It is fine to suggest the Province ought to have a ‘Crown Jewel’ like Hydro Quebec or Statoil. But, when the motivation for a monolithic State Owned Enterprise (SOE) comes from a Premier, whose business experience is chiefly in the ‘regulated’ economy and whose motivation is legacy, you can imagine other questions abound.
It seems easy enough. Find a need, like electricity; design a hydro project, develop a set of estimates, engage the markets and the public purse to finance it, execute a power purchase agreement requiring the public to pay it all back and then some. What could be simpler!
Of course, it isn’t simple at all.
What if the hot economy isn’t conducive to controlling costs, the management team is limited by a lack of basic construction experience, the captive market needs only 40% of the power, possibly less, and you need to achieve 100% cost recovery from just that market? What if you are forced to give away 20% of the project’s power potential to achieve export access?
What if you agree to incur 50% of the cost overruns on that transmission link and commit all your remaining ‘surplus’ power to keep your export partner happy; what if you are given a not so gentle reminder all the risk is yours and that the benefits of the Federal Loan Guarantee belong to Nova Scotia!
What if you are told by the Nova Scotia regulator: take it or leave it.