Not surprisingly, the Muskrat Falls Project took centre stage
— again — in 2018, while in the last quarter the Commission of Inquiry stole
the spotlight, including among the mainstream media.
The Inquiry heard a sordid tale and irrepressible proof that that the project was based on false premises. The
integrity of the sanctioning process was undermined by a number of disclosures including confirmation that other options (power from Hydro Quebec and LNG) in addition to the Isolated Island option (small hydro, wind and thermal) offered the province less risk and possessed greater viability. Estimates for the project were “low-balled” (a
long-standing claim of the Anonymous Engineer). The Commission exposed myriad instances of official
interference with the very consultants whose compromised Reports Nalcor
and the Government used to justify Sanction.
Readers of the Uncle Gnarley blog have probably heard enough
of the Muskrat narrative since the Inquiry began in September. Likely, most have
broken out the Christmas cheer — including the legal weed — which is sensible,
as long as the car keys are buried. Sobriety
may not be good for your health right now. In what other way, I wonder, could the drip-drip-drip of mind-numbing
testimony extracted by Commission Co-Counsel be suffered by a decent citizenry,
however necessary? Fortuitously, O’Brien and Learmonth have been gifted the
skills of interrogation, each one displaying the painstaking artistry of the dentist’s
drill. It is a useful tool, too, so many of their subjects having exhibited
excessively large memory cavities. Poor mental dentition was repeatedly the
politicians’ escape. Ignorance of cavernous proportions was also on display, overlain
with unbridled hubris. Ed Martin even elicited from the Commissioner an unscheduled
interim report — actually a tongue-lashing — which described him as “rude”,
though I expect an even harsher assessment awaits.
Muskrat Energy Cost – Another Measure of Failure
Several leading electricity industry research organizations compile
annual estimates of utility scale generation options.These reports roll up the expected lifecycle
costs relative to energy output to provide a single energy cost figure known as
a Levelized Cost of Energy (LCOE).LCOE allows alternatives with high capital
cost but low operating cost to be directly compared to options with low capital
cost but high operating cost.
The energy industry consistently selects projects that can
deliver competitively low LCOE numbers, however, Nalcor avoided this technique
in favour of a customized and burdensome Cumulative Present Worth analysis that
avoided illustrating the true economic merit of Muskrat Falls.Although the LCOE metric was front and center
in the Nova Scotia regulatory hearing for the Maritime Link, it was avoided by
Nalcor and Government here.Little
wonder, as Muskrat’s LCOE is nothing to be proud of.
Former Premier Kathy Dunderdale is scheduled to appear as a Witness at the Commission of Inquiry into the Muskrat Falls Project today. The question that should be in the public's mind is whether she will display any more knowledge of why her Administration sanctioned the scheme than she did in 2012. At that time she ought to have known that Nalcor was headed by unsuitable and inexperienced leadership and that it was driven by ego (her own and Danny Williams') as well as recklessness underpinned by several unfounded (possibly contrived) assumptions which included some 50-year forecasts.
A few weeks after the Government sanctioned the project (December 17, 2012) this Blog featured a piece entitled "What the Members Opposite Don’t Understand" which had nothing to do with their ignorance (though it could have been about that, too). At issue was the lack of knowledge displayed by Dunderdale, herself.
Now, the former Premier will have to convince Judge Richard LeBlanc that she comprehended the complexity of the project and enormity of its implications - apart from the justification for giving it Sanction.
We await greater illumination from the former Premier in the coming days. Here is the January, 2013 piece:
A comeuppance for Ed Martin was as predictable as the
certainty that Muskrat Falls would become a $12-15 billion project. But it took
nearly three full days of evasion, obstruction and “attitude” from Martin for the
Commissioner, Richard LeBlanc, to run out of patience. Less tolerant Judges might
have reined in the former Nalcor CEO during the first hour of his examination
by Commission Counsel, Kate O’Brien.
Like a spoiled child beyond even coddling, this grown-up
couldn’t discern that his behaviour, every bit as much as his decisions, were
under a judicial microscope. Contrition was never an expectation.
Triggering the Judge to intervene late Wednesday afternoon was
the cross-examination by Geoff Budden, lawyer for the Muskrat Falls Concerned Citizens
Coalition (this scribe is one of the Coalition’s three interveners along with
David Vardy and Ron Penney). But the moment was not his as much as it was Kate
O’Brien’s. Budden had merely continued a line of questioning which Martin interpreted
as a licence to obstruct and to void the Inquiry of the requirement of basic
my guest post of October 4th I explained how the 2002 Gull Island deal was scuttled by then Leader of the Opposition, Danny Williams, aided and abetted by
the then Chair of the Board ofNewfoundland Hydro, Dean MacDonald, and board member Mark Dobbin.
