31 August 2010

Bury my lede at Muskrat Falls

The Proponent [NALCOR Energy] has failed to justify the Project in energy and economic terms and has not provided an assessment of greenhouse gas (GHG) emission reduction in possible export markets as required in the detailed criteria provided in the EIS Guidelines.

You can find that statement as an attachment to a letter, dated January 26, 2010,  from the joint review panel appointed to conduct the environmental review of the Lower Churchill project.

The attachment lists, in painful detail, the areas of the NALCOR submissions to date that come up so short that the panel could not commence full public hearings.

But just look at those words:  “failed to justify”. They tell you, in the clearest way possible, why the Lower Churchill project is on hold. That’s something premier Danny Williams didn’t admit, incidentally until May 2010, but it is true.

NACLOR failed to justify the project on energy or economic grounds.

And those deficiencies are the reason the provincial cabinet is not even close to giving the thumbs up to start construction.

Forget the Premier’s claims about Hydro-Quebec. They are simply a diversion, a smokescreen. They are, as noted here many times, a complete nonsense given all that is in the public domain and the Premier’s own comments in April 2009.

As a result of that letter from the joint review panel, NALCOR spent another eight months pulling together more information in an effort to meet the review panel requirements.  NALCOR submitted the information to the joint review panel on August 9 and the panel began distributing the information to interested parties for comment on August 12.

Interestingly, that’s the same day Premier Danny Williams held a surprise news conference to accuse the Government of Quebec of interfering in a funding request to Ottawa for a project that, as the public subsequently learned doesn’t actually exist. As it turns out, a power line between Nova Scotia and the island of Newfoundland is merely a hypothetical project that depends on construction of the Lower Churchill. Still, the local media dutifully reported his claims without question and the story went national just like a spark touched to dry embers in the hot, dry woods of a central Canadian summer.

Sheer bunk though, all the same.

You’ll also find that quote from the environmental panel in a Telegram news story, dated Saturday August 21*, under the headline “Nalcor weighs risk and reward”. The article starts out with this line:

The province’s energy corporation has laid out a possible development scenario for the Lower Churchill.

That isn’t news, by the way, even though the most important idea is supposed to go right at the start of a news story.  The development scenario and the rest of the stuff at the front and in the middle of the article is exactly the same stuff that’s been talked about by NALCOR and its predecessor dating back to the 1990s.  It’s the development scenario laid out in the original environmental submission this time around. The complete document record of the review is available online.

You have to read all the way to the end of the Telegram article, though, to find any reference to the environmental panel’s January decision.  And even then the fact the panel told NALCOR their work was fundamentally lacking is presented as if it were merely the innocent stimulus to further action by glorious team at NALCOR:

Timelines associated with the joint federal-provincial environmental assessment panel have dragged on longer than expected.

The panel said Nalcor’s previous filings were lacking.

A pesky inconvenience at worst.

But as a result of this little setback, NALCOR did all this wonderful work, which the Telegram has now told us all about.  Now the panel will “now assess those filings before deciding how to proceed.”

Yay, NALCOR.

In the news business, they call it burying the lede.  That’s a news story that starts out with secondary information and puts the main point farther down the piece.  News stories are usually written with the most important thing at the top and the least important information at the bottom.  Some call the style an inverted pyramid because the big part is on top.

The style evolved over time and it has a number of advantages.  People skimming quickly through a newspaper can get the main point of each story by only reading the first sentence or first paragraph.  Editors running the story who are also jammed for space can safely hack off stuff at the end without losing the important information.

What makes this Telegram story stand out is that it doesn’t just bury the news, it puts the kernel of hard news in a place where editors would normally cut.  Not only that, but people may not even read all the way to the end.  And if they only read the first bit, they’d be fooled into believing that everything is hunky dory with the Lower Churchill when – as a matter of fact – it isn’t.

This Telegram story could easily have been written in the provincial government’s communications department.  But it wasn’t.  And that’s where an article like this  gets it’s persuasive impact on readers.

In the marketing world, a favourable news story is worth considerably more than any amount of paid advertising. That’s because the news story comes with the perception that the news is vetted by a reporter and a layer of editors and ultimately the producer or owner. If it is in the paper or on the air, it must be newsworthy and the information in it implicitly comes with a stamp of truthfulness.

Research tends to bear out that perception.  A 2008 Ipsos poll of Canadians reported that 69% of respondents had trust and confidence in conventional Canadian news media to report the news “fully, accurately and fairly”.  A more recent Gallup poll of American audiences suggests that Americans have considerable faith in conventional news media, even if it is lower than Canadian.

The distortion of reality, the burying in a wider sense, isn’t just confined to this sort of writing. You can find it as well in the stuff that doesn’t get reported locally at all, ever. A good example of that more recently was a story in the Toronto Star on energy issues.  It appeared five days before the Telegram puff piece on NALCOR and it goes to one of the major problems with the Lower Churchill project:  a lack of markets.

The massive, state-of-the-art Bécancour cogeneration electricity plant is capable of powering 550,000 homes. At the moment, however, the only action its gas turbines are getting comes from the dehumidifiers that prevent them from rusting out.

