administration knew the decision was coming and knew there were basically only two possibilities. Either they'd win or they'd lose. Since the Premier already committed to abide by Mr. Justice Halley's decision - whatever it was - then there really isn't much to ponder.

So why is the provincial government having such a hard time giving its official reaction - even a preliminary reaction - to the decision?

The Premier has been noticeably silent, indeed he's been all but invisible these past few weeks.

Word on the street is that the powers that be can't sort out who will speak: Will Danny Williams go out there and deal with it himself or will he send his proxy minister, Kathy Dunderdale?

Take all the time you need, gang.

The way government has handled this file tells us all a great deal about how this administration operates.

Their lack of a reaction on this file is just part of the bigger picture.

Ruelokke wins; government's actions called reprehensible, callous

Mr. Justice Raymond Halley handed down his ruling in the case Max Ruelokke was forced to bring against the Danny Williams government in an effort to have Williams and his cabinet live up to the law governing the offshore regulatory board.

Ruelokke won.

Halley's comments on the provincial cabinet's actions in the matter are scathing, calling Ruelokke's treatment at the hands of cabinet "reprehensible". Halley said "[o]n the whole, the Respondent has treated the Applicant with contempt
and disrespect." (p. 22)

Several new details of the case emerged in today's ruling, details that undermine the credibility of the government's campaign to install St. John's mayor Andy Wells in the job as head of the board regulating the offshore industry.

According to Mr. Justice Halley, before the hiring process was sent to a third party arbitration panel, federal natural resources minister John Efford offered to split the combined chairman of the board and chief executive officer job and send only the board chair position to the panel. Williams and the provincial government never took up Efford's offer despite subsequent claims they wanted to split the job in the interests of "good governance."

Minister Efford initially advised the Respondent that the federal government intended to submit only the position of Chair of the Board for mandatory arbitration.
It was at that point that the Respondent had an excellent opportunity to insist that both governments proceed under section 12 of the Act for the selection of the Chair and that Panel or another Panel be constituted under section 24 of the Act to select a different person to be the CEO of the Board. According to the Respondent, the good
governance of the Board was "“at stake"”.

Instead of proceeding with the selection of the Chair of the Board only as suggested by Minister Efford, the Respondent appears to have embraced the "“one person"” concept. In reply to Minister Efford'’s letter, the Respondent issued a press release on August 25, 2005 in which Minister Byrne announced that Dean MacDonald would be the province'’s representative on a Panel that would select one person to be both the Chair and CEO of the Board. (p. 9)

Halley also confirmed that the selection panel used Robertson Surette, the company hired to conduct the initial search for chairman/CEO to conduct the second arbitration panel. The initial approach by RobeSuretterrette was scuttled by Danny Williams bizarre and thus far unexplained efforts to foist Andy Wells on a process that was nearing completion.

Halley called Andy Wells unqualified and said "it was mischievous for the Respondent to continue to 'push' for his appointment [of Andy Wells] after the Panel had made its decision." Bond Papers reached the same conclusion on Wells' lack of qualification last July.

So far no one has been able to come up with a good explanation for the Premier's "mischief" beyond pique.

While Danny Williams said three weeks ago he would abide by Mr. Justice Halley's ruling, odds are good that Williams will opt to appeal this decision to the Supreme Court of Canada if need be.

The Premier was unavailable for comment today. Let's see what he does on this file next.

Anyone wanting a copy of the decision in pdf format can simply drop me an e-mail.

The Four York Harbourmen

Monty Python used to do a sketch in which four elderly gentlemen sat about inventing ever more outrageous stories about how tough it had been growing up in their little corner of Yorkshire.

It loses a lot without the broad Yorkie accent but there were a couple of gems like:

"There were hundred and fifty of us living in shoe box in middle of road."

