BEST NEW YEAR - COMPLIMENTS OF THE BARD (AND ALL OF US)

BEST NEW YEAR

To all in NL spellbound stand:

Lang may yer big lum reek.*

Long life and warmth to hand,

Good health, and joy at peak.

We’re better blest than all the rest:

We’ve freedom and fresh air -

We’ve space, and room to quest.

Of those, make greatest care.

Not oppressed, perhaps ass-prest,

Bullets, we seldom fear -

We’re Royalty, it’s manifest,

So have the best New Year.

John Tuach

December 28, 2017

*   “long may your chimney smoke” - an old Scottish New Year greeting given with the symbolic gift of a lump of coal. With the gift of a birch junk, the greeting could become popular in NL.

THE NIGHTMARE BEFORE CHRISTMAS

The loud and intemperate knocking on the front door didn’t just announce Uncle Gnarley’s arrival. It was a sure sign that Nav would have no peace this Christmas.

Suddenly, broken Christmas lights and spouse’s irksome claims regarding Nav’s diminishing utility were forgotten amidst an overcharged sense of anticipation, one that the old man instantly inspired. Nav had not felt so happy since Gnarley visited a couple of years ago on his way to the Charbonneau Commission Hearings in Quebec.

“My god, man, I thought you were going to leave me out here the whole bloody winter.” Gnarley‘s first words exploded with the gale force of a Wreckhouse wind.

He and his single worn suitcase soon filled the foyer, along with myriad ornaments. Spouse was a tiresome devotee — of St. Nick.

VARDY PUTS MINISTER'S NORTH SPUR POSITION ON PUBLIC RECORD

Guest Post by David Vardy

Response from Minister Disappointing

The Labrador Land Protectors presented a petition to government on May 9, 2017 calling for the appointment of an independent expert panel on the North Spur.  It was signed by more than 1000 people. There has been no response. Since that time the urgency of the panel has been raised. It has been raised by new research conducted in Sweden as well as by revelations flowing from the SNC risk assessment report released by the Premier.

The recently disclosed and disturbing SNC Lavalin risk assessment report of April 2013, released by the Premier on June 23, 2017, refers to the need for further geo-scientific information to guide remedial measures and assess overall safety and stability. SNC Lavalin rated the risk as “very high.” Whether Nalcor has successfully remediated these risks over the period from April 2013 to the present is as yet unknown. It will take the work of an independent expert panel to measure whether risks have been reduced or indeed whether they can be mitigated or eliminated.

DEBBIE FORWARD SHOULD BE KINDER TO JOHN ABBOTT

Even the most politically disinterested observer had to know from the minute the Deputy Minister of Health, John Abbott, uttered the word “change” in relation to the health care system that he would be forced to eat his words — by both government and union.

What were they? “We have put in a lot of services and facilities that we no longer need and no longer can afford… We have 45 per cent more nurses than the rest of the country.”

Having gotten Nurses’ Union head Debbie Forward’s knickers in a knot, the premier’s office sent Abbott out to backtrack.

Many of us have long wondered if even one senior public servant had the spine to speak truth to power, successive governments — mostly Tory — having run the province over a fiscal cliff (note the past tense). It seems there is one such person.

THE BARD ON THE SKUNK CASH MACHINE

Skunk (definition): Strong Weed. Ridiculously strong. Usually grown outdoors. It is a guaranteed f**king-up. This is the kind of weed that leaves you sitting there giggling for twenty minutes, your legs numb, your mind completely bricked, and your hands so twitchy you keep spilling the bongwater all over the floor. Another definition - only slightly different - is found on this link.

THE SKUNK CASH MACHINE 

The future to pot, Government’s bought,

Hundreds of jobs, excitement has caught.

Plants plan to proceed, now guaranteed:

Twelve tonnes to process has been agreed. 

A LEGAL CHALLENGE TO EMERA CONTRACTS NEXT?

Guest Post by David Vardy

SUPREME COURT OF CANADA: NL VS. NS ON CONTRACTUAL INEQUITY

The “Good Faith” Argument

Finally, the Supreme Court of Canada (SCC) is hearing the argument that the Churchill Falls contract is inequitable. The SCC hearing began on December 5, 2017. This is an appeal to a decision of the Supreme Court of Quebec, which was in turn an appeal of a decision rendered by Judge Joel Silcoff on July 24, 2014. CFLCo had sought the following declaration (Silcoff, p. 2):

POWER CORRIDOR FOR QUEBEC NOT ALL THAT IT SEEMS

What's behind the recent announcement by federal Energy Minister Jim Carr promoting  an “energy corridor” for the Atlantic provinces? How does it relate to this province? Are there other issues at play that should worry NL? Is the financial “dead carcass” of NL about to be picked over?*

.........................................................