Apart from providing steam for an industrial park neighbour, the plant, 150 kilometres northeast of Montreal, sits largely idle, victim of policies and planning in a province overrun with electricity.

Such is the extraordinary electricity surplus in Quebec that several hundred million dollars are being spent and lost each year dealing with the problem, and consumers are footing the bill.

Hydro-Quebec has so much surplus capacity that it can afford to shutter this plant and others.  The company is still building more hydro and wind capacity.  it forecasts a surplus for 2011 that is enough to power 77 billion 100 watt light bulbs for an hour.

Try and think of the last time any one of the conventional local media reported any discussion of the Lower Churchill that did anything but report government pronouncements or reaction to government pronouncements?

Keep trying. 

There might be one or two, but by far they are outweighed with the sort of stuff the Telegram ran in late August burying the news about the Lower Churchill from last January under a mountain of cotton-candy fluff.

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* 2009 average paid circulation for the Saturday Telegram was 40,166 according to the Canadian Newspaper Association.

Transcontinental claims the Telegram reaches 78% of adults in the St. John’s census metropolitan area and 88% of “managers and professionals.”

Updated 0848 to clarify a sentence.

30 August 2010

Corner Brook soldier dies of wounds rec’d in Afghanistan

pinksen Corporal Brian Pinksen, 21, a soldier with Second Battalion, the Royal Newfoundland Regiment, died at a hospital in Germany today of wounds received in Afghanistan.

Corporal Pinksen was wounded eight days ago while on a foot patrol in Nakhonay, a village 18 kilometres southwest of Kandahar.  An improvised explosive device planted by insurgents detonated, wounding Pinksen and another soldier. Both were serving with the battle group centred on 1st Battalion, the Royal Canadian Regiment.

From the Canadian Forces release:

Cpl Pinksen was treated on scene and evacuated by helicopter to the Role 3 Multi-National Medical Facility at Kandahar Airfield then subsequently moved to the Landstuhl Regional Medical Centre in Germany.  He arrived in Ramstein, Germany on 25 August and succumbed to his injuries earlier today at the Landstuhl Regional Medical Center.

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Related:

Math problem: oil production, oil prices and oil royalties

“Back of the envelope calculations”,  a recent Telegram story assured us all, “put royalties for the first three months of the [current] fiscal year on pace with government’s $2.1-billion target.”

But, the Telegram headline says, that’s because “surging production” is offsetting “softer” prices.

Unfortunately, the Telegram didn’t see fit to show us the back of the envelope so no one can tell exactly how they came to that conclusion. It must be a provincial government envelope, though because the numbers don’t quite add up.

As forecast

As it looks,  revenue projections are likely to be on target with the forecast.

The provincial government’s oil royalty is a function of oil prices and production. The Telegram reported  - quite rightly - that the provincial government forecast oil royalties of $2.1 billion based on total production of 90 million barrels and and average price of oil at US$83 a barrel.  The provincial government also allowed the Canadian dollar would be close enough to the American dollar that there wouldn’t be any sizeable windfall from a cheap Canadian dollar.

The Telegram also reported that oil production is on track to come in around 101 million barrels.  The offshore regulatory board’s actual figures for the first four months of 2010 (April to August) show oil on track to hit 99 million barrels. Still, that’s 10% above the government’s spring forecast.

As for crude oil prices, they have not averaged US$83.  The Telegram puts the average price of Brent crude at US$80 a barrel the week the story appeared. This is where it gets interesting.

For the first four months of the current fiscal year, Brent crude has averaged US$77.71 a barrel. That’s about six percent below forecast.  If you take out the April average of $84.98 – because it is the only month averaging above $80 dollars this year – you get an average price about 10% below the government’s forecast average.

With production above and price below, the one pretty much cancels out the other.

No surge

Production isn’t actually surging, though.  In fact, production at about 100 million barrels is only slightly above last year’s production total of around 97 million barrels. As for price, there’s no surge there either.  The average currently showing in 2010  - including April - is only about a dollar above the 2009 fiscal year average.

In other words, everything is tracking to bring in the same average price and the same yearly production as 2009. The provincial government forecast an increase in royalties to $2.1 billion from $1.8 billion. 

All three fields should be in payout and according to the pre-2003 royalty deals, that means they’d be paying more to the provincial treasury.  Hibernia didn’t hit payout until June last year, so it appears the extra cash is solely the result of having the big field paying higher royalties for a whole year instead of just part of it.

That means that the slightly higher royalties are coming from old development deals, not from something happening to oil prices and production.

Still on track for another big cash deficit

And what does that mean for the provincial budget? if you relied only on the  Telegram story you might be fooled into believing that the provincial government might balance its books this year.  It might do so using accrual accounting, but there won’t likely be a balanced budget on a cash basis.

In fact, the current fiscal year looks a lot like the last one, including the fact everything is on track for another whopper of a cash shortfall.

For some unfathomable reason, the Telegram decided you didn’t need to know that the provincial government’s budget forecasts a cash deficit of nearly a billion dollars. Nor did they mention that last year the provincial government had a cash deficit of about $500 million. 

Instead, they left you with the Pollyanna-ish view that everything is looking great.