The climax of the sketch is Eric Idle, as the fourth Yorkshireman, who finally launches into a tirade:

Right. I had to get up in the morning at ten o'clock at night half an hour before I went to bed, drink a cup of sulphuric acid, work twenty-nine hours a day down mill, and pay mill owner for permission to come to work, and when we got home, our Dad and our mother would kill us and dance about on our graves singing Hallelujah.

FIRST YORKSHIREMAN: 

And you try and tell the young people of today that ..... They won't believe you.

ALL: 

They won't!

It's like the Upper Churchill and the lengths some people go to "prove" just exactly how bad Hydro Quebec is screwing us. We already blogged this, but the whole subject is a goldmine of information.

Something under the bed is drooling

The agreement between Hydro Quebec and BRINCO for the development and operation of the Churchill Falls hydro-electric project stands as one of the most lop-sided agreements in Canadian history.

The provisions that garner the most attention are the ones requiring Churchill Falls Labrador Corporation (CFLCo)- the company managing the site, jointly owned by Hydro Quebec and Newfoundland and Labrador Hydro - to sell power to Hydro Quebec at a phenomenally low, fixed rate until 2016 and from 2016 to 2041 to sell the power at fixed rates that are lower again.

The Upper Churchill contract remains a touchstone for nationalist and other ire in Newfoundland and Labrador. Such is the emotion raised by the subject that it rivals the popular hatred in pre-1933 Germany of reparations under the Versailles Treaty that officially ended the Great War.

Much has been written in the past five years about the Upper Churchill contract with claims as to how much money Hydro Quebec makes from the project versus what accrues to Newfoundland and Labrador through the Crown-owned Newfoundland and Labrador Hydro.

In a December 2005 article, The Independent claimed that "[d]ue to the lopsided nature of the 1969 contract, Hydro-Quebec is currently earning an annual profit of close to $2 billion compared to Newfoundland and Labrador's $32 million." No source is cited for the statement. An August 2005 article in the same newspaper claimed "since 1972 [Hydro Quebec] has gathered an estimated $23.8 billion in revenues; Newfoundland and Labrador has made approximately $680 million." Again, no source is cited for the information.

The same information was cited by Memorial University professor Dr. Chris Dunn in a February 2005 article on the Atlantic Accord. Dunn cites The Independent's so-called balance sheet on Confederation since 1949.

Former Premier Brian Tobin told Toronto's Empire Club in 1996 that:

Hydro-Quebec is buying Churchill Falls power at 1969 prices and re- selling it at 1996 prices. Under the agreement, this will go on for another 45 years. The windfall profits for Hydro-Quebec are immense ... and unconscionable.

Since full power came on stream from Churchill Falls in 1976, Hydro- Quebec has received benefits averaging about $600 million a year. Newfoundland and Labrador has received benefits that averaged $23 million a year. Recently, that has slipped to $16 million a year.

From 1976 to 1996, Hydro-Quebec received 96 per cent of the benefits, while Newfoundland and Labrador got only 4 per cent. To put this in perspective, in 1995, while Hydro-Quebec received benefits of $1.4 million a day from Churchill Falls, Newfoundland and Labrador received just $45,000 a day.

His successor, Danny Williams has made much the same argument using much of the same language and the same figures.

At least two things are noteworthy in the examples provided above, examples that are consistent with virtually every single comment on the Upper Churchill project and alleged revenues gained by Hydro Quebec from what Brian Tobin clearly asserted was the practice of reselling Upper Churchill power at windfall prices.

First, not a single source - let alone a verifiable source - is cited for the figures.

Second, the figures vary widely and one might also note wildly. Brian Tobin's figure of $600 million annually is low, even allowing for electricity prices in the mid-1990s. Danny Williams claim of $1.0 billion is large but some of the more extreme claims, such as those of The Independent have put the figure as high as $2.0 billion annually.