The public should worry when weak governments run the province. For a decade, successive administrations have given little focus to tough public policy issues, worsening an already difficult fiscal situation. They don't see that successful societies harm themselves looking inward when predators come calling. 

We forget that, while political parties, labour and business conduct their affairs with a vision narrow enough to be thought ‘in the moment,’ the real business of politics — our business — is being managed in places where strategic self-interest has long been defined.

BARD OF PYNN'S BROOK DOES A MINISPLIT

THE MINISPLIT

Adams claims a split in attic

Lowers heating bills dramatic.

Some can see a man pragmatic,

Others think the man fanatic.

Air exchange for heat advises

With less cost for mini sizes.

Their efficiency he eulogizes:

Could he own the split franchises?

- John Tuach

December 03, 2017

SENSE OF URGENCY REQUIRED ON NORTH SPUR STABILITY ISSUE

Guest Post by David Vardy

The North Spur Remains Unresolved and Urgent

Muskrat Falls is the only hydroelectric project in the world which relies on a large natural dam, underlain by sensitive glacial clays, and raising major concerns for local communities. Experts from the Geological Survey of Canada documented the extensive presence of glacial marine clays in the Lower Churchill in their testimony to the joint federal-provincial environmental panel.

The Labrador Land Protectors presented a petition to government on May 9, 2017 calling for the appointment of an independent expert panel on the North Spur.  It was signed by more than 1000 people. There has been no response. Since that time the urgency of the panel has been raised. It has been raised by new research conducted in Sweden as well as by revelations flowing from the SNC risk assessment report released by the Premier.

THE POSTER SAYS IT ALL!

MUST THE PEOPLE OF HV-GB AND MUD LAKE LEARN TO LIVE IN HARM'S WAY?

Guest Post by Cabot Martin

Dr Stig Bernander, someone I have the utmost respect for as a technical expert and as a very decent and moral man, continues to try to save us from ourselves at the North Spur.

His most recent contribution - Summing Up of North Spur Stability Issues -  gets right down into the weeds. He demonstrates that based on the little data that Nalcor has, something as basic as filling the reservoir may well trigger a failure of the North Spur.

Fairly basic stuff to overlook or not worry about.

THE BARD AND THE RISKS OF BUILDING ON CLAY

THE WISE MAN AND THE FOOLISH MAN*

The wise man built upon a rock, the foolish built on sand. 

The bible's lesson:  on sand, the structure will not stand.*

Clay, it's weaker than the sand, and, it's prone to collapse,  

And yet, at Muskrat Falls, clay planned as Churchill trap.**

A natural ridge with clay to impede the Churchill flow?

A natural dam with quick clay - part collapsed decades ago!

No mention in the bible of the man that built on clay:

Such building is foolhardy, maybe doesn't need to say. 

TERRIFYING CONCLUSION FOLLOWS RELEASE OF NEW BERNANDER REPORT ON NORTH SPUR

Guest Post By PlanetNL

PlanetNL6: Latest Bernander Report on North Spur Leads to Terrifying Conclusion

If there is one topic in the whole of Muskrat that is truly clear as mud, it’s the North Spur. Equally murky is Nalcor’s plan to use this natural formation across the Churchill River as the largest dam holding back the reservoir.  

PlanetNL’s agenda has deliberately left this challenging topic to others, choosing instead to concentrate primarily on the financial disaster that awaits the people of this Province upon Muskrat completion in 2021.  The others who have written on the North Spur are better researched on the subject and have written passionately about the North Spur on this blog and elsewhere.  

FISCAL CRISIS BIGGER THAN ACCOUNTED FOR IN EMPLOYERS' COUNCIL PLAN

“Another Way Forward” is a policy document recently released by the NL Employers’ Council. It is a response by the province’s largest business organization to our desperate fiscal crisis. It purports to contain suggestions for a “better way forward” than the one released last year by the Ball Administration.

High on the agenda of the Employers’ Council is a reduction in taxation on both business and individuals, cuts to government programs and services, and a reduction in public sector employment by attrition. 

The NLEC concludes that “government could remove more than a billion dollars in spending and we would still have:

1.       the largest spending per capita

2.      the highest paid public service and

3.      the highest spending on health and education of any province in Atlantic Canada.”  