Maybe it is, but one thing is for sure:  it has nothing to do with “surging” oil production or “soft” oil prices.

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29 August 2010

Second escape from police, accused faces two sexual interference charges

A man who escaped police custody on the Burin Peninsula for the second time in two years is facing two charges of sexual interference and two charges of breaching probation orders.

The Provincial Court docket for Grand Bank shows that Andrew Kenneth Parsons is due back in court on Wednesday, September 1, 2010 for election and/or plea.  Parsons was remanded in custody last week.

But he won’t make that court date unless police can get him back in custody.

There’s no word on how Parsons managed to escape. This is the second time in as many years that Parsons did a runner from the Royal Canadian Mounted Police detachment in Marystown.

Media reports on the escape don’t give any indication of why police had Parsons in the nick. The Telegram quotes unnamed police sources as saying that Parsons is scheduled to appear on “a number of serious criminal offences.”

Nor do the local media reports have much else to say beyond giving Parsons’ physical description.

According to vocm.com, police said that Andrew Parsons is “not a threat to the public.” 

The Telly appears to have also gotten the same line on safety from police:

Parsons is not considered dangerous but the police said because of the nature of his charges, “there is a definite need for public concern.”

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Update:  Kudos to Glen Payette of CBC’s Here and Now for adding way more details to this story on a whole bunch of levels.  CBC Radio Noon got the details of the escape by interviewing the CBC division media relations officer.  Payette did the same thing, but he also added the guy’s crim record and – for the first time today – someone other than your humble e-scribbler reported what the guy’s been charged with.

A big part of this story, though, has been the bizarre approach B Division took to this escape and the news release.  For some unknown reason, they refused to say what the guy was charged with. 

CBC Radio Noon host Ramona Deering started the interview with the straightforward question of why the guy was in custody.  Media relations officer Staff Sergeant Boyd Merrill ducked the question referring only to the guy having been remanded in custody pending another court date on charges Merrill obviously wasn’t going to talk about.

Maybe they are sensitive about the escape.

Okay.

Well, if that’s the case, then the little darlings can get over that one pretty quick.  If you are going to traipse through the words looking for marijuana plants in some grow-op near St. John’s then you can suck it up and talk about a more embarrassing moment.

Sound media relations practice for organizations like the police is built on simple ‘just the facts’ story telling using – we can only hope – plain English instead of CopSpeak.   Ducking obvious questions or dancing around issues that are apparently quite simple (even if a wee bit embarrassing) just aren’t part of a good MR practice. 

And hey, reporting every possible tip or lead as if each was credible doesn’t balance out the credibility ledger.  At some point, people will start to wonder whether or not this guy is doing a third-rate send up of the Scarlet Pimpernel:  “They seek him here.  They seek him there.”

Statoil explores renewables

Norwegian energy company Statoil is expanding its interest in renewable energy.

The company plans to develop the world’s first floating offshore wind farm.  Possible sites include one off Maine, two off Scotland or another off Norway.

Statoil has other offshore wind farms already in development.

Meanwhile, in Newfoundland and Labrador, the provincial government is focusing its energy future on eventually developing a $15.5 billion hydroelectric megaproject.  According to the 2007 energy policy, everything else is on hold until the future of the Lower Churchill wet dream is settled.

Unfortunately, the future of the Lower Churchill, a.k.a. the Great White Whale, is also up in the air indefinitely.

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Maine’s energy future

Maine Governor John Baldacci can easily list off the elements of his state’s energy future.

“This year Maine signed a Memorandum of Understanding on tidal energy with Premier Dexter of Nova Scotia, on offshore energy research. There is a huge development in Eastport with the Portland-based Ocean Renewable Power Company. We can learn from each other and share our experiences with each other.

“We are working collectively as a region. It’s important that we are in sync, especially with the issues surrounding Hydro-Québec and New Brunswick’s nuclear plans.

Newfoundland and Labrador didn’t make the cut.

Wonder why not?

Maybe it has something to do with the current administration’s obsession with a $15.5 billion wet dream for which there are neither markets nor money.  There are plenty of other generation and transmission opportunities, smaller and more financially feasible, even on the island of Newfoundland. 

None will be developed  - including a connection from the island to Nova Scotia – unless it involves the Great White What of the Lower Churchill.

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28 August 2010

Danny Williams and the National Post: Fact Check

No surprise Danny’s miffed at the National Post. 

Nor is it any surprise that the most thin-skinned person on the planet  - short of someone actually without an epidermis at all - claims that it isn’t about him.

And it’s really absolutely not the least bit of a shock that between the two of them -Danny Williams and the National Post -  readers will wind up being about as in  touch with reality in Newfoundland and Labrador as people who get everything they know about the universe from Glenn Beck.

Rather than go through the errors and nose-pullers in detail let’s just take the biggest whopper for each of them:

For the Old Man, it would be the contention that “Abitibi operated in our province for 100 years”.

Sure 65% of the province’s population may have trouble with numbers, math, logic and reasoning but few likely would have listed the province’s best-known Rhodes scholar among the innumerate.

Those that did can go to the head of the line.