There is one assessment that does provide some slightly more detailed information. A paper prepared by the Centre for Spatial Economics for the Royal Commission on renewing and strengthening our place in Canada reproduces analysis completed by the Newfoundland and Labrador Department of Finance. It is important to note, however that the figures represent theoretical losses for Newfoundland and Labrador as a result of the long-term, low-fixed-price power sale portions of the Upper Churchill Contract.

The Department of Finance estimated lost revenue for both CFLCo and for the Newfoundland and Labrador government for the period 1991 to 2001 based on several scenarios and assuming that power could have been sold for $20, $30 and $40 per megawatt hour above existing rates.

On the face of it, these assumptions are nothing short of fantastic. They are entirely devoid of any of the historical basis on which the original development took place. In and of themselves, the assumptions proceed from the very best case scenario in which the original contract negotiators were not only free of financial pressures but were also able to foresee subsequent developments in energy pricing such that they would provide the best possible power sales terms less than 20 years after the project achieved full power.

On top of that, the finance department estimates - at least as reproduced by the Royal Commission paper - that CFLCo would turn over all revenue to the shareholders and that, in turn, Newfoundland andLabradorr Hydro would have turned over all additional revenue to the provincial government.¹

If we accept all those assumptions, the province's Department of Finance projected that for the years between 1991 and 2001, the Government of Newfoundland and Labrador would have received the following amounts of revenue:

Year: Amount (pricing assumption per megawatt hour [mwh])

1991: $294.0 million (+$20/mwh) to $589.1 million (+$40/mwh)

2001: $315.0 million (+$20/mwh) to $630.0 million/mwh

This is a far cry from figures cited in any of the examples given above. Moreover, it must be borne in mind that these are theoretical losses of revenue. No evidence has been presented that Hydro Quebec actually sells Upper Churchill power at the highest possible prices and therebycollectss the windfalls Brian Tobin claimed. This is not to say of course that such a situation might not theoretically exist; but it is a long way between theory and proof or even between theory and a conclusion based on a balance of probabilities.

All we can say with certainty of these figures - the only ones from an identifiable source - is that they represent theoretical losses based entirely on the assumptions of the economists conducting the analysis. If they assume different can-openers, then the entire analysis heads for the ash can.

Some will undoubtedly wonder why this argument about amounts is important. After all, the nuclear winter theorists only confirmed that nuclear war would be an unmitigated disaster. Whether or not Quebec is reaping windfalls or the magnitude of the windfalls is irrelevant: the contract is still a disaster for Newfoundland and Labrador, some would argue.

This would be true except that it appears that entire argument is based on fantasy. it should go without saying that fantasy is no basis for public policy.

More importantly however, the Upper Churchill contract has become nothing more than a convenient tool which successive politicians have used to bludgeon their adversaries for more than three decades. Such is the impact of the Upper Churchill mythology that an otherwise viable agreement with Quebec in 1991 to develop the Lower Churchill fell apart in large measure due to fear in both Quebec and this province that references to the Upper Churchill agreement would cause a political and popular backlash in both provinces.²

In the same way that the Conservative Opposition attacked Wells on the matter in 1991, Progressive Conservative leader Danny Williams - aided by then-Hydro chairman Dean MacDonald - used Lower Churchill negotiations and the spectre of the Upper Churchill to bludgeon Roger Grimes a decade later. The only difference was that the 1991 Conservatives felt a deal ought to have been done.

Danny Williams has repeatedly exploited popular fears of the upper Churchill at every juncture.Hee repeats the pledge that he will not do a bad deal, as was done in the 1969 agreement. Williams repeated use of the Upper Churchill contract as a political device is more than mere partisan rhetoric.

At the very least, his enthusiasm for describing Newfoundlanders and Labradorians as victims of foreigners and corrupt or stupid local politicians serves only to undermine public confidence that they - individually or collectively - can ever negotiate a "good deal." So widespread is the self-doubt that has come from decades of the victim myth that in the recent film contrasting Newfoundland and Ireland, comedian Mary Walsh lambasted her fellow Newfoundlanders as too stunned to make a decent deal.