JIM LESTER GETS ADVICE FROM THE BARD

From the Bard of Pynn's Brook

LESTER, MHA

Jim Lester leaves the family farm,

The Mount Pearl seat, to keep it warm.

Knows the turkey, and it’s charm;

Manure that clings will not alarm.

Let’s pray his time up on the hill

Will more than just his pension fill:

Perhaps he’ll work to change instil? -

And lower future heating bill.

- John Tuach

November 22, 2017

JUDGE LEBLANC NEEDS CHANGES IN INQUIRY MANDATE TO DO A PROPER JOB

Guest Post by Cabot Martin

WHY WORDS REALLY MATTER – The need to amend the Muskrat Falls Inquiry Terms of Reference

Way back in the 1980’s when I was hanging out in the Premier’s Office on the 8^th floor of the Confederation Building as Senior Policy Advisor to the Premier, I noted that there was one group that everyone respected – the Legislative Drafters.

As politicians with policy to implement, the Cabinet (with the help of the Cabinet Secretariat) would draft, debate, amend and finalize what they thought the proposed new Act or Regulation should do and contain.

As a next step, the measure was put into the hands of the Legislative Drafters, as specialized a group of legally trained professionals as you will find.

JAMES MCLEOD IS LEAVING. TIME TO LAY BLAME.

I had never thought James McLeod to be one of the four horsemen of the apocalypse. In last Saturday’s Telegram, he telegraphed just that. 

In mortal terror, he’s leaving the province. And I know I’m the one responsible.

McLeod had interviewed Uncle Gnarley for a story in September that he called “Meet Uncle Gnarley: Muskrat Falls’ prolific doomsayer blogs in turbulent times”.  I had no idea that, after just a few hours with him, McLeod would want to ‘cut and run’ — hightail it — for the mainland!

Already wearing his unemployment boots and heading for the Marine Atlantic Ferry, he left this advice:

“Here’s the honest truth: It’s in the economic self-interest of every man, woman and child in this province to do the same thing I’m doing: pack up and move literally anywhere else. The province has a demographic problem and a geographic problem. There are too many old people…

LOW RESERVOIRS POSE GREATEST OUTAGE RISK SINCE DARKNL

Guest Post Written By PlanetNL

PlanetNL5: Low Reservoirs Will Strain Thermal Generation This Winter

Uncle Gnarley suggested readers be given a respite from the gloomy Muskrat analysis series and instead asked PlanetNL to provide a critique on a different energy concern: the impact of low reservoir levels on this winter’s energy supply needs, as just revealed in a recent NL Hydro report.

The first concern is the cost of unplanned high fuel consumption at Holyrood and the standby combustion turbines over the winter and possibly well into 2018, a cost that NL Hydro is certain to want to recover through rate adjustments.  A considerable pre-Muskrat rate hike will result. 

BARD OF PYNN'S BROOK TACKLES "MR. BIG"

MR BIG

By John Tuach

“Develop or Perish!” - Smallwood.

A former ‘Main Man’ steering ship?

The files will have a familiar flip:

Churchill River hydro mill -

Cash for Provincial coffers fill!

Offshore oil, mines, forestry,

Energy, and fish - all travesty!

Industrial avarice in major plays,

Who abets the give-aways?

Power to run the metal mines,

Windmill spins atop the Barrens,

Making pellets - a money burn,

Old projects, each in turn.

An alternate agenda is a toot:

Prolong the Muskrat money loot

To obfuscate some other theft -

And perished public more bereft.

And some suggest conspiracy:

Plunder planned (a resource spree?)

A Nalcor asset fire-sale feast

When entrails stirred of Muskrat beast.

Did ‘Canada’ steer the scam?

To issue bonds to build the dam,

To grab a slab of finance loot,

Perchance a numbers game afoot.

Is there ‘The Man’ for subterfuges?

(The latter crowds only stooges).

That sat around at Federal tables,

Investment lucre now enables.

Media manipulator extraordinaire,

To move and shake the political air.

Knows the people (to burn) too green -

A puppet-master behind the scene?

October 30, 2017

OSBORNE: NO PRICE TOO HIGH FOR POLITICAL PEACE

Mercifully, Finance Minister Tom Osborne kept the Budget Update short. It won’t get much ink here, either.

Osborne has confirmed what most people seem to have concluded: he has no intention of tackling the deficit.

The former Finance Minister, Cathy Bennett, told a reporter that “I wish we had had better information going into the election campaign,” seemingly ignorant of the fact that, as an MHA, she was always expected to read — and to understand — the Budget Estimates. Of course, her search was for a scapegoat. Osborne, not four months into the job, hopes he has found one too. 

