Monday, 30 September 2013

PADDY DALY SPUTTERS CATHY BENNETT’S CAMPAIGN

Actually that title is a slight exaggeration, but one no worse than the pumped up propaganda Cathy Bennett attempted as she got hoist on her petard, by VOCM Backtalk Host Paddy Daly.  She must have been trying to be Kathy Dunderdale, again. 

 The two are ‘cheek to jowl’, on Muskrat; the only difference is that Bennett believes she can explain the Project better. 

My Blog Post, How The Premier Damages Her Own Credibility (Part II) deals with Dunderdale’s wish to supply New England electric power for a fraction of its development cost. 

When no less a personage, than the Premier, advocates that we develop Labrador’s Gull Island, which is larger than Muskrat and reportedly cheaper per KWh, but still well in excess of 20 cents per KWh, and that we should sell it to the Governors for net 3.5 to 4 cents per KWh, you just know we have a problem.  When Bennett uses her soapbox to sell the same message, you know ‘Alice’ must have left the two behind, in Wonderland.
Therefore, I think my last Blog Post does offer a glimpse into the thinking of Kathy Bennett.  It helps prepare you for her interview with Paddy Daly.  Ordinarily, you would dismiss anyone, including Bennett, attempting to engage in silliness. The problem is, this Cathy wants to be Premier, too; monied interests are backing her.

Though Bennett is fond of touting “the Business Case” for Muskrat, it is less than clear that she even understands it.  This is a person formerly a Director of Nalcor and one who voted for the Project. 

If you like Open Line Shows, you know Paddy Daly does a fine job. Though he is not a reporter, he seems to have tired of spokespersons explaining something, as complicated as Muskrat Falls, using incessant and often superfluous generalities.  That Dunderdale, Ed Martin, Bennett and others have gone unchallenged, on details, has been a huge problem from day one; it constitutes, in my view, the greatest failure of reporters, to the citizens of this Province.

But, Paddy Daly was ready for Bennett, who might have expected an easier ride.
_______________________________________

VOCM BACKTALK with Cathy Bennett

_______________________________________
She opened by saying we needed to change the conversation about Muskrat and move on.  Paddy stopped her and asked about all the hurdles Muskrat is facing, including demands for more cheap power from Nova Scotia’s UARB and various legal challenges, including from Quebec.  Bennett suggested using the word “’hurdles’ gives people a false sense of what’s going on” and proceeded to charge that interest groups, opposed to the Project, were “scaremongering”. Daly’s scepticism was obvious.

Bennett moved on, in the interview. She noted the well-worn Nalcor/Dunderdale line that Muskrat Falls is $1.7 billion cheaper than replacing Holyrood.  She forgot that script was prepared before the DG-3 numbers were released; projects costs have since risen. 

Bennett forgot, too, that Muskrat Falls is not cheaper than replacing Holyrood, alone.  Nalcor’s numbers are predicated on expected 50% growth in NL electricity demand.  If that does not materialize, the entire complex business case fails, for Muskrat.

If the 40% of the power that is surplus, is contracted to Nova Scotia under a long term agreement, (and Cathy made it clear more power sales to that Province were a “good thing”) we have big problem. 
As "JM" who has make several contributions to this Blog and to the PUB, on Muskrat, states: “Holyrood will have to stay open to ensure NL’s forecast growth needs are met.  Upper Churchill or Gull Island cannot provide any additional power, without upgrades to the Labrador Island Link.”  

The alternative possibility is that the Nalcor’s growth forecasts are inaccurate, and the power is not needed in NL.  This, too, defeats Muskrat’s business case, as the lowest cost option.

‘Lowest Cost Option’ is a highly dependent catch phrase, invented by the PR folks at Nalcor.  If you use it without understanding all the factors it is supposed to imply, you might get your comeuppance. 

Equally, the $1.7 billion savings that Bennett cites is a “nonsense” number.  That is as nice as I can be.

Paddy challenged Cathy who suggested ‘we had to replace Holyrood regardless of whether we get the Federal Loan guarantee or sell to Emera’.  Daly said ‘if we build the damn and it is cheaper by $1.7 billion you are still saying we have power we can sell to Emera….but we can’t, if the Maritime Link is in jeopardy’.  Paddy told her she couldn’t have it both ways.  