The "No bad deals" pledge may also lead Williams himself to poor decisions. There is good reason to believe that Williams walked away from the Hebron offshore oil deal, at least in part, for fear that some would argue - utterly without reason - that it was a repeat of the Upper Churchill give-away.

In the recent pursuit of the Lower Churchill development, Williams has also made questionable decisions. He tossed aside what appeared to be a viable and beneficial proposal from Ontario and Quebec in favour of the go-it-alone option. In making the announcement Williams made much of the psychological aspects of his decision with references to being master of our own destiny. Yet he made no mention of the financial impact of doubling the provincial debt in pursuing the $9.0 billion project solely on the credit of Newfoundland and Labrador taxpayers.

By the same token, Williams' option of avoiding sales to Quebec might also prove to be so difficult a feat that the project will not be built. Worse still, it might be built but under economic terms that will be far less beneficial to the province than ones that were already in front of his face. In hydro-electricity development, as in oil and gas, timing is the key and Williams may well have fouled the timing for the Lower Churchilldrivenn largely by a demon of his own invention.

The only way to get past this issue is to de-claw the Hydro-Quebec demon so carefully created by so many politicians and others for their own, often self-serving purposes. Only by understanding what actually occurred in 1969 or at any time in the past, can we expect to make sound public policy decisions and, in the process, come to appreciate that collectively, Newfoundlanders and Labradorians are already capable of mastering their own destiny. They can never do so on the basis of fantasy and fear.

By de-clawing the Hydro Quebec demon we do not ignore an ignominious contract; rather, we restore to ourselves collectively and individually the wisdom to succeed.

If we do not despatch the Hydro-Quebec bogeymann lurking underneath our political beds, we may find ourselves saddled with an enormous and entirely unnecessary financial burden from a genuinely bad deal, or worse still, left with a Lower Churchill project that failed for nothing other than a politican's fear of saying yes to a very good deal.



___________________________________________

¹ First we assume a can-opener redux. The authors of the report state the revenue was assumed to be turned over to the shareholders and then carry forward certain other assumptions about the theoretical impact of Equalization reductions on the resulting revenue. Unfortunately, this is yet another huge assumption which has equally huge implications for the rest of the analysis.

Until the early 1990s, the provincial government did not make a habit of claiming dividends from Newfoundland and Labrador Hydro. NLH is the shareholder in CFLCo, not the Government of Newfoundland and Labrador.

Since the theoretical assumptions were applied only to the decade before 2001, we have no way of knowing what would have occurred in the 1980s, and hence what the financial state of the provincial government would have been in the recession of the 1990s. This is what drove the claiming of dividends and therefore the assumption in the cited report that government would have ultimately received all added Newfoundland and Labrador revenues from the theoretical projections.

² See, for example, Jason Churchill, "Power politics and questions of political will: a history of hydroelectric development in Labrador's Churchill river basin, 1949-2002", prepared for the Royal Commission on renewing and strengthening our place in Canada, March 2003.

Specifically, the proposal called for a 30 year contract that would initially grant Hydro Quebec access to 2,400 MW of power but this amount would decline over time such that by the end of the contract in 2031, Newfoundland and Labrador would have had 3,200 MW available to either use, to export, or some combination thereof. Newfoundland and Labrador would also have provided energy security well into the twenty-fi rst century and access to 800 MW of power at 3 mills/KWH. This would have granted the province competitive energy rates in terms of the Canadian average and the province would have secured a $12 billion asset which would have generated income and employment into the subsequent century. The deal also included an escalation clause and stipulated that Hydro-Quebec would pay approximately between 73-74 mills for the energy. Additionally, the project would involve the Lower Churchill Development Corporation and the province served to receive upwards of $14 billion through its 51 per cent share in the company. This amount could have been increased if the province decided to buy out Ottawa's 49 per cent share. The deal was projected to be of far greater value than the Hibernia Project. In terms of personal income benefits it was expected, by 2001 to have yielded $2.7 billion in terms of personal income benefits as opposed to $2.1 billion for Hibernia and $710 million in gross government revenue as opposed to $610 million for Hibernia. (Briefing to cabinet, December 1991, cited as footnote 100, page 55.)