Mr. Williams became Premier in 2003 he proceeded to commence a series of
personnel changes at Newfoundland Hydro which has led directly to the Muskrat
first was the appointment of Gilbert Bennett in 2003 to oversee the Lower
Churchill project. Mr. Bennett formerly worked with Rogers Cable, whose work
experience is in telecommunications. He is no doubt a bright and competent
telecommunications engineer but it is hard to see how that experience readied
him for his current role.
What the Isolated Island Option Could Have Been
In deciding to proceed with Muskrat Falls, Nalcor and
Government could not see the low-cost alternative staring them in the face that
was available to eliminate Holyrood and keep electricity rates stable and low.
First, they could not identify that the
Isolated Island System had no load-growth potential.
Second, they would not recognize that there
was great inefficiency in allowing high seasonal electric heating requirements
Third, they resisted changing
consumer rates to include marginal pricing that would sell Holyrood energy for
what it cost to produce.
Guest Post by PlanetNL PlanetNL20:
Island Load Forecast Still Wrong
To sanction the Muskrat Falls project, Nalcor relied on
their development of a steadily growing electricity load forecast on the Island.The assumptions used have proven so weak that
in 2016 Nalcor decreased the total Island energy load forecast out to 2040 by
25%.That’s a major error for any
self-respecting utility to make.By
putting forward the 2016 revision, Nalcor has quietly admitted their prime
reason for Muskrat sanction, needing a lot of power soon, was untrue.
This posting will challenge why the latest Nalcor load
forecast still includes 10% net load growth leading up to 2040 instead of declining.
Does Nalcor believe this province has
insatiable electricity demand at any price?Do they remain shockingly ignorant of global trends and energy
alternatives? It appears their revised forecast was a
significant step toward reality but not all the way there.The analysis also begs the question,
shouldn’t a proper pre-sanction load forecast have also pointed to declining
power needs instead of increasing?
Paul Humphries, the VP of System Operations and Planning at Newfoundland Hydro
until his retirement two years ago, recently appeared as a Witness at the
Muskrat Falls Inquiry. Humphries was one of the primary architects of the
project, as he stated during the 2012 PUB hearings with this declaration:
I'm Paul Humphries, manager of system planning and ultimately the decision on
the requirement to move forward and the alternative for the best alternative,
and the determination of the cumulative present worth of those alternatives is
the responsibility of my department.”
Cumulative Present Worth (CPW), to which Mr. Humphries refers, is a methodology
used to discount to present value, for comparison purposes, the Isolated Island
and the Muskrat Falls options. Of course, the calculation is meaningless if the
inputs used aren’t prepared rigorously. In such a case, the boosters of the
preferred option always win.
While megaprojects have huge costs, their promoters love to
talk about the benefits.At the Decision
Gate 3 (DG3) final sanction stage in 2012, Nalcor developed cost and benefit
models that predicted not only that Muskrat was going to be billions cheaper
for ratepayers than the Isolated alternative but that the Province would reap many
billions in dividends.Key Muskrat promoters
heard from at the Inquiry so far still seem to cling to expectations of positive
dividends from the project.
This post lays out how Nalcor and Government failed to assess
rate affordability and revenue risk before sanction.As a result of one of the key risks becoming
realized, Government’s anticipated dividends will be greatly exceeded by
subsidies and mounting debt servicing costs.These two-way cash flows must only be considered together in finding the
true dividend or net loss on the project.Government and taxpayers will struggle to subsidize high Muskrat costs
in every year of the 50-year project payback term leading to massive new debt
growth far larger than the original capital cost of the project.
In March of this year the Finance Minister, Tom Osborne,
delivered the seventh in a successive string of deficit budgets, their genesis originating
in both Tory and Liberal Administrations. And like his Liberal predecessor,
Osborne still offered the assurance that fiscal balance will be achieved by 2022-23.
On what basis should we believe him any more than we did Tory Finance Minister Ross Wiseman or Liberal Cathy Bennett? Isn't the process of digging the province out of the current debt spiral less a matter of prediction than of serious intent, discipline and leadership provided through diligent oversight? Last year's Budget outcome offers a perfect example of why the promise of achieving a balance of revenue and expenditures in our fiscal affairs is just that - a promise. Nothing more.
I have attempted below to examine the likelihood that Muskrat
Falls will cover all of its costs. To make this assessment I have used the
“revenue requirement” projections supplied by Nalcor in response to my
ATIPPA request for each component of the project, along with the return on
equity assumptions used by Nalcor. The return on equity (ROE) for generating assets is 8.4% and is
built into the PPA for 50 years.
Part 1: Is the PPA another Churchill Falls Contract?
Russell Wangersky was right when he said in the Telegram on
October 27, 2018 that Muskrat Falls is “a win for investors but the risk’s on
us”, the ratepayers.“The fundamental
assumption in the financing of the project is that the revenues charged to
island ratepayers for the generation and transmission of Muskrat Falls power
will flow unfettered to the lenders to satisfy debt payments.”