The Anglo-Newfoundland Development Company opened the Grand Falls paper mill in 1909.  Abitibi started operations in 1912 but not in Newfoundland and Labrador.

This is 2010.

Right off the bat, anyone with that information would know that it is absolutely utterly and totally impossible for a company that is 98 years old to have been in operation more than two years before it existed.

I am my own grandpa indeed.

But then you have to consider that Abitibi didn’t arrive in Newfoundland and Labrador until 1969, a fact noted in some of the AbitibiBowater bankruptcy proceedings and a point that has curiously escaped every single reporter in this province for the 18 months or so the Premier has been saying this complete bit of nonsense.

Even a Rhodes scholar ought to know that 100 is not 41.

As a result of his repeated numerical blunder, one must wonder if Danny actually reads anything laid in front of him, whether his high-priced help are really that incompetent, whether he cares about facts at all, or if what we see here is some combination of all three.

Now for the Post stuff:

Well, the name of the province is Newfoundland and Labrador but that’s really the smallest part of the problem with the Post editorial.

The rest of it is a litany of things that never happened, as Williams easily pointed out.  Most of his comments in reply were just the usual self-serving blather but there’s no denying that the  magnitude of the factual errors in the editorial would stun a herd of the hardest-headed mountain goats in British Columbia.

The easiest thing to do is take the biggest error:  “… time and again, Ottawa graciously bails Mr. Williams out from his blundering anyway.”

The idea that Canadians have paid for all Williams’ blunders is just foolish.

Sure he managed to score a couple of billion extra from the feds in 2005 but for the most part, the major blunders of his administration haven’t cost all taxpayers in the country a penny.

Only provincial taxpayers will bear the load – way more than $130 million – from the expropriation fiasco.  They’ll also be taking their proportionate chunk of the NAFTA settlement as well.

Only the taxpayers in Newfoundland and Labrador will be coping with the huge cash deficits Williams’ administration is racking up.  They’ll be the only ones dealing with the fall-out from a record of wild public spending even his own cabinet ministers agree is unsustainable.

His huge gift to Big Oil  - section 5.1 of the Hebron financial agreement - won’t affect Ottawa a tiny bit even if it makes the provincial government nothing more than a vassal of the oil companies on some issues.

In the end, though, the Post is still the Post.

But word is Danny is looking for a post-politics gig.

Maybe Kory should give him a call.

If the guy can handle a piece of chalk, there’s the makings of a new star in the Reform-based Conservative Party news heavens.

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The Return of the Konavalov

Once more, we play our dangerous game, a game of chess against our old adversary…

Russian hunter-killer submarines are stalking Royal Navy ballistic missile submarines in the North Atlantic.

Royal Navy submariners report the highest number of contacts with Russian submarines since 1987.

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Traffic Drivers: August 23-27 2010

Saludos, my darlings, and you know who you are.

Top post this week is from 2006.

Believe it or not.

  1. Government by Fernando.
  2. VOCM “news” has no source.
  3. AbitibiBowater reaches expropriation settlement.
  4. Mr. Premier, what are you trying to hide?
  5. Lower Churchill costing:  recap.
  6. Bashing your own guys over the head is soooo strategic.
  7. Could nothing be further from the truth?
  8. And the NAFTA/expropriation winner is…?
  9. The old trading federal cash for a deal with Quebec trick.
  10. Good to the last fish.

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Still more orcas and minkes

Via cbc.ca/nl, comes yet more video – the fourth – of orcas hunting minke whales off Newfoundland.

You can find other video in an earlier Bond Papers post.

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27 August 2010

Does Danny have them all cowed?

Craig McInnes of the Vancouver Sun asks a good question – make that a very good question  - about the federal party leaders (Jack, Ig, and Elizabeth) and other provincial premiers:

It's not that surprising that Williams' parochial vision is wildly popular back home on the Rock, given his success in turning Ottawa-bashing into a profitable enterprise. What surprises me is how timid our federal politicians have been in taking him on. Two days after the announcement of the $130-million settlement with AbitibiBowater, none of the leaders of any federal parties and no other premiers have criticized either Williams for getting us into this mess or the federal government for picking up the tab. [Emphasis added]

Does the bull of St. John's have them all completely cowed?

It would certainly seem so.

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Good to the last fish

Two stories this week each highlighted in their own way the ongoing and largely ignored fisheries crisis in Newfoundland and Labrador.

On the one hand, you have a story about a fish plant converting to produce canned whelk – sea snails – for an overseas market. A local fish company will – as the Telegram described it -  “start with between 12-14 positions for four to five weeks with a possibility of future expansion.”

That story made the major media in the province.

The second story was a hearing by a provincial government agency into a request by another local fish company to move one of its processing licenses from one community on the province’s northeast coast to another on the southeast coast.  The plant is only major employer in the northeast coast town. There are no other economic prospects in the area for the plant’s aging, seasonal workforce.

For those who may not be familiar with the fisheries crisis in this province, let us put it as succinctly as possible:  there are fewer and fewer fish in the ocean.  You can see this in the fact that fish plants have now turned from processing  the creatures that swim through the water using their fins and tails to packaging up things like snails and jellyfish.