CHERNOBYL-LITE: THE PRICE OF DENYING MUSKRAT ECONOMICS

Guest Post by PlanetNL

PlanetNL.4 - Mothball Muskrat Now

Previous PlanetNL instalments have detailed how the uneconomic Muskrat project threatens to destroy NL Hydro and ratepayers or, if the subsidy route is chosen, Government and taxpayers.  The painful third alternative is to choose to stop the project and have the Premier call on Ottawa to act fully and promptly on the murky Federal Loan Guarantees of $7.9B.

Even with the federally guaranteed debt removed, serious issues remain.  Ratepayers still face large rate increases and the Provincial Government must record a total loss of equity. Emera would suffer contractual losses and demand compensation.  Ottawa would be divided on whether to act as many other provinces will not support the bailout.  A substantial and raucous debate is sure to erupt whenever Ottawa publicly considers this request.

…………………….

COADY MISINFORMED. SECOND SOURCE CONFIRMS FAULTY TOWERS

The Uncle Gnarley Blog stands by the source who provided information regarding the welding defects Nalcor has encountered on the Labrador-Island Transmission Link (LIL).

The existence of the defects has now been confirmed by a second source.

The blog post entitled Faulty Towers: Nalcor's Comedy (Of Errors),  published on Monday, reported that the problem is associated with the welds on a component part located at the base of each tower.

FAULTY TOWERS: A NALCOR COMEDY (OF ERRORS)

Newfoundland would have provided the perfect setting for the British TV Comedy series “Fawlty Towers”. Here, John Cleese would have had no need for inventive double entendres. And the laughs could have been on Nalcor’s dime.

According to an Uncle Gnarley Blog source, Nalcor is grappling with a new problem. And it is no laughing matter. As you might have guessed, the issue revolves around faulty towers.

Nalcor has discovered structural defects in an undetermined number of the towers on the 1100 km Labrador-Island Link (LIL). That’s the extension cord intended to deliver Upper Churchill recall power next year and, subsequently, power from the Muskrat Falls project.

According to the source, the structural integrity of a selection of 30 towers was tested recently. The tests produced a failure rate of 100%.

IS MUSKRAT FALLS A PONZI SCHEME?

Guest Post by David Vardy

There are remarkable similarities between the business model for Muskrat Falls and a Ponzi scheme, credited to Charles Ponzi, who instigated the first Ponzi scheme in 1919. 

Bernard Madoff was one of many who built upon the original Ponzi concept. Madoff met his Waterloo in March  2009, when he pleaded guilty to 11 federal felonies, including securities fraud, wire fraud, mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan, and making false filings with the SEC. Will Muskrat Falls lead to such a wide range of criminal charges after the Commission of Inquiry has concluded?

The business model for Muskrat Falls is built upon fictitious energy sales which created unearned revenues. Electricity consumers were conscripted to participate in these fictitious sales through amendments to the Electrical Power Control Act which conferred monopoly power upon Nalcor, so that all large consumers of power were required to buy power generated at Muskrat Falls.

IS NALCOR OK WITH THIRD WORLD HEALTH AND SAFETY PRACTICES?

What was Occupational Health & Safety (OH&S) doing at the fly ash plant in Goose Bay two weeks ago? Did the Inspector order it closed, as a local source — a former worker — reports?

According to the source, the plant was ordered closed but was back in operation again within a day or two. 

The plant is the sole supplier of fly ash to the Muskrat Falls project. The operation is housed in an old hangar near the Goose Bay Airport. The building is reportedly in poor condition and, according to the former worker, unsuitable for its current use given the toxic nature of fly ash. 

Fly ash is used in conjunction with (or as a partial replacement for) Portland cement to improve a particular property of concrete (e.g. to obtain slow hardening) or to restrict a specific chemical reaction.  It is a by-product of pulverized coal and this source believes that, based upon product data sheets, the ash contains a high percentage of silica.

HAS THE A-G SPOKEN TRUTH TO POWER?

Guest Post by David Vardy

Introduction

Terry Paddon, the province’s Auditor General will be stepping down at the end of the month. His swan song was the recent release of his annual report to the House of Assembly, on the Audit of the Financial Statements of the Province of Newfoundland and Labrador, for the year ended March 31, 2017. 

In light of the parlous fiscal state of the Province one has to ask if he told the truth, the whole truth and nothing but the truth? 

Did he speak truth to power in a language that both citizens and their elected representatives can understand? In particular, how did he deal with the Muskrat Falls project? 

