Thursday, 27 February 2020

UNDERSTANDING THE BALL-O’REGAN RESTRUCTURING PLAN

Guest Post by David Vardy
Former CFO Derrick Sturge told the Muskrat Falls Inquiry the project and its financing were “rock solid”. CEO Stan Marshall told us two years ago the project would “finish strong”.
Premier Dwight Ball promised “Newfoundlanders and Labradorians that they will not bear the burden of higher electricity rates or taxes as a result of Muskrat Falls. We will deliver on that promise.”

On February 25, 2020 Nalcor CEO held a press conference and took questions from the media confirming the delays which had already become well known. He did not provide a cost update on the project, which appears likely to exceed the official 2017 estimate of $12.7 billion. He repeated the statement that Nalcor would “finish strong”.

Monday, 24 February 2020

RATE MITIGATION AND OTHER DELUSIONS

Guest Post by Ron Penney
We are faced with two big problems, either one of which would be difficult, if not impossible, to resolve. 

The first is the fiscal situation. 

The Auditor General, in her most recent presentation, set out again our perilous financial situation. By almost any measure we have the worst fiscal metrics compared to the other provinces, despite having the highest per capital revenues in the country. 

 Expenses have gone up 33% over the last ten years. Over the same period revenues decreased by 9%. Over the past 7 years we have had a cumulative deficit of $6.4 billion.  

We have the highest per capita expenditures in the country by a large margin. 

Tuesday, 18 February 2020

DWIGHT BALL MOVES ON. GODSPEED. GODDAMN.

When political leaders step aside, expectations of them, however fanciful, are withdrawn; civility requires us to wish all, including Dwight Ball, godspeed. But while some leaders are quickly given the peace they seek, others warrant the lament popularized in the now famous lyric by Ron Hynes: “Godspeed. Goddamn.”

It wasn’t as if this Premier rose to the status of First Minister on a wave of expectation. He didn’t defeat a leviathan in Paul Davis. The public just needed to rid themselves of a godawful government in a province where good governance is a rarity. The new broom had represented at least the possibility of hope.  

Monday, 17 February 2020

FINDING AN ENDURING FIX FOR MUSKRAT FALLS

Guest Post by David Vardy
Two major events signal the rising tension among the people of this province, fearful of their future. Since 2016 we have had 11 quarters in which the population has declined continuously, from 530,000 to 522,000. This is a measure of the angst over our serious fiscal plight and the prospects of dramatically higher power rates.  

The two events were the release of the final PUB report on rate mitigation and the second was the press conference by the Premier and Natural Resources Canada Minister Seamus O’Regan on negotiations toward rate mitigation. Both events focused on the return on shareholder equity. The PUB recommended that the province forgive payment of dividends on provincial equity. The joint press conference latched onto that option as a cure for Muskrat Falls, namely the writing off of dividends and financial restructuring.

Thursday, 13 February 2020

PREMIER’S MITIGATION PLAN A BRAZEN "SNOW JOB"

Preamble
A long time ago, I heard someone say: never argue with the logic of a dreamer. The implicit warning is that there is no answer to nonsense. 

“Dreamer” can have many connotations; the reader likely needs no instruction on context. Danny Williams and Ed Martin talked up the promise of dividends from the Muskrat Falls Project even as costs sky-rocketed. Many rightly called it “Voodoo Economics”. Even then, others used it as an argument in favour of project sanction, all the while failing to understand that they had to pay those “dividends”. While Martin stuck to this line, most Muskrat watchers assumed that, as silly as it seemed, he, and his political boosters, were just trying to retain some dignity having made a series of horribly bad judgments. Not surprisingly, I was shocked when Ed Martin actually made a case for why those cost overruns were beneficial in his final submission to the Muskrat Falls Inquiry.  

Monday, 10 February 2020

RATE MITIGATION: PUB OFFERS NO MAGIC SOLUTIONS

On Friday the PUB sent its final Report on the Rate Mitigation Reference to the Ball Administration which it promptly released to the public. It would be nice to report that the PUB has contrived a magical solution to this enormous challenge, but there is no such good news. The Report, itself, is a bit of a disappointment though not because it contains no magic or that it offers limited solutions. It simply misses an opportunity to give certainty and clarity to the precise dimensions of the mitigation problem, fails to give Nalcor its proper berth, and fails to offer the Ball Government – and the public – advice on a realistic and permanent solution to the worst possible consequence of Danny Williams' legacy project. Obviously, I can be blamed for an excess of expectation.

Monday, 3 February 2020

ELECTRIFICATION: GOOD BUSINESS OR POLITICAL SLEIGHT-OF-HAND?

Guest Post by PlanetNL
PlanetNL28: Electrification – Is it Good Business or Political Sleight-of-Hand?

This blog has detailed time and again how electricity costs are set to roughly double once the Muskrat Falls project goes into operation and the potential social harms that will inevitably occur.  Rate mitigation tactics are promised by thePremier and his Administration but they are bound to be as delayed and poorly delivered as is the Muskrat Falls project itself.  This post examines the Government’s pursuit of converting oil-fired buildings to electric heating.  Growth of electricity is supposed to provide relief to existing ratepayers while getting off oil and lowering emissions is an added bonus – who could argue?  Those who look at the big picture, that’s who.