They call it fishing out the food web.  Humans started at the top with the really big animals.  Over the centuries and with no apparent slackening of blood-lust, they’ve collectively managed to demolish species after species around the globe until the humans now catch the tiny thing those bigger fish used to eat.

Toward the end of his life, the late Jon Lien used to do talks about this sort of thing.  He had a foil packet covered in Japanese or Korean writing stashed under the podium as a prop.  At the right moment in his talk, Lien would hold it up to the audience and ask if anyone knew what was in it.

None did.

Dried jellyfish was the answer, processed by a local plant and shipped off to the East as a snack food.

Yes, friends, we are moments away from a krill fishery.

At the same time, there are still thousands of people in Newfoundland and Labrador trying to squeeze a very meagre living from processing fish for a few weeks a year and then collecting government hand-outs for the rest.  A report delivered to the current administration when it was still young pointed out that the typical fish plant worker made less than $10,000 a year from labour, picking up another $5,000 in employment insurance premiums.

There are still way too many of them – plants and plant workers – for them all to make a decent living from what fish, and now snails, there is to turn into frozen blocks. The only thing that has changed in the better part of a decade since that report is that the workers are finding it harder and harder to collect enough weeks of work to qualify for the EI.

Oh yes, and the prospect of a fish plant adding up to 15 jobs for a month stuffing slimy globs of flesh into tins makes province-wide news as a positive thing.

As it turns out, there is some sort of poetic symbolism in all this.  Around the time that a bunch of West Country merchants backstopped Giovanni Caboto’s explorations five centuries ago, British fishermen were trying to find a new place to wet their lines.  Seems they’d managed to clean out their own grounds and had started to spread farther and farther in search of new species to decimate.

They found such a place in the waters off Newfoundland where the cod were supposedly so plentiful they could be had by lowering a basket over the side of the ship. Now cod are a species declared commercially extinct in 1992 and teetering on the edge of ecological extinction.

Yet still there are people who want to keep fishing them. And jellyfish, slugs and in the not-too-distant future, perhaps sea snot or microbes.

As depressing as it seems, there are solutions. As Elizabeth Kolbert wrote in a  recent review essay in the New Yorker

M.P.A.s [marine protected areas], smart aquaculture, and I.T.Q.s [individual transferable quotas] —these are all worthy proposals that, if instituted on a large enough scale, would probably make a difference.  … it is in “everyone’s interest” to take the steps needed to prevent an ocean-wide slide into slime.

It is indeed.

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26 August 2010

Could nothing be further from the truth?

And it seems like only yesterday  - 2004, in fact - mainlanders could write stuff like this:

He flatly rejects the already swirling speculation about an eventual run for the federal Conservative leadership (although conspiracy theorists will be pleased to hear that he wants to become bilingual).

Then others have him nicknames. They forgot the most appropriate one, by the by.

But then someone notices a curious turn of events since 2008:

Oh, by the way — anyone notice that Danny hasn’t been criticizing Stephen Harper quite so much any more? Gee, I wonder why.

Hmmm. 

Good point.

Maybe it would be good to wonder why.

 

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And the NAFTA/expropriation winner is…

In their offices in the Sun Life Building in the heart of Montreal’s financial quarter, the boys at AbitibiBowater are likely making toasts using the finest single malt scotch they save for just these special business occasions.

There haven’t been too many of them for the managers at the financially troubled company lately but this week, they can crack open the bottle and enjoy themselves.

And while they are at it they can make two toasts.

Their first one should be to Danny Williams. 

Were it not for the Premier’s unshakeable  - and entirely unfounded - belief in his own infallibility, AbitibiBowater could not have achieved its monumental success in Newfoundland and Labrador. 

Not only did Danny Williams’ astonishing business and legal prowess relieve them of the huge liability for environmental cleanup in Newfoundland and Labrador, he voluntarily took their financial liabilities to some of their former employees and handed them all to taxpayers in his own province.

On top of all that, AbitibiBowater will get a nice cheque from the federal government for their troubles. That money will easily cover the minor costs for remediation at the couple of properties they still own in this province and leave pretty much all of Stephen Harper’s $130 million intact.

Sweet. 

And if all that were not good enough, they still get to watch their lawyers humiliate the provincial government in its own courts over those environmental orders cooked up during the NAFTA war. Lay money on judge after judge stuffing the orders up Danny’s nose for as many appeals as he may want to make.

AbitibiBowater could use more enemies like Danny Williams. If he wants to practice corporate law after he retires, AbitibiBowater would hire him in an instant to go to work for their competitors. He’s just that good.  

The other toast would be to the biggest losers in the expropriation, namely the people of Newfoundland and Labrador.  The five hundred odd thousand people of the island – and Labrador -  are stuck with the bill for all this. The environmental messes, the legal bills to Toronto and Montreal firms, the severance and all the rest of it.

But supposedly the raggedy arsed artillery of Newfoundland and Labrador have mighty assets now, according to Danny Williams, to cover those liabilities.  These assets would have been sold to unnamed others had Williams not struck with his expropriation sword.  Of course, he fails to mention that the liabilities go with the assets such that who ever owns them cannot get one without the other. But then again  Williams the Great Lawyer knows this already even if he does not share his knowledge with his clients.