Cathy then noted that the Maritime Link (ML) would provide for an additional 330 MW of power to be sold for export. 

Daly reminded her that if all the surplus power went to NS, with only a 500 MW capacity ML, the Link would be at capacity, that there would be no room for more power, from any source. 
Bennett had another go at the math to defend her position.  Paddy chimed in, again, when her double counting was obviously not working and told her bluntly: “Cathy that is patently not true”! "Yes, but",  Bennett countered: “the agreement with Emera will be over in 35 years, right” (forgetting that Nalcor’s says we need that power earlier) which Paddy ignored but informed her, in reference to the 35 years, that that term was “also the life expectancy of that cable…”). 

Suddenly, Bennett realized her argument didn’t stand up to scrutiny; she stuttered and stammered and said, “well, what are we going to do to replace Holyrood?” to which Paddy replied “are you asking me?”  as she sought the safety of a more secure argument.

She seemed totally unaware of the many options for Holyrood, less risky one too, than a $7.4 billion boondoggle of Muskrat.  But, that wasn’t all.

Bennett proceeded to blame the generator problems at Holyrood, this past winter, on aging equipment. How could she even know that?  A Final Report, on the cause, is schedule to be filed with the PUB only today, September 30th.  

Then she moved on to say Muskrat should not harm seniors and those on fixed incomes.   

Paddy Daly must have had himself tied to his chair at this point.

Nalcor demands that we pay 100% of project costs for Muskrat in return for only 40% of the power.  The Agency also seeks a 8.4% IRR (Internal Rate of Return) plus any revenue associated with the 40% it intends to export. This would bring the rate-of-return into the 12% range or higher.  As "JM" nots, “Muskrat Falls exemplifies the most regressive form of taxation.  It targets everyone with an electrical meter, including those under-privileged and those on fixed incomes.” 

The analyst is right, of course, but, like the Premier, Bennett thinks she is talking to ignorant people. She expects that no one will challenge her rhetoric.  Paddy Daly did. And good on him!  

Now, I suggest Paddy needs to start calling Premier Dunderdale, the Minister of Natural Resources and Ed Martin back to the studio. 

Paddy Daly may not have halted Cathy Bennett's Campaign, but more such challenges will confirm her limited knowledge of the Muskrat Falls Project.  The 'business case' Bennett touts is her own business acumen.  But public life and the job of Premier demand a higher standard.  Kathy Dunderdale is seeing that now, too. 

It may be best that the Liberal Party simply advise Cathy Bennett her services are not required.
At least, they will keep her liability a limited one. 

10 comments:

  1. Well done, Uncle Gnarley and well done yourself Paddy Daly! This Muskrat fiasco is like big bad ass boys pushing a very large boulder down a mountain towards an unsuspecting community. Of course there are no brakes, no safe way of stopping the boulder and the community is devastated. The harm that is done is unrecoverable. When asked later why they pushed the rock down the mountain, not one of the less then brilliant boys could come up with any idea of why they done it. "It was just there, asking to be pushed!" "We did not think it through and it seemed like a good idea at the time!" Asinine!

    ReplyDelete
  2. Good summary. Daly deserves credit for figuring his way through the smoke screens around Muskrat Madness. I was particularly impressed when Daly responded to Bennett who claimed that the ML would be an asset in future even if it lost money now by pointing out that submarine cables only last about 35 years. Daly has been doing his homework.

    ReplyDelete
  3. Assumed 50% demand increase is criminally negligent on Nalcor's part for the justification of Muskrat Falls. Where are the models for various demand projections? CBPP CbC probably won't be operational by 2015, how many MWs does that represent?

    Can this supposed demand use any of the 20,000 GWH of Upper Churchill power in 2041? Any short term energy demand increase will be nullified by the closure of current industrial users.

    Wade Locke in his Harris center presentation stated for every 20% energy cost increase there is a 5% DECREASE. 5000 GWH of utility consumption @ 16.4 cents kWh (current 11 cents residential) is 50% higher therefor demand should drop by 12.5% (625 GWH). MF could easily start out at 22 cents kWh (DG3 #s still unavailable) current demand could plummet 25% under this scenario.