PREMIER SHOULD TELL BEOTHUCK ENERGY TO GO ‘FLY A KITE’

If you live in Newfoundland, you know all about wind.  There’s the natural kind… and then there’s the wind that keeps carpetbaggers aloft until the easy money disappears.

“If you got the juice we got the use,” Kathy Dunderdale was fond of quoting the New England Governors, the cost of producing the power never entering the equation. 

"Even if we produce everything we have here at Muskrat Falls and Gull Island, we still wouldn't fit all the energy demands south of the border," the CBC quoted Kirby Mercer in a story posted back in June. 

Mercer is the spokesperson for Beothuck Energy’s proposed wind power project in St. George’s Bay.

Like Dunderdale, economics seems not to matter to him either. 

FINANCE DEPT. FRUSTRATED BY NALCOR'S FAILED HEDGES

Not surprisingly when politicians and public servants screw up, and their error is exposed, the excuse register gets pretty crowded. That was the case when this Blog revealed that Nalcor lost $66.9 million on a hedging scheme in which it speculated on $1.82 billion of the most recent $2.9 billion Federal Loan Guarantee - funding for the Muskrat Falls project.

On NTV, August 21, 2017 CEO Stan Marshall defended the loss - suggesting nothing would have been said had it been a win. 

Of course, Marshall was mute about Nalcor's expertise in this complex and risky field. He did not mention if he had given any guidelines (limitations) to his officials - now speculators with the public purse.

Nor did he comment on whether those decisions are given over to some investment advisor with no skin in the game. And he offered no data as to the frequency of the Corporation's hedges. And, which would have been nice, he didn't confirm if – over time - wins/losses had evened out.

Certainly, there was no mention of Nalcor’s $14.1 million loss (including fees) reported in its December 31, 2013 Financial Statement . The losses were recorded on nine hedge contracts worth $2 billion entered into between December 3-6, 2013. 

VARDY TELLS B.C. "SITE C" INQUIRY NOT TO REPEAT MUSKRAT FOLLY

Editor's Note: When David Vardy released the essay entitled “Making Best Use of the Lower Churchill: The Muskrat Falls Development”, which he had prepared as a brief for the Action Canada Fellowship in 2011, it constituted the first sceptical appraisal of the many claims of the Williams Administration regarding the project.

It took six more years before then Fortis CEO and current Nalcor CEO Stan Marshall got around to describing the project as a “boondoggle”. But Vardy was there, at the starting gate, absent any but the public interest, to warn of that likely outcome and to replace hyperbole and falsity, often issued under the guise of patriotism, with objective analysis.

It can rightly be said that Vardy not just wrote the primer on the Muskrat Falls project; he was the "first responder" sounding the alarm, demanding notice of Muskrat as ill-considered, possibly injurious, public policy.

MUSKRAT SUBSIDIES WILL CAUSE A GOV'T DEBT SPIRAL

Guest Post by PlanetNL

PlanetNL3: New Nalcor PPA Information Confirms Massive Revenue Problems

In PlanetNL2, Nalcor’s 50-year Dividends forecast was assessed along with the assumed costs of the 50-year Muskrat Power Purchase Agreement (PPA).  At the time, a revised Nalcor PPA cost forecast was not available, therefore some general guesstimates were made in the absence of specific numbers.  The preliminary analysis predicted huge subsidy requirements from Government to mitigate Nalcor losses and bankruptcy.

On October 3, 2017 Nalcor responded to a citizen’s Request For Information to issue the up-to-date forecast of PPA costs.  A full analysis is presented here using Nalcor’s own exact PPA and Dividend numbers, in combination with the Premier’s expressed 17 c/KWh rate cap, and the PlanetNL prediction that energy sales will fall by 30%.  The results are indeed as frightful as feared: Government debt is going to rapidly mount and crush program spending.

.….

PUBLIC INQUIRY NEEDS BROAD MANDATE SAYS VARDY

Guest Post by David Vardy

Framing the Mandate for a Commission of Inquiry

Premier Ball has announced that an Inquiry into the Muskrat Falls project will begin soon, perhaps before Christmas. Before celebrating this announcement we need to know that the Inquiry will have a broad scope, as well as the necessary resources to do the job.

The Commissioners must have a wide range of expertise, including experience in managing major projects, as well as expertise in energy policy, project engineering and public utility regulation. The panel should include people who operate at an international level as well as Commissioners who understand the environment in which we operate. This mission calls for a broad set of skills and requires more than one  single Commissioner.