Annoying INCO?

Danny Williams said publicly that INCO and the striking union should go back to the table and see if they can settle their differences...

which is exactly - as in word for word exactly - what NOIA told Danny to do with the Hebron thing.

Two questions:

1. Should the president of INCO tell Danny to piss off because he is annoying?

After all, that's what Danny told NOIA to do.

2. Why is Danny treating INCO - and its supposed steal of a development deal differently from ExxonMobil?

Peace in Middle East at hand

Heading into a Liberal caucus meeting on Friday, Quebec premier Jean Charest called for a cease fire in southern Lebanon today, saying his position is "similar" to that of the G8 group of countries.

How nice.

I am sure the Israelis and Hezbollah will cave in to that pressure.

Paul Wells' take on the recent Premiers' meeting in St. John's couldn't have been more accurate.

What's next?

Danny Williams hops a plane to Jerusalem to see if his expert negotiating skills can work where everyone else has failed?

Bernard Lord promises to make Middle East peace an election issue in New Brunswick?

Ralph Klein delays opening the Alberta legislature so he can go fishing with the Israeli prime minister?

Provincial legislators lease office space from themselves

The Telegram is reporting today a story originally covered by The Independent, that some members of the House of Assembly operate offices in their constituency from buildings they own.

The Telly version is considerably better detailed.

Ed Joyce (Lib. - Bay of Islands) and Kelvin Parsons (Lib. - Burgeo-La Poile) own the rental properties in which their offices. According to the Telegram story, both charge $350 per month to their House of Assembly accounts as rent on the office space.

When contacted by the Telegram, both MHAs noted that the price they charge government is less than they were charging previous tenents. Both were also quick to point out that they were within the rules established by the Assembly's Internal Economy Commission. Both also claimed to have written permission from Clerk of the House to rent their own property to themselves and bill the cost to the House.

With all due respect the savings - if any - are irrelevent. Both members of the legislature are personally benefitting from public money. The decision on which space to lease was made solely by the legislators themselves.

It's about as clear-cut a case of conflict of interest as one can get.

As for the rest of their excuses, both Joyce and Parsons point to the need for a public inquiry into the entire House of Assembly mess. The legislators themselves set up rules both on constituency allowances and the management of the House accoutns that allowed this sort of conflict of interest to take place over several years. The same group - the Internal Economy Commission - also set up the system that allegedly allowed for the missappropriation and misspending of over $4.0 million between 1999 and 2006.

The current review by Chief Justice Derek Green will propose new rules, but without a more detailed - and entirely public - examination, Green's recommendations will likely have the value of the sensible rules proposed in 1989 by former MUN president Dr. M.O. Morgan and followed until June 1996.

Green's review will be conducted entirely behind closed doors and has no mandate to delve into the previous misspending. In June 1996, the House of Assembly's internal management board voted to change the way constituency accounts were handled and in 1999/2000 changed other rules which the members knew or ought to have known would leave the Assembly's accounts rife for the sort of abuse that has recently come to light.

Politically, a public inquiry would be unpalatable to the Williams administration: in addition to the former Liberal government member's of the IEC would be examined, two current and one former senior minister in the current administration would also likely be examined on their decisions.

Deputy Premier Tom Rideout, finance minister Loyola Sullivan and former House leader Ed byrne sat on the IEC during the period after 1999 when crucial decisions were taken and much of the alleged abuse occured.

