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Saturday, 1 December 2012

The PM to Dunderdale: Take It or Leave It

Just as I was beginning to think that, during my 27 year absence from politics, the Feds had become tabby cats, lovingly lavishing a $6 billion guarantee upon a Newfoundland and Labrador sponsored project, I was jolted back into reality.  Absolutely nothing about Ottawa has changed!

The hoopla, over the PM's visit to Goose Bay, won't last until Monday's Question Period.

I waited until the wheels of the PM’s plane had left the tarmac and Tweeted a few words over Muskrat, to an old Tory and skilful Ottawa man, Tim Powers; then, I settled in to examine the entrails of what Harper had dropped on Dunderdale.  Soon, I started to laugh; I laughed some more, then I felt sad!  I was sad for Dunderdale, for getting herself into such a fix, but sad, mostly for this Province.
The Deal was exactly what I was warned to expect.

Media types, CBC’s Cochrane and NTV’s Mike Connors had been Tweeting all over themselves, Thursday night, trying to confirm the rumour.  Was the Press Conference going ahead or not? Dunderdale didn’t know, her staff didn’t know; but, strangely, Ottawa knew. 

I know that if, at 9:30 PM the night before the Event, the Premier is unaware that the Prime Minister is joining her in Goose Bay, she is either fibbing or she has been handed an ultimatum she abhors. It’s take it or leave it time. She has been cornered. The deal is bad. 

Of course, she has done it to herself and she knows it!

This is in a different league than being embarrassed by missing the “shale gas revolution”.  Having to watch the PM confirm for her, and none too subtly, in front of the whole Province and the whole Country, the importance of independent review (Nova Scotia’s), must have hurt.
CBC’s Cochrane noted, what the Premier’s body language suggested; she was truly unaware that the Event was already planned.  Dunderdale, having failed to deliver a single seat for Harper in the last General Election (a certain flying outfit in Goose Bay is taking credit for Penashue’s seat), and having waited two years for a multi-billion dollar guarantee to drop out of Ottawa, at the eleventh hour to meet Nalcor’s sanction schedule, she is offered an unpalatable choice.  With the PM’s ultimatum in hand and with only minutes before he is about to retire for the night, she makes another, in a long list, of bad decisions.  She accepts.

Television emphasizes a lot about a person and not just your weight.  If I saw anything on the 6:00 o’clock news on Friday evening, I saw an unhappy Kathy Dunderdale; she wasn’t into the Press Conference. The body language that Cochrane spoke of, suggested a Premier, who felt shafted.
Now, you will remember the original Term Sheet of the Federal Loan Guarantee. It held certain requirements about data, a letter from a bond rating Agency, etc.  Questioned, the PM noted that the Feds had looked at it and dropped the requirement. Did they look for, but could not get, such a letter of endorsement?

There was one critical condition that the Feds would not overlook -- the transmission link to Nova Scotia.  The Loan Guarantee was conditional on Muskrat Falls having a ‘regional’ context.  The UARB, the equivalent of our PUB in NS, announced earlier this year, that hearings would not be scheduled for the Muskrat Falls Project until 2013!  
The Feds insistence that, without a signed up Nova Scotia Link, there would be no Loan Guarantee was a tough blow. Dunderdale and everyone else knew it.     

Following the signing ceremony between Nalcor and Emera, last July, the Premier of Nova Scotia, Darrell Dexter, was heard to say Nova Scotia was now “in the driver’s seat” when it came to energy; he would  be able to play one source off against the other, (including NL vs Hydro Quebec).
Harper’s announcement, in Goose Bay, affirmed Premier Dexter’s view and what other watchers knew. Not just the Nova Scotia ratepayer but, Emera too, are now “in the driver’s seat”.  Let me spell it out.

If Dunderdale sanctions Muskrat, now, she proceeds completely at Newfoundland and Labrador’s risk:

1.      Without a fully effective and operating federal loan guarantee, NL cannot borrow billions for the project.

2.      If the Dunderdale Administration tries to use their depleted $2.0 to 1.7 billion Slush fund and/or raid the current account for Muskrat, rather than wait for the NS UARB and Emera , the rating agencies will be all over them.  The Feds will have a way out even if Emera wants to come in.  WHERE is the letter from the rating agency?  It is a question that demands an answer. It is not a side issue. The agency is the first non-governmental financial analysis of the Project.

3.      If NL proceeds, the Province will be into the Project by several billion dollars before NS makes any decision.

4.      The Head of Emera, Chris Huskilson, informed the NS Legislature’s Committee on Resources, that “he won’t accept paying 14, 15, or 16 cents a kilowatt hour for Muskrat Falls hydroelectricity”. He added: “Well, that won’t make it. That kind of number won’t make it.” If Muskrat power via Emera, at 14 cents per KWh, was too high in 2011, it may be time to note that DG-3 numbers increased the MF Project by 24%; it is safe to assume that the NS Link increased by a similar amount. Likely, the NS ratepayer is looking at the higher figure of 16 cents.

5.      Enter Hydro Quebec!  My friends in Nova Scotia, we have a deal for you.

Whether it was witting or not, the PM delivered to Ms. Dunderdale, much less a Loan Guarantee, than a clear and unmistakable message.  It is this: you, Ms. Dunderdale may choose to flaunt the democratic process, but I, will respect the longer history of democratic practice, in the Province of Nova Scotia and in the rest of Canada.  
But, that is not all.  The PM’s message displayed the skilful hand of Nova Scotia’s powerful Federal Minister, Peter McKay.  Always beware, the Puppeteer!

For over a year, Ottawa, and especially McKay, has watched the Muskrat saga play out in this Province and the Premier paint herself into a corner. With half a billion dollars already into the Project and possibly many millions more committed, Premier Dunderdale has hardly kept her cards close to her vest.  Smart and wily, the Nova Scotia Minister knew when to make his move. He has unmistakably put Dexter in the “driver’s seat”.
A tough spot, indeed.  For NL, for Dunderdale, not for Nova Scotia.

I am not fond of a NL Premier going, cap in hand, to anyone.  We have seen this script before.  Given Premier Dunderdale’s decision to go to Goose Bay, at all, is a confirmation that the bankruptcy Trustee will have long arrived before this woman knows she is broke.
All eyes on the Nova Scotia PUB.