WILL PREMIER ASSUAGE ONE PERSON'S WORRIES ABOUT PUBLIC INQUIRY?

The Premier’s announcement that he will reverse course and call a public inquiry into the Muskrat Falls project has attracted much comment on this Blog and in other forums. The public’s worst fear is that the inquiry will accomplish little and result in another waste of money. 

Scepticism abounds that government will restrict the inquiry’s mandate. 

Nalcor meddling is an undercurrent of the debate. Another is that the government will placate the many politicians and restrict the inquiry from having them testify and face examination.

Only the Premier can quell those fears with announcement of the broadest possible inquiry mandate.

INQUIRY NEEDS ENGINEERING CAPABILITY TO UNCLOAK "BIG SCHEME COMPRISING MANY SMALLER SCHEMES"

Guest Post by Cabot Martin

My recent Uncle Gnarley posts have dealt with Emera and Civil Deceit (May 15)

SNC Lavalin and Criminal Deceit ( September 14)

and the risk of catastrophic failure of the hillside above the North Spur (September 28)

They are all connected; all part of the grand scheme.

That September 28th post more or less described the time bomb that Nalcor has constructed at the North Spur.

Today I’d like to go back to look at some of the design steps that got them there.

For background, the keeners amongst you can check out a long but well illustrated powerpoint on the North Spur issue on my muskratinfowebsite – 

Please restrain yourself until you are through reading this present much shorter Uncle Gnarley piece. 

NALCOR MEDDLING A THREAT TO MUSKRAT INQUIRY

If this were a different time, we would wonder why the Premier chose a Liberal Party fundraiser to announce that he will now call a Judicial Inquiry into the Muskrat Falls project - the very people the $12.7 billion "boondoggle" will least affect.

If this were a different time, we would wonder why he chose to disclose one of the most important initiatives of his Administration to this group of peddlers, contractors and compradors that hung on Danny Williams’ coattails. 

If this were a different time, we might ask the Premier to share his moment of conversion and what inspired him to do an about face.  

However, while those things niggle at our sensibilities, none constitutes the real issue. The larger object of our focus, now, must be getting the right inquiry.   

NALCOR AND CONSULTANTS FACE LIABILITY IF NORTH SPUR FAILS

Guest Post by Cabot Martin

My last post on the Uncle Gnarley Blog - entitled Premier Needs Quebec Judge's Help On Forensic Audit - was about possible criminal activity on the Muskrat project and the need for a forensic audit.

The previous piece I authored - back in May - was called Of Deceit, Emera and Muskrat Madness. It described a possible action of civil deceit against Emera with respect to their very burdensome Muskrat contracts with Nalcor.

Both very important issues. 

But as my good friend Con O’Brien is quick to point out, over-riding all is the North Spur.

Muskrat must be halted for that reason alone – Now.

But that issue sometimes (all the time?) gets lost in the Muskrat shuffle.

So let’s go through it yet one more time.

SOCIAL PROGRAMS TO BE CRUSHED BY MUSKRAT SUBSIDIES

Guest Post by PlanetNL

PlanetNL2 – Muskrat Will Cause Monumental Government Debt and Social Pressure

In last week’s inaugural PlanetNL, the post-Muskrat rate hike was predicted to rise quickly into the 30-35 c/kWh range and then to continue to spiral upward as the market continually fails to deliver required revenue.  This pricing model should be considered theoretical because it’s too insane to think the Government would actually allow rate runaway to happen and not attempt to intervene with a better alternative that can preserve stability of the market and the survival of the utilities that serve it.

Logically, Government must limit rates to some sustainable level that ratepayers can bear.  They must also not allow the bankruptcy of NL Hydro and the Nalcor companies as this would lead to the evisceration of core Government assets to outside interests.

Government has little choice but to lean heavily on the public purse of the taxpayer to make up the shortfall in utility revenue.

IN PICTURES: NALCOR DUMPS MILLIONS

Nalcor’s lack of quality control on the Muskrat Falls project failed to detect a faulty transmission cable, containing a "popped" wire, which was strung — with the defect — on a large section of the Labrador Island Link.

CBC reported the issue in June 2016. Flabbergasted by what he had read, James L. Gordon, the Canadian engineer who has written repeatedly on the Uncle Gnarley Blog, contacted renowned transmission line designer J.P. Schell, P. Eng. (Ret’d) and asked him to examine the issue. Mr. Schell wrote a piece entitled Design Engineer Baffled By Extent of Muskrat TL Flaw Reported by CBC for this Blog.