At least half of the alleged misspending/misappropriation took place after April 2004. When the scandal broke in June, Premier Danny Williams and other senior officials maintained that administrative changes made in the House of Assembly in April 2004 would make it difficult for abuse to occur after that date. Having agreed with those comments initially, subsequent reports by the Auditor General revealed sizeable financial irregularities occured up to at least December 2005.

Only a public inquiry will have the necessary legal powers to root out the truth of what has been going on with public money for the past decade.

Everything else is obfuscation.

Shameless fan-ism second installment

Yes, you've read it here before.

It's true.

I am a fan of Lynda Calvert (left).

And we are overdue for the annual "It's nice to have Lynda anchoring the local news" post.


and it is great to have her back, even if it is just another summer fill-in job while the regular anchor takes a vacation.

Just like it's great to have someone other than Karl Wells doing the weather. As solid as Karl is, the guy has just grown kinda dull in the job. His replacement created a buzz because she is funky and unconventional in her approach. Once she got over a few distracting visual tics - like the need to bend at the knees when she moved her arms - her delivery got better.

There's a tendency in news anchoring to stick with the tried and true. With its new format, though, the revamped Here and Now supperhour news can mix things up a bit in the search for a format and content that draws more viewers.

Let's consider some shake-ups, like leaving Kris in weather and sending Karl off to do quirkier, human interest stories. The guy is probably crying for a break after centuries of pointing at the bloody blue screen.

Sometimes a change is as good as a rest.

Williams' Hebron folly more plain

While The Telegram editorial today softpedals the issue, let's make it clear:

By rejecting the Hebron development last spring, Premier Danny Williams gambled with a major public policy issue and lost.

Badly.

Predictably.

Williams gave up upwards of $10 billion in oil royalties, plus considerably more in related construction and job benefits because the deal didn't include his last-minute add-on of an "equity position" that he valued at a mere $1.5 billion over the life of the Hebron project.

Williams has never explained what was so important about the "equity position".

The United States Senate voted on Tuesday to open 8.3 million acres of offshore land in the Gulf of Mexico for exploration and development. Reserves in the land parcels are estimated to be 5.8 trillion cubic feet of natural gas and 1.3 billion barrels of oil.

To put that in perspective, the oil reserves are the size of the Hibernia field and more than double the size of Hebron. The gas reserves are more than the total reserves and resources offshore Newfoundland and about two thirds of the total offshore gas when Labrador is included.

A congressional conference committee will now reconcile differences between bills on the offshore lands policies passed separately by the House of Representatives and the Senate.

The Telegram notes that stability - one of the main attractions of the local offshore - has just been undermined by the opening of oil and gas resources in American waters. The Telly-torialist is right.

What they didn't note is that this week's development is further evidence that there are plenty of oil and gas development opportunities around the world and that the Premier's gambit was foolish as a consequence. The Telly also didn't admit that this same point was made previously by the Globe and Mail in articles and editorials the Telly criticized previously.

There are two consequences for Newfoundland and Labrador from this week's developments in the United States.

If - and that is a big if - Williams could theoretically re-start negotiations on Hebron, he will have to give up considerable revenues or forego considerable guaranteed local benefits to make Hebron attractive. The Gulf of Mexico is a well-established area and with its considerable infrastructure, any discoveries in the new parcels can be brought on line far more quickly and at much lower cost than anything offshore Newfoundland and Labrador. They are also far closer to refining and to markets.

If Williams could even get ExxonMobil to return his telephone calls any time soon, getting $10 billion in royalties and thousands of jobs for a mere $500 million in short-term tax concessions will seem like a fantasy.

The other consequence, a far more likely consequence, is that interest in the Newfoundland and Labrador offshore will diminish significantly for the remainder of Williams' tenure as Premier. The oil companies have better plays than Newfoundland and Labrador. Even if Williams lives up to his promise (threat?) to stay in office longer than Joe Smallwood, the oil companies won't be expressing too much interest in Newfoundland and Labrador.

