Thursday, 14 November 2013


If you are selling your house, and you want to be left with your shirt in the bargain, don’t ask the senior people at Nalcor to negotiate on your behalf.  Here's why.
In a ‘normal’ negotiation, if you give something, you expect to receive something in return. The Energy Access Agreement (EAA) between Nalcor and Emera, on the matter of ‘surplus power’, have the rewards going one way.  They aren’t small either.

The original agreement on the Maritime Link, negotiated many months ago, was rejected by the UARB. Why?  Simply put, the Agency said it failed to meet the test of “lowest cost option” for Nova Scotia.  The UARB stated the Agreement was deficient by roughly $1 billion and that deficiency could be satisfied only with a further commitment of virtually all NL’s ‘surplus’ power.

From the perspective of Nalcor, or even of Emera, the original Agreement must have been thought fair; otherwise, no agreement would have been concluded. No suggestion was ever uttered, by anyone including by Emera, that it was coerced. 
The ‘EAA’ has huge implications, for NL, especially given the amount of power involved. The size of the new deal ought to have caused an announcement of some proportion.  If NL received even the tiniest reward (beyond Mass Hub pricing) it would likely have been noted by a Government grasping for victories. 

With the acquiescence of the media the announcement of the ‘EAA’ was a non-event in this Province.  If the NL public drew any conclusion, and that is unlikely, it would have determined that ‘surplus’ power was just that: “surplus”.  We know that anything surplus must have little value, don’t we. 

While that conclusion would be wrong given the size, the 24 year term of Nalcor’s supplemental power commitment and the liabilities to this Province if we fail to deliver, it is even more ludicrous that NL is forced to take a price set by the an auction system designed for the New England States.  ‘Mass Hub’ is a cut throat market into which Quebec and Ontario dump their excess power.
The fact that NL is not connected to that market attracted public indifference as did Nalcor’s legally enforceable commitments. That the Premier referred to it, recently, as a “lucrative” market suggests how far out of touch with reality she really is. This is the same market where, in last week's spot market, electricity was selling for just over 2 cents per KWh.

Perhaps, the media had already assumed Nalcor’s capitulation. Possibly they had no idea what the Agreement contained. 

NTV permitted Ed Martin a minute to sound off, without challenge.  The CBC gave the issue no mention; other media gave the announcement scant attention and no analysis.

Debbie and Jonathan might as well have announced at the opening of the six o’clock news: ‘no time for boring issues today, folks.

News editors need to think about not just what items may be popular but of those that are important.

On the subject of issues and the public interest, could someone confirm whether the Consumer Advocate has a pulse?  

Little wonder Premier Dunderdale and Ed Martin feel emboldened to say little and release less.  Little wonder the NL public is relegated to gleaning information, not from our own PUB, but from the fillings of interveners and others at the Nova Scotia offices of the UARB.

What about the original deal?  Was no one in the ‘blue building’ on Columbus Drive able to advise Emera or the UARB: “a deal is a deal”?  Was no one in Confederation Building able to ring up Ed Martin and ask if we could be left with some dignity?

Had Nalcor cornered itself with Dunderdale’s premature pre-Christmas sanction? 

There are several theories making the rounds on that question.  Obviously, the injury to the NL taxpayer, inherent in the ‘EAA’, was Nalcor inflicted.  As to the motivation, I tend to find inexperience, hubris and self-interest stronger forces than any conspiracy theories.  

For now, consider yourself warned that the ‘EAA’ is the first casualty of premature sanction; but only the first.

It would be easy to say that the UARB are skilful negotiators, that they outsmarted either Emera or the defeated NDP government of Nova Scotia.  Some things are just obvious.

But, when a company sets itself up for failure, as did Nalcor, no one should be surprised when it fails. It is just unfortunate that Government’s incompetence and a disinterested media, protects them from the public lash.

Just a few days ago, on November 7, 2013 MPA Morrison Park Advisors Inc., a Consultancy employed by the UARB to advise it on the EAA submitted its Report.  This is its conclusion:

The provisions related to the cumulative amount of energy over the life of the Agreement provide further protection to Nova Scotia ratepayers, giving substance to the representations about the benefits of the Maritime Link originally argued before the Board. Further, it is our view that the Agreement does not impose additional costs on Nova Scotia ratepayers that were not already evident in the Maritime Link transaction, nor does it otherwise detract from the proposed Maritime Link project originally proposed to the NSUARB. (Emphasis added)

The deal won’t cost Nova an additional cent of capital investment, no concern of cost overruns and no additional risk.

Within a couple of weeks the NS UARB will continue to assess NL’s generosity and whether it is will suffice to approve the Maritime Link.

Over here, few people have any idea of the extent to which Nalcor has extended our obligations.  They have hardly a clue as to how deeply Ed Martin and Kathy Dunderdale have dipped in to our collective pocketbooks!

I bet Nova Scotia does.