The transmission cable (170 km X 2 lines = 340 km of D.C. conductor wire) was spun at the factory, shipped, stored and erected before anyone at Nalcor noticed — testimony to a management ill-equipped for the roles they fill.

MUSKRAT WILL DESTROY UTILITY SYSTEM IN 2020

Guest Post by PlanetNL

PlanetNL1: Like a Hurricane - Muskrat To Destroy Utility System in 2020

This guest blog series is offered to demonstrate the true value of Muskrat Falls (aka Lower Churchill Project) and to expose the risks and burdens imposed by it on Newfoundland ratepayers and taxpayers.  The view will be predominantly forward looking, relying on best available project and market information to deliver plain economic analysis that can be appreciated by a wide range of people.  There will be little ranting as the dire economic concerns will speak for themselves. 

First up is a deeper exploration of consumer billing rates than Nalcor and Government have been providing.  The Nalcor rate projection has consistently gone up as the Muskrat project has advanced with cost overruns, yet it seems they have not given all the facts.  They already have a prediction of more than doubling rates after the project is commissioned in 2020 but PlanetNL projects that rates will actually shoot much higher.

PREMIER NEEDS QUEBEC JUDGE'S HELP ON FORENSIC AUDIT

GUEST POST WRITTEN BY CABOT MARTIN

So is the Muskrat fat finally in the fire?

Premier Ball’s nostrils are definitely offended by the stink from Muskrat Falls but it’s Nalcor’s method of paying it’s top end workers that seems to be the immediate cause.

We’ll have an inquiry into Muskrat, he says, and it will even start before the site is deserted. We are working on the Terms of Reference, he says, 

... and this employment contract mess will be included and, of course, we cannot delay the project.

Opps!

A curious turn of logic. Big problem – long finger.

Premier – you are on the mark with the need for a Public Inquiry but you need a road map to get there.

RCMP MUST ACCOUNT FOR FAILURE TO INVESTIGATE NALCOR

The poorly conceived August 31, 2017 EY Report on the Muskrat Falls project was essentially irrelevant, albeit with one major exception. 

EY stated that “the Project [still] retains a high level of inherent risk”. The firm said that the risks included “a series of complex and significant activities” which will command a “high planned spend rate”.

Cited as examples were construction at the North and South Dams, continuing power plant installation, turbine and generator installation, HVDC commissioning, and the approaching winter.

Why should the issue of “high level of inherent risk” justify revisiting?

EY REPORT ON MUSKRAT FALLS MOSTLY A BIG MISS

When it comes to auditing the risks and shortcomings of the Muskrat Falls project, and the incompetence of Nalcor, EY is no Liberty Consulting Group.

Plain-speaking Liberty, employed by the PUB to analyse the cause of the breakdown in service during DarkNL, persistently offered a clear narrative of what reforms might effect change.  

In contrast, EY’s prescription for Muskrat is so couched in practised opacity and bathed in bureaucratization that often only the innocuous is illuminated. The Muskrat Falls Report entitled "Assessment of Implementation of EY Interim Report recommendations" is essentially a document for politicians to point towards. It is strong on neither engineering nor cost-accounting. 

B.C.'s SITE C AND MUSKRAT FALLS COMPARED

Guest Post by David Vardy

Summary of Submission to BCUC

This is a summary of my detailed submission entitled "Site C and Muskrat Falls Compared" made to the British Columbia Utilities Commission relating to their inquiry into Site C. This inquiry was initiated by the new NDP government of BC and is directed towards the determination of the costs of continuing, suspending or terminating the project.  

In both provinces there were joint federal provincial environmental reports. In each case the joint panel recommended further detailed financial and economic analysis to confirm the wisdom of proceeding, recognizing that no strong business case had been presented for either Site C or Muskrat Falls.  Both provincial governments proceeded with little deference to the advice from the joint environmental panels.

PUB SHOULD TREAT HYDRO'S RATE HIKE HARSHLY

When government agencies engage in self-aggrandizing claims, they really should try to support them with something more than rhetoric.

The public awaits PUB approval of a NL Hydro sponsored electricity rate increase of 6.6% in 2018 and another 6.4% in 2019. The PUB has adequate reason to reject at least a part of the request.

Hydro’s Rate Application (Vol. I, page 3.5) reads that the rates increases are necessary because: 

“Hydro has prudently increased investment in its capital program. In 2016, Hydro spent approximately $204 million on capital work (infrastructure). In 2017, Hydro plans to spend $370 million. These investments, including the new transmission line TL267 from Bay d’Espoir to Western Avalon, are necessary to secure the long-term reliability of the system for Hydro’s customers.” (bold added)  

BARD OF PYNN'S BROOK GETS WINDY

WIND 

Offshore mills!  The wind is strong:

A grandiose scheme, beat the gong.