Williams can't develop the resources himself because even if by some miracle he persuades Steve Harper to hand him the legal hammer to beat a field into production, Williams lacks the cash to go-it-alone through the newly minted Hydra oil and gas, hydro electricity and everything else under the sun corporation. Middle-eastern money or Asian money wouldn't change that situation much either, since those investors all have better plays elsewhere.

It's painful to be pessimistic about offshore oil and gas that only a few short months ago was finally becoming the cash cow it had been so long been heralded as being.

But now, after a few rash decisions, the oil and gas industry in the province in well and truly in the slings.

Premier Williams may like to talk tough and puff up his chest when talking of taking big risks.

Perhaps he would do well to remember that he is taking risks with our money, public money.

Perhaps we would do well to remember the same when he comes courting our votes next year. After all, if we want to know who is ultimately responsible for the state our province is in, we need only look in the mirror.

Worth the cash: Paul Wells on the Premier's meeting

It's been a while since Paul Wells' columns at Macleans gained a link from here.

Long overdue sez many and I'd agree.

So here's a link to his most recent online column (at macleans.ca) in which Paul points out that the Premiers' recent meeting in St. John's was a dismal failure.

Oh no. I fear I have fallen into the mocking tone that sometimes provokes a letter of rebuke from Benoit Pelletier, the Quebec intergovernmental-affairs minister, who plays the same role in the Council of the Federation that the former Cardinal Ratzinger once played in the Vatican: stern-eyed guardian of doctrine and lecturer of apostates. How could you take glee from the provinces' hardship? How does Canada benefit when the provinces lose? Doo-dah, doo-dah. But in fact, the provinces, understood as places where Canadians live and consent to be governed, are fine. Eight of them are in budget surplus. All enjoy near-record low interest rates and unemployment. It's the "provinces" -- understood as jumped-up satrapies whose potentates get to tell the governments of Brazil and China how to trade, as a break from telling the government of Canada how to budget -- that had a bad couple of days in St. John's.

Good thing Paul didn't say something about Danny. Then it wouldn't be an ersatz Ratzinger sending e-mails.

Nope.

The Premier's personal publicist might pick up the phone or, if the slight was grievous enough, the thin-skinned Prem himself would give you a ring.

It's another thing Danny picked up from Brian one day when they were playing golf together.

There'd be no chance of spoofing one of those calls.

Nosirreee.

BTW, speaking of spoofing e-mails: if any one of the eighty people or so who got e-mails purportedly from the Premier's e-mail address actually thought that an address saying "premier@gov.nl.ca" was the real thing, then none of those 80 people ever got an e-mail from the real account. Apparently, they also completely missed that the content defamed the Premier hisself.

lookit, people. A spoof has to mimic not merely the address of the sender but the content typically sent from that address. A real spoof is one of those supposedly from your bank or eBay asking for your account number and password. People get fooled because they look real.

If people actually though this fake e-mail came from The Danny, then they likely had never seen a real one.

If the computer nerds shut down the e-mail system on the off-chance these were real, then those guys need to re-evaluate the security system of the government computers.

Seriously.

The shareware obviously ain't cutting it.

But I digress.

As for Paul Wells, when all is done, head over to Inkless Wells, Paul's blog. It is - as usual - an eclectic mix of comments on everything from failing printers to Iggy the erstwhile Liberal leader to a devastating - but brief - review of the Miami Vice movie.

Biting. Funny. Worldly. Thoughtful.

Paul Wells.

What every blogger wants to be when they grow up.

Canadians in Afghanistan

Via youtube.com comes this video of Canadians in action in Afghanistan.

According to the title plate, the video was shot by Canadian Force Combat Camera 8-9 July about 25 km west of Kandahar. The segment opens with a short clip of junior officers or senior non-commissioned officers discussing the operation. At one point, one of the soldiers refers to "niner", radio short-hand for the boss.

You can find other Canadian Forces still and video imagery from operations at the combnat camera website.