It does seem
bizarre that critics of the Muskrat Falls Project, in this Province, would look
to outside intervention to defeat an unwise, even foolhardy use of public money. But, when independent assessment is shut down
and essential information denied, the options are scarce.
Now that the
Government has prevailed, it is unlikely that thousands of Newfoundlanders and
Labradorians will pack our version of “Independence Square” (as the citizens of
Ukraine are now doing) to push-back bad policy and to demand the Government’s
resignation.
Regrettably,
most people have no idea the extent to which their Government has entangled
them. But that has all been said before.
The question
is: should Newfoundlanders and Labradorians feel more secure about Muskrat
Falls now that the FLG is in place? The
answer is: they should not.
One analogy
might liken the award of the FLG to giving the NL Government the bullet,
Dunderdale and company already being in possession of the gun. But the comparison is only partially
correct. Nalcor committed at least $1
billion to the Project prior to confirmation of the FLG or even UARB approval.
To be sure,
the FLG would not have been forthcoming without the revised deal with Nova
Scotia. That is when Nalcor, over a barrel,
capitulated upping its commitment from 20% to roughly 50% equivalent power from
Muskrat Falls.
Anyone who
believes that the FLG was related to the election of Peter Penashue or due to
any triumph in Federal/Provincial relations or because our Federal Liberal and
NDP MPs supported the idea of the FLG, ought to seriously seek a reality
“check-up”.
Any observer
of Canadian politics knows that, in the absence of a strong Regional Minister,
few major files get traction in Ottawa.
Even when we are represented by a Regional Minister progress on any
substantial issue is a tough slog, as former NL Regional Ministers John Crosbie
and Brian Tobin can confirm. Muskrat
Falls was never going to happen without the FLG notwithstanding the Premier’s
bluster that she would “go it alone”.
For that
reason Wednesday was really Nova Scotia’s day, not Newfoundland and Labrador’s. The ceremony was held here, but the real celebration
happened in Nova Scotia. It is an irony
that will not be understood, here, for three or four years.
Nova
Scotia’s Federal Minister Peter McKay has done his Province yeoman service. We will be picking up a large chunk of Nova
Scotia’s electricity for a very long time.
That said, I
want to return to the earlier question.
Should you feel more secure now that the FLG is in place?
Does the
issuance of the FLG imply that the Project is more financially sound than
critics, at first, suggested? No.
It is
important to remember that financing was based upon a “Power Purchase
Agreement” (PPA) between Nalcor and Newfoundland Hydro. The PPA is a “take-or-pay” scheme to recover
from the ratepayers (you) the costs of financing the Project plus a
rate-of-return to Nalcor. The PPA will deliver a maximum of 40% of the power
from Muskrat but you will pay 100% of the costs. The PPA is the foundation of the $5 billion
loan and the FLG. The Dunderdale
Government has decreed you will pay it back.
Do you
believe that the estimated $6.2 billion will cover the costs of the
Project?
I have found
no evidence to take comfort in Nalcor’s numbers. I have examined several megaprojects
undertaken in NL and throughout Canada; all endured serious cost overruns. Where will the additional money come from? I think you already know the answer.
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For more on the issue of cost overruns, please see the following links:
Has Nova
Scotia placed itself in a position where it might install the Maritime Link and
not have the power Nalcor has committed?
No.
The
agreements relating to the Maritime Link have no connection with Muskrat
Falls. The Dunderdale Government has
approved a deal which gives Nova Scotia access to our island power capacity,
like Bay d’Espoir, including ‘recall’ power from the Upper Churchill. You will be supplying Nova Scotia, every year
for 24 years, Muskrat or no Muskrat at 4.2 cents per KWh.
God, Peter
McKay, you are good! But, your Nova
Scotian buddies weren’t dealing with a lot of Wall Street sharpies, were they!
Does the
provision of the FLG imply that Quebec Hydro will lose its challenge, in the
Quebec Superior Court, of
the Water Management Agreement? No.
The Federal
Government clearly decided not to link that question with the FLG, although
that would have been a prudent measure. NL
has chosen to assume all of the risk of Muskrat regardless which way the Court decides.
Would you like to be
reminded of the power capacity of Muskrat Falls if the Quebec Court defeats
the Water Management Agreement?
According to
figures supplied by Nalcor, rather than 824 megawatts, the Project will supply
only 170 MW of firm power in the absence of the Water Management Agreement.
What will
the Dunderdale Government do if they lose the case? An answer would be speculative. But, according
to the UARB, the cost to NL of obtaining its approval of the Maritime Link was
in the range $706 million to $1.422 billion (page 70). Nalcor complied. Dunderdale said it was a good deal. The Premier has been given enough money to dig a big hole, but as to value any has been awarded to Nova Scotia to provide cover for her and Ed Martin's folly.
How will
Dunderdale satisfy Quebec? Quebec has a
longer term view than does the Government we elected. I think you should be very concerned.
What can we
do now?
Do you mean
in the absence of showing our displeasure, peacefully, and attempting to rid
ourselves of this Government, Ukrainian style?
We can wait
for the bills to come in.