In this post I examine the underpinnings of this “fundamental
assumption”, beginning with the take-or-pay power purchase agreement (PPA), the
role of equity and the concept of freedom of choice. Does the PPA lock us in to
an abusive relationship, not for 65 years but for 50? Is it another Churchill
Falls Agreement which strips us of our rights? In my next post I will ask if
the PPA makes Muskrat Falls self-supporting and whether revenues from rates
will cover all costs and generate dividends for the government of Newfoundland
and Labrador (GNL).
The message from the hall-of-fame coach to his Green Bay
Packers was unmistakable: equanimity should never be perceived as resignation
or acceptance even when a loss is beyond your control. Lombardi might have added,
for certainty as much as a warning: there’ll be a next time.
Dwight Ball is no Vince Lombardi. The weakling Premier,
oblivious to the greatest financial crisis since the 1930s, has confirmed —
again — that he does not have the stuff of leadership.
What did he say when the Supreme Court of Canada gave its 7-1
decision last Friday on reopening the Upper Churchill Contract? “The past is
the past for us. The decision is the decision,” Ball told the media in a tone
of resignation. He added: “It will not interfere with the working relationship
we have with Quebec.”
When a kick in the balls for the first player giving the
opposing team a compliment would have constituted Vince Lombardi’s sole command,
for our leader the ink isn’t dry on the SCOC decision before he is playing
supplicant to Quebec.
Big Windfalls to Come from Churchill Falls?
decades, Newfoundland and Labrador (NL) Governments have recited the lost
earnings potential of the Upper Churchill and bemoaned the billions earned by
Hydro-Quebec (HQ).They long for the day
of August 31, 2041 when HQ’s locked-in low-price contract for 90% of CFLCo’s
energy shall expire and most of the profit will flow into NL.
the kind of linear-thinking politicians thrive on: if electricity prices remain
constant, demand remains constant, and production costs remain constant, then
the dream seems real.A naïve Premier today
may even be thinking of borrowing billions to mitigate Muskrat losses until
2041 because the mighty Upper Churchill will quickly pay it all back and more.
would be a terrible gamble to take as already there are a number of economic
threats to the viability of Churchill Falls power.
Former senior bureaucrat Todd Stanley was on the witness stand at the Muskrat Falls Inquiry last Monday, October 22. All witnesses at the Inquiry are
interviewed by Commission Counsel, but his interview is noteworthy for several reasons.
Mr. Stanley's constituted the most frank appraisal yet of the
relationship that existed between public servants and Nalcor senior
executives when approval of the Muskrat Falls development was being whisked
through the Government's approval process.
A 17-year veteran (2001–2018) of the public service, Stanley
rose to the position of Deputy Minister of Justice. He also served as Counsel
to the Department of Natural Resources in the early days of the Muskrat Falls
Exploding NL Transmission Costs A Terrible Blunder
While Muskrat Falls “the dam” is the object of much
well-deserved scorn, the transmission line parts of the project may not be receiving
all the critical attention they deserve.This post examines cost recovery for the transmission assets on A C/kWh
basis to demonstrate just how uneconomic they are.
Along the way, transmission costs in other jurisdictions are
compared and the economics for importing or exporting energy over the Maritime
Link are examined.The conclusion is
that Muskrat and the Maritime Link will do only thing well: deliver benefits to
Surely there must be some aspect of the Muskrat Falls affair in
which there is evidence that the public interest mattered? Actually, no. So far,
the facts only show a myopic determination to get the project sanctioned. At the
Inquiry, even the fundamental integrity of Nalcor senior management is now
On the witness stand, Derek Owen confirmed email evidence that
Paul Harrington, MF Project Director, attempted to influence the conclusions of a process known as a Cold Eyes Review. The Independent Review Panel (IRP) struck for the purpose was chaired by Owen. It was an electrifying
moment to be sure, possibly in part because we may be witnessing how unfettered
executive privilege becomes empowered in an atmosphere of political bombast. The
Commission has not even been able to find government-prepared analysis of the
project. Former Premier Williams was asked by the Commissioner to help locate
According to some observers, John Mallam, P. Eng. ought to
have been — minimally — the Vice-President of Nalcor. He had served in senior
roles at Hydro for most of his engineering career and rose to the position of
Vice-President of the “regulated” subsidiary — utility speak for an entities under the control of the Public
Utilities Board. He now serves on the Nalcor Board of Directors.
On the witness stand at the Muskrat Falls Inquiry, Mallam did
not seem to fit the pliant mould that afforded cronyism to run rampant at
Nalcor's senior level. Upon Nalcor’s creation, becoming the parent of Hydro and
other subsidiaries holding provincial assets including Bull Arm, some senior
executives were shown the door following Ed Martin's arrival.