That is really part of Williams’ brilliance as a lawyer, however and why companies like AbitibiBowater will want him to work for their competitors once he leaves politics.  Only a truly amazing talent could shag his own clients so completely and yet have them lust for the rogering like a pubescent suicide bomber eager to get down with the 72 virgins he’s been promised.

Both are in for a rude shock, of course.

But unlike the child-fanatic, the people of Newfoundland and Labrador have a good clue that these very expensive assets are far less valuable than they’ve been made out to be.

One of the three companies interested in the timber – and one very seriously considered for a while – was a bankrupt German paper maker looking for massive government hand-outs.

Another even less appealing prospect wanted to turn prime logs to sawdust in order to make wood pellets out of them. To appreciate just exactly how lame is that idea, one need only realise that wood pellets are most often cited as a way of using the scraps left over from making major wood products like furniture or paper. Anything else is a waste of a very valuable log.

Yet to be tallied into the cost of this expropriation fiasco are the payments the taxpayers in Newfoundland and Labrador will have to make to a bunch of companies who are essentially collateral damage in Danny Williams war against – or is it on behalf of? – AbitibiBowater.

Settling fairly with these companies was a condition of the federal government’s payment to AbitibiBowater, according to Danny Williams. Undoubtedly the rather obvious preferential treatment given to these other companies compared to AbitibiBowater, not to mention Williams’ own comments attacking AbitibiBowater, coloured the expropriation bill to the point where the lawsuit could have cost the federal government much more dearly than the $130 million it did.

As it is, Fortis, ENEL, Clarica, Sun Life Assurance, Mutual Life Assurance, Standard Life Assurance, and Industrial Life Assurance will all be restored to their former financial position, according to the Premier during his scrum with local reporters.  Talks are still going on, but according to the Premier, they will get cash or a power purchase agreement or some other arrangement. Fortis is already getting cash: the provincial government assumed responsibility last year for a $60 million loan Fortis and AbitibiBowater had for their hydroelectric partnership. Keep an eye on those talks.  Their outcome could be most interesting indeed.

Whatever the conventional media may be saying about the latest part of the expropriation saga, the winners and losers are not as they initially appear, nor is the magnitude of the loss yet known.

The saga’s last chapter has yet to be written.

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25 August 2010

Sticks and stones: NAFTA edition

Danny Chavez?

Danny Arafat?

How about the Cuckoo of Corner Brook?

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Bashing your own guys over the head is soooo strategic

An article in the current issue of Embassy magazine examines the European Union’s seal ban and how it is that Canada found itself outmanoeuvred by the anti-hunt movement.

University of Calgary political science professor Donald Barry told Embassy that two things gave the otherwise moribund seal crowd a new lease on life.

One was a hike in quotas that brought the number close enough to a million to give it some propaganda value again.

The other was…

Mr. Barry says another key development was the fierce exchange between Newfoundland Premier Danny Williams and former Beatle Paul McCartney and his then-wife Heather Mills McCartney on CNN's Larry King Live in March 2006. During the show, Mr. Williams alleged, among other things, that the FBI was investigating the International Federation for Animal Welfare and other animal-rights groups for terrorism, and that the McCartneys were being used by the groups.

"The publicity propelled [IFAW] right back into the forefront of the opposition," Mr. Barry says. With IFAW's ability to mobilize support and the Humane Society's strong public relations machine, "you have a series of groups whose strengths complement each other and they're practiced at what they do."

So basically that whole Larry King foolishness turned out to be a gigantic help to the other guys.

And that one trip to Europe did exactly diddly-squat.

Like, no one saw that coming.

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.

Lower Churchill costing: recap

How does $15.5 billion grab you?

Feel any better about $12 billion?

Maybe $11 billion?

Since the subject is back in the public eye yet again, here are some figures  - yet again -  related to the estimated costs for the Lower Churchill project.

1.     Danny Williams’ estimate of costs to build two dams, line to St. John’s and line to Quebec (House of Assembly, May 2010):  $12 billion. Note:  Williams gave a range of $6.0 to $12 billion. 

Based on other information in the public domain, Williams’ estimate of $6.0 billion would be for the dams alone without any transmission infrastructure or for the highly unlikely scenario of one dam and limited transmission infrastructure.  The project description used for these comments is the one contained in NALCOR’s environmental assessment submissions.  It consists of two dams, a line to St. John’s and a tie to Churchill falls and out to Quebec.  There is no plan in public for any connection to Nova Scotia or any other part of the Maritimes.

2.     Cost for two dams, line to St. John’s and connection to Quebec (1998):  $10.5 billion.

3.     NALCOR estimated cost for two dams and line to Quebec (Telegram, August 2010):  $9.5 billion.  Consists of $6.5 billion for two dams and $3.0 billion of transmission facilities.

4.     2009 value of the 1998 project cost estimate, accounting for inflation:  $13.75 billion.

If you accept NALCOR’s current cost estimate for the project – in the Telegram story linked above - you would have to believe that they have been able to negate over a decade of inflation and at the same time further reduce construction costs in a province where government capital works projects routinely go over budget, some by as much as 70%.