Beothuk sings a heady song 

To let power flow To let  flow to Up-along? 

Think Muskrat Falls a precedent,  

A template for a cost-ascent
That promises our discontent 
As heat bills to the heavens sent.  

Wind power widely subsidized: 
Rates are low, cost high-sized.
Many projects ill-advised, 
Markets often un-realized. 

To fill Brakes Cove, what's the need? 
There's lots of wharf, and land in weed
Sees little use, that could be freed
To development if must proceed. 

For short-term jobs, the mayors bray:

Assemble mills in filled-in Bay.
The public signed for cost to pay?
To facilitate power give-away.

That old hype pattern on project moot. 
We can't afford the bill to foot -
The peoples bill! Who gives a hoot? - 
- Demand a stop to our cash input. 

John Tuach

Pynn's Brook
August 18, 2017 

"EMPTY WORDS" FROM CONSUMER ADVOCATE DRAWS REPLY FROM ANONYMOUS ENGINEER

EDITOR'S NOTE: We haven't heard from the "whistleblower", referred to as the "Anonymous Engineer", in awhile. But it is important to remember that he is the engineer who originally disclosed falsification of the estimates for the Muskrat Falls project on January 30, 2017. His revelations were described in a post entitled Muskrat Falls Estimates A Complete Falsification and a second post on February 6, 2017 called Muskrat: Allegations of Phony Cost Estimates, as well as to the CBC. Writing today, the whistleblower responds to Consumer Advocate, Dennis Browne, whose recent public comments suggest he is confusing "Forensic Audit" and "Forensic Accounting". - Des Sullivan

Guest Post by the "Anonymous Engineer" 

The letter to the Editor of the Telegram and the concurrent discussion with the journalist Pam Frampton by the Consumer Advocate Dennis Browne of August 19^th, 2017 was a futile exercise in public relations.

Mr. Browne did not say anything that the public had not already heard from Premier Ball, Minister Coady and CEO Stan Marshall. At least there is one remarkable element of consistency – they are all singing from the same sheet of music, which no one believes.

NALCOR LOSES $66.9 MILLION IN 6-DAY FAILED HEDGING SCHEME. PUBLIC NOT TOLD.

Introduction
Just when you thought the incompetence couldn't get any worse at Nalcor, along comes another scheme to up the ante on deceit and dumb.

This blogger has just learned that Nalcor lost $66.9 million following management's decision to place a bet of $1.82 billion - public money - in the “futures” market.

Nalcor even tries to put the blame on U.S. President Donald Trump.

To add insult to injury, Nalcor and the Ball Government did their best to cover up the failed scheme.

The losses occurred in May of this year. An eagle-eyed Nalcor watcher, able to parse Nalcor’s most opaque assertions, brought the contents of the corporation’s last quarterly financial statement to my attention.

REFLECTIONS ON THE MUSKRAT FALLS PROJECT

Guest Post by David Vardy

Introduction

The sanctioning of the Muskrat Falls project in December of 2012 was a huge mistake, one which has spiralled into a major economic and environmental catastrophe. 

The warnings of the joint federal provincial panel were ignored, as were those of the Public Utilities Board. These warnings relate to the lack of a business case for the project, the high risk for a small province, the adverse demographic factors, the lack of export markets and the high unit cost.

A Gamble that failed

In a Telegram article dated May 25, 2013 the Honourable John Crosbie said that “Muskrat Falls is worth the risk”, quoting T. S. Eliot on the subject of risk: Only those who would risk going too far can possibly find out how far you can go. Since then we have sailed on a sea of risk and reaped the whirlwind. 

THE AG AND THE CONSUMER ADVOCATE DO THE PROVINCE A DISSERVICE

“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn't. And contrary-wise; what it is, it wouldn't be, and what it wouldn't be, it would. You see?”

— Alice in Wonderland (1951)

Only within the upside-down world of Alice would much of what is occurring in this province make any sense. Still, the behaviours of such an inverted — some would say perverted — place, their origins in the Premier’s Office, ought not to extend to our few institutions.

But they do.

Politics in NL has been turned upside down.

An excessive level of stupidity, denial and self-interest — far more than normal — has infected our political process. That the Ball Liberals have prolonged the madness begun by the Tories does not make it any less mad. It has been allowed to run through the senior bureaucracy, too — try as the government might to create the perception of normalcy.