    62GJ or 17,222 kWh is the average consumption in NL households - 16.4 cent rates represent a $930 INCREASE for the same amount of power in 2017.

    NS will charge 1 cent kWh tariff fee for export power - 3.5 - 4 cents is more like 2.5 - 3 cents.

    330MW @ 5 cents $144 million in export sales @ 2.5 cents $72M = $2.5 billion in export sales over the 35 year shelf life of ML combined with Emera's $1.5B is $4.0 billion for 60% of MF rated capacity. $4.0B won't even be 40% of the final MF cost, good luck financing with such paltry PPAs.

    $200 bbl oil(insane projection), replacing Holyrood, getting around Quebec and exponentially increasing demand were the 4 main MF planks.

    Oil currently $108 - to reach NLPCs $125 budged oil @ 2% annual cost increase we will have to wait 8 more years in 2021. With such inaccurate oil forecasting can NL residents trust NNLPCs on a FIFTY year projection?

    Replacing Holyrood with cleaner alternative hasn't been researched very well (if at all) by Muskrat opponents.

    Quebec legal issues aren't some minor pain as CB has suggested: firm power sans WMA isn't even 200MW/824MW - not even enough for the Avalon's demand.

    Business case when from dubious in 2010 to unfathomable in 2013.

    Nalcor has put the future energy demand cart ahead of the current demand horse.

    ReplyDelete
  4. The problem since the beginning is that the power has been sold to emera, while it was ear marked for labrador mining, while it was committed in a PPA to NL's. the bottom line is that it is expensive power that everyone wants, but no one wants to pay for.

    ReplyDelete
  5. Nalcor has had a 50% load growth forecast since Brian Tobin's abortive 1998 deal with HQ, and it certainly wasn't correct then. It would be interesting to compare their forecast against reality, just to see the level of expertise available to them.

    ReplyDelete
  6. AC, yes power demand will drop with price increases, but also drops with conversion to efficient heating systems, look at what New England is achieving at one sixth the cost of MF power. And both of those will hit together, as price of power goes up , more conversions will follow. Winston Adams

    ReplyDelete
  7. I am not going to hold out hope for the efficiency improvements that come from new heating systems: that kind of capital investment will be a harder sell to individual consumers than it will be to the government. What I think will happen is that people will go without electric heat. More wood burning, more rooms with no heaters on, and overall colder homes. Sounds grim but in the UK rising heating bills, regardless of source, have meant colder homes. If you want to see the future, look closer at the past. Watching the Celtic tiger doesn't hurt either. A lot to be learned from their speculative development economic experience....

    ReplyDelete
    Replies
    1. Soot Boots, capital investment for efficiency is a about one fifth of muskrat costs, via rebates to customers that is cost effective from the massive reduction in energy use. This seems socialist, and should be a good fit, and yet the capitalist USA are far ahead of us in doing this. The programs there work and needs awareness here to understand why it is so popular elsewhere. Your comment suggests you don't understand how it works. Without the rebates, you are correct and it is a harder sell. Even Fortis , British Columbia is way ahead on this. Winston Adams

      Delete
    2. I hope it does work here but really don't think we have an invest now, save later mentality. Drive around and look at new homes under construction and you will see vinyl siding going on top of tyvek wrapped OSB. Hardly what I would call energy efficiency. I am willing to bet that as long as electric baseboard heaters are cheap up front any sort of rebate program will not be popular. I hope I am proven wrong and that we can all be persuaded to switch to modern efficient heating systems but possibility does not equate to probability.

      Delete
    3. Soot Boots, I agree that contractors and buyers who plan to flip their house in a few years will avoid efficiency improvements. Codes are now more strict and it depends how well they are enforced. What was a high standard in 1985, a r2000 is now the minimum standard. New house elsewhere are Net Zero, which may be the norm in 30 years, but before this will be efficient heating systems, which will likely be the norm in 10-15 years, but considerable uptake is happening. With this happening in this time frame it will seriously impact MF power need for the island going forward. Note the already slowing of demand and Holyrood production. The economics is about a 7 year payback , and half that if rebates paid 50 percent. Apparently 70 percent of buyers want to consider efficieny options that contractors are not offering.... so the interest is there, and consumers don't realize the high indirect cost of these high capital cost maga projects on their bill. Education and awareness is essential.

      Delete