Inflation alone would put the 1998 project (that is, essentially the same one NALCOR is proposing) at something around $14 billion.  A line to Nova Scotia would add a minimum of another $1.5 billion to that for a cost of more than $15.5 billion.

5.     Estimated cost of tie to Nova Scotia (Chronicle Herald, Jan 2010 not on line):  $800 million to $1.2 billion.

6.     Estimated cost of tie to Nova Scotia (CBC Here and Now, 24 Aug 2010, not on line):  $1.5 billion.

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24 August 2010

AbitibiBowater reaches expropriation settlement

The Government of Canada and AbitibiBowater announced a settlement today of AbitibiBowater’s NAFTA challenge of the 2008 seizure of its property and assets by the House of Assembly.

There is no word on any settlement with other companies also affected by the seizure. Government seized hydroelectric assets belonging to Fortis and Enel.  Other companies affected by the seizure included Clarica, Sun Life Assurance, Mutual Life Assurance, Standard Life Assurance, and Industrial Life Assurance.

AbitibiBowater initially sought much higher damages in its claim under the North American Free Trade Agreement.

The expropriation will still hit provincial taxpayers in their collective bank accounts. Premier Danny Williams confirmed that in May.

A gigantic legal error in the wording of the expropriation legislation means that the provincial government seized not only assets but also most of AbitibiBowater’s substantial environmental liabilities.

On top of that, the expropriation bill for taxpayers also includes millions spent on futile legal arguments.

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Government of Canada news release:

“The Government of Canada and AbitibiBowater have reached an agreement regarding the expropriation of assets in Newfoundland and Labrador.

“The Government of Canada has agreed to make a payment of $130 million to AbitibiBowater upon the company’s restructuring. This payment represents the fair market value of the company’s expropriated assets.

“AbitibiBowater has agreed to irrevocably and permanently withdraw its claim against Canada.

“The Government of Canada has resolved this dispute for the benefit of Canada’s long-term economic interests. In reaching this agreement, we are avoiding potentially long and costly legal proceedings.

“This approach reaffirms the Government of Canada’s commitment to maintaining a rules-based business environment that facilitates free trade and encourages investment.

“The Government of Canada is moving forward on an ambitious free trade and investment agenda—a cornerstone of Canada’s strong economic position and future growth. We will continue to stand up for Canadian businesses at home and abroad by securing greater access to the North American marketplace.”

- 30 -

Trade Media Relations Office
Foreign Affairs and International Trade Canada
613-996-2000

AbitibiBowater news release:

AbitibiBowater Announces Intention to Withdraw NAFTA Notice of Arbitration - Settlement Agreement Reached with the Government of Canada for C$130 Million

MONTREAL, Aug 24, 2010 /PRNewswire via COMTEX/ --

ABWTQ (OTC)

AbitibiBowater today announced a formal settlement agreement with the Government of Canada with regards to its assets and rights in Newfoundland and Labrador, Canada, expropriated by the provincial government under Bill 75 in December 2008. The Government of Canada will pay AbitibiBowater C$130 million, representing not more than the fair market value of those rights and assets, following the Company's emergence from creditor protection.

As part of the settlement agreement AbitibiBowater will waive its legal actions and claims against the Government of Canada under the North American Free Trade Agreement (NAFTA).

"We believe this is an acceptable settlement for our Company, stakeholders and creditors, given the set of circumstances faced by the Company at this particular time as well as the inherent uncertainty of any judicial process," stated David J. Paterson, President and Chief Executive Officer. "We are now able to move forward and focus on finalizing our restructuring process and plans to emerge from creditor protection in the fall 2010."

"AbitibiBowater would like to thank the Government of Canada for its efforts to reach this settlement and avoid a protracted and expensive NAFTA case. We look forward to continuing our strong working relationships with Canada and contributing to the country's economic, social and sustainable development," concluded Paterson.

The settlement agreement is conditional upon AbitibiBowater obtaining the approval of its terms by the Superior Court of Quebec in the CCAA proceedings and by the U.S. court in the chapter 11 bankruptcy proceedings as well as court approvals in the U.S. and Canada of AbitibiBowater's restructuring plans. Following emergence, the settlement payment will be paid to the new Canadian entity.

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

SOURCE ABITIBIBOWATER INC. - ENGLISH

Mr. Premier, what are you trying to hide?

Opposition leader Danny Williams would have a field day with the Old Man he’s become as Premier.

The younger Danny would be kicking the Old Man’s ass all over the political map.

Take, for instance, the billion dollar secret deal with Nova Scotia he decided not to tell anyone about and that both provincial governments are still not talking about.

The Chronicle Herald managed to find out from NALCOR that the application to a federal funding program is for $375 million. But…

The Dexter government declined to release the amount last week, but Nalcor Energy, Newfoundland’s Crown power utility, did disclose it.

Nancy Watson, spokeswoman for the Energy Department here, confirmed the figure. She said the province wasn’t going to release it because it’s preliminary and the project would eventually be subject to private bids.

She said officials here thought it "more sensible to not talk about things before we had the details in place."

