Monday, 2 December 2013


It didn't take long for the Nova Scotia UARB to approve the Energy Access Agreement (EAA) in its Supplemental Decision on the Maritime Link (ML). Its blessing is needed by the Dunderdale Government to trigger the Federal Loan Guarantee (FLG) for Muskrat Falls.

The UARB took just one week to digest the evidence presented at both the Technical Conference and Hearings and write a Report. They ought to feel a little foolish for the rush knowing it was unnecessary to create more CO₂ than a Sydney coal by burning all that mid-night oil; the Dunderdale Government is concerned with saving face. It would have agreed to anything.

The crux of the matter is that UARB declared, in its July Decision, (para 216, page 70) the Maritime Link is $706 million to $1.422 billion more expensive than the alternative lowest cost option.  It stated that its approval depended upon Emera’s success at closing this large financial gap.  It said the gulf could be bridged if Nalcor guaranteed to Nova Scotia sufficient surplus or “Market-priced” energy from Muskrat Falls. 

It had no concern about price as long as the power was valued against the super competitive New England market. A bigger fear was that Labrador mines or domestic growth might absorb the available surplus.
Noteworthy is that the UARB confirmed Nalcor has agreed to provide access not to just to  Muskrat Falls but to all of NL’s power generation facilities, to ensure the power is delivered. 

 Nalcor didn’t just commit most of NL’s surplus power; it guaranteed the supply in a manner that is so legally binding that the word “surplus” is actually now a misnomer. The only wiggle room the deal affords NL is, if we run into problems with supply, Emera has agreed to find 25% of our minimum commitment (subject to other conditions).  Nalcor has to come up with the balance; otherwise, it is hit with financial penalties.

The EAA permits neither domestic power growth (Native Load), Labrador Mines, nor even drought to free Nalcor from the undertaking.  If more power is needed Nalcor has agreed to build more.
In short, we have agreed to sell power cheaply but keep building the expensive kind. Little wonder Richard Cashin would invoke 'Alice in Wonderland' to describe the Dunderdale Government's mentality.
For more details on what NL committed in the Energy Access Agreement:


One fact is clear.
This is not the Muskrat Falls Project that the Government presented to the PUB.  It is certainly not the one the Dunderdale Government told the public it ought to support.

It has often been said that, by sanctioning prematurely, Emera and the UARB had the NL Government by the throat.  The Dunderdale Government, consciously and in full view of the public, exposed itself to that risk. The UARB performed its job and protected the interests of Nova Scotians. Our Government did not protect our interests.

For some reason, the Government of Danny Williams determined three years ago Muskrat Falls would be constructed ‘come hell or high water’.  The Dunderdale Administration put on the same blinkers.  Though it boasted it would go it alone, if the FLG failed to materialize, everyone knew NL could not raise the billions of dollars the Project required. 

As public money flew out the door to SNC Lavalin and others, even as the market price for energy in the northeastern U.S. worsened in the face of the shale gas revolution, it was not within the capability of the Government to change course. 

For some reason, in spite of the huge cost overruns on every other mega project and significant outstanding legal issues, too, the Government steadfastly maintained its obliviousness to the risks of this Project.

A negative outcome on water management, in the Quebec Superior Court, could diminish Muskrat’s power output from 824 MWs to 170 MWs.  But, given the manner which the EAA is drafted, just like cost overruns, the Water Management Agreement is our problem.

The Nova Scotia ratepayer is fully protected.  The NL ratepayer is fully exposed and will have no idea of the cost until the Project is completed. 

Even the eight demands that the new Liberal Government of Nova Scotia crafted, as prerequisite to its support, were added to the EAA by the UARB; Emera and Nalcor were informed these conditions must not place additional costs on Nova Scotia ratepayers. You heard Ed Martin and Premier Dunderdale on Thursday.  It’s all fine with them.

I understand Governments can make mistakes.  I understand that there will always be disagreements over public policy.

What I don’t understand is why the Dunderdale Government would expose this Province to so many risks, ostensibly just to shutter Holyrood. 

If we were at war and our freedom at stake, just as we did in an earlier time, we would break open the bank, punch above our weight and ensure we had performed our duty. But, to undertake so much risk to access only 325 MW capacity, the insanity of it is mind boggling.

Then there is the secrecy, shutting out the PUB, the double speak and outright dishonesty. 

Why would a Government disallow its own Department of Finance to check Nalcor’s assumptions, modelling and cost estimates denying itself the opportunity for second opinion from the very people on whom they depend year in, year out?

Why would the CEO of Nalcor not want them involved or to share responsibility if there is serious miscalculation?  (Perhaps Jerome Kennedy will tell, all in due course, though his opportunity for absolution in these matters is becoming very limited.)

Why would the Minister of Natural Resources, with the approval of the Premier, stand and inform the House of Assembly that the 'surplus' power, committed to Nova Scotia, could be "recalled at any time", knowing, as he must have, that Nalcor has placed the power beyond our reach?

Indeed, why would Nalcor be permitted to proceed without first resolving the North  Spur stability problem?

In time, a badly informed public will be forced to consider how it was possible, in the midst of wealth, education and good fortune that it installed a government that cared not a whit about the role of our institutions, like the PUB, or for the fundamental requirements of governance.

We will wonder how it was possible so many people were prepared to place their faith in the most incompetent government, since Confederation, to undertake the largest publicly financed project in our history.  

What will the final chapter on Muskrat Falls say about the Dunderdale Administration? I believe it will speak to its lack of integrity.

We have a Government that cannot tell the truth; one that distorts and hides important information.  Whether the issue is Bill 29 restricting information access, Bill 60 and 61, confirming its power monopoly, or Muskrat Falls, it is willing to place our fundamental interests in harm’s way.    

The Government is arrogant, unwise and undeserving of our trust.

An Administration that deceives its citizens should not hold public office. 

It is unfit to govern.