Maybe what they are trying to hide is that this line to Nova Scotia is a lot less than the Old Man tried to make it sound like.

Details not in place.

“Preliminary” cost estimates.

Maybe the whole thing is just a ploy.

Maybe it’s Danny just setting up a pre-emptive excuse when the feds turn down this half-baked, incomplete “preliminary” application.

No matter how you slice it, the whole thing just makes you want to scream at Dex and Danny:

“Mr. Premier, what are you trying to hide?”

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The truth of fiction: may I have the envelope please?

Back of the envelope calculations that don’t add up.

Cabinet ministers who get to make stuff up during interviews and their comments go unchallenged by simple facts and figures in the newspaper story.

All just par for the “news” course in Newfoundland and Labrador these days, apparently, and for the second time in a week, nottawa has laid out some pretty sharp observations on local reporting and the bogus political claims they contain.

In the latest post, nottawa takes apart comments made by finance minister Tom Marshall in a Telegram story on provincial government profits from video lottery terminals:

First, while disposable incomes in Newfoundland & Labrador [sic] rose sharply in 2006, they've declined every year since.* The first year that VLT numbers rose, disposable incomes in this province were actually declining, not increasing. That tends to happen in a recession. Thus if higher disposable incomes were to account for the rise in VLT revenue, surely that rise would have occurred in the very years that Marshall himself reported that VLT revenues were declining. It's completely contradictory.

As for an increase in population, while the province did report a minor population increase in 2009, Newfoundland & Labrador's population has 6,000 fewer souls than it did in 2004-05, the baseline comparator year given by the great numerologist himself in the Telegram story.

The asterisk just directs you to the Statistics Canada data series that show the declines he mentions.

There are a couple of details that nottawa left out.

For starters, the Telegram story refers to a cut in the number of terminals and other changes to game play:

In 2006, the government launched a strategy to reduce the number of VLTs in the province by 15 per cent over five years.

That target has been exceeded. The number is closer to 25 per cent.

In 2007, the province brought in other measures to reduce VLT play.

VLT operating hours were cut to a 12-hour window between noon and midnight. Previously, the hours were 9 a.m. to 2:30 a.m.

The machines were reprogrammed to slow play by 30 per cent. And the stop-button feature was removed from VLTs, further slowing play.

Now on the surface that looks like some kind of anti-gambling move.  Yay, government! That rosy interpretation would be easy if you also heard the news stories about the Premier’s remarks on online gambling and didn’t get anything else but the superficial version of things.

But that conclusion would also be a wee bit off base once you consider the second element.

Take a look at an aspect of the Telegram story that isn’t right there in your face.  Look at the number of machines and the profit and figure out how much each machine that is in service generates for the province’s finance department in profit.  Don’t forget along the way that, as nottawa pointed out, that the lottery corporation knows in intimate detail what action each machine gets.

When you compare the profit and the number of machines, you discover that each machine made an average of $32, 266 in 2004-05.  The profit dipped to $27.761 per machine the next year but then four years later - 2008-09 - the per-machine take is back up to $34,216.  That’s roughly where it was four years earlier.

Fewer machines.

Same profitability.

And from nottawa’s observation about population, you could logically conclude the actual cash take on the machines might well have been the same in 2008 as it was in 2004. Heck, the haul might have even gone down somewhat. 

Fewer machines, same profitability and all in the absence of a huge jump in revenue.

Could it be that the lottery corporation very sensibility reduced its costs in order to improve its profit margins? On the face of it, the cut in machines could do just that.  By getting rid of unprofitable machines or ones with low profitability the lottery corporation would do two things.

First, it would reduce the cost from payments to bar owners, cash payouts on low revenue generators and maintenance.

Second, it would redirect the cash from the less profitable machines to other machines, often in what was essentially the same business establishment.

Poof!  Lower costs would mean increased profitability even if you had exactly the same gross revenue. 

When more people start playing the smaller number of machines or start spending more cash, the profitability climbs even higher.  This might seem like magic to some people, including, apparently, the province’s finance minister.  Remember:  Marshall was taking about factors that would increase revenue, but the figures he gave the telegram were profits.  The two are connected but they aren’t the same thing.  

But really, the lottery corporation apparently just took a sensible business decision when it started to cut back on the number of machines.  The fact that it looked to some like an anti-gambling initiative was a bonus. Two birds.  One stone.  Ya gotta like them apples, or in this case cherries and lemons or whatever it is that VLTs show on their screens.

Now the lottery corporation isn’t likely to give you its gross revenue numbers for the province because that’s a competitive issue.  You can find out what the total profit was for this province in 2008, but when the corporation reports profits in the thousands of millions of dollars – instead of billions – you know that obscuring details are important to the corporation.

Even the 35% of the province’s adult population with adequate numeracy skills would have to think twice about the figure of $1,637 million to figure out how much it is.  They could just as easily have said $1,637 thousand thousand. Still the same number but not exactly the conventional way of saying $1.637 billion, is it?

All that said, though, if you follow the logic, it is compelling.

But it sure isn’t what Tom Marshall was blathering on about or what the Telegram reported.

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