Danny Williams' inability to address the issues raised in the Grant Thornton Forensic Audit or answer for why the Commission of Inquiry is unable to find any detailed analysis performed by his Administration on the Muskrat Falls project seems not to have inspired in himself even a moment of reflection. Rather, he returned to the Inquiry evidently for his pound of flesh as early critics, David Vardy and Ron Penney, sat in front of the Commissioner, too.
Williams could be seen lurking on
the sidelines, the former Premier still hoping that some of his dignity might yet be
salvaged. He was waiting for his
brother, Tommy, to land a few body blows on Vardy and Penney. He left
Observing Tommy brought to mind a well-known citation
attributed to Napoleon, one I had hoped our legal counsel would be mindful of.
A paraphrasing of the adage might read: never interrupt your adversary when he is in the
process of self-destruction.
Needles in Haystacks, Symptoms of An Ongoing Accountability Problem
Participants and followers of the Muskrat Inquiry and earlier
Muskrat reviews suffer simultaneously from information overload and yet a
dearth of the vital information they are often seeking.Nalcor and Government may have provided reams
of materials but much of it is window dressing that gives little insight into
key decision-making issues.Take for
example the Commissioner’s direct message to former Premier Williams that there
is no evidence of anyone inside Government performing a critical review of
Muskrat information supplied by Nalcor.
Too often it appears that the more important the issue, the
less there is to be found.In today’s
post we revisit the issue of post-Muskrat rates being based on a two-tier
declining rate scheme as a tiny but significant new nugget of information has
been found about it.Such a rate scheme
would be a huge change in policy and one deserving of considerable study, yet
it was buried in a mundane technical report with no basis of justification or
analysis to defend it.
Former premier Danny Williams fired back at critics at the
Muskrat Falls Inquiry calling their opposition to the project "reckless,
irresponsible and shameful." Williams went so far as to term them “bottom
feeders”. Even the Uncle Gnarley Blog earned his wrath referred to as “Uncle Nobby, Nutty or whatever”. Eventually, it seems, the Commissioner had heard
enough. This is an excerpt:
Williams we are living in a democratic society so you being a politician in the
past would know that there are people who are going to agree with you and
people who are going to disagree with you. So people have a right, I assume, to
disagree and while you may not like the tenor of their statements I suspect
that, in a democracy, we have to give people the right to express their views. – Judge
The Commissioner’s rebuke of Williams’ disparagement of
Muskrat Falls’ critics was one noteworthy moment of Williams’ testimony last Monday and
Tuesday, October 1 and 2.
Guest Post by Ron Penney MISSED OPPORTUNITY: THE SCUTTLING OF THE 2002 FRAMEWORK AGREEMENT FOR DEVELOPMENT OF GULL ISLAND
full development of the Lower Churchill consists of two projects: Gull Island
and the much smaller Muskrat Falls project. Gull Island is projected to be a
2250 megawatt project as compared to the Muskrat Fall’s 824 megawatts. Gull
Island was always felt to be the far more economic project.
the time, the then Chair of Newfoundland and Labrador, Dean MacDonald, and
another Board member, Mark Dobbin, broke with the rest of the Board, and
opposed the agreement. The then Leader of the Opposition, Danny Williams, became
aware of the agreement and mounted a vigorous and ultimately successful
campaign to scuttle the agreement.
represented the most recent attempt to develop Gull Island and led directly to
the Muskrat Falls debacle.
When former Premier Danny
Williams stood to be Sworn-In before Inquiry Commissioner, Judge Richard
LeBlanc, last Monday, thoughts of Hans Christian Andersen’s memorable phrase –
the Emperor has no clothes - was difficult to suppress.
The moment had nothing
to do with the witnessing of the diminutive former Premier being held to
account. Rather, it was the recall of a phrase spoken by a child in the Danish novel
who in his innocence described what he saw. “But he isn’t wearing anything at
all”, the child exclaimed. It was the one truth that every one of the emperor’s
subjects had been afraid to utter.
Comments for Muskrat Falls Symposium sponsored by the Sociology Department of Memorial University organized under the leadership of Dr. Stephen Crocker:
I have been asked to discuss the Uncle Gnarley Blog and the
impact it might have had on public understanding of the Muskrat Falls project. I
will be careful not to perform an appraisal best left to others.
One might ask: why blog anyway? It’s a lot of work. One
reason was that no clairvoyance was required to see that this project would end
badly and those who saw it that way had an obligation to warn the public.The business case could not
stand up to scrutiny.Those responsible needed to be held to
Guest Post by PlanetNL Planet
NL15: Forensic Audit Only Scratches Surface of Sanction Costing Errors
The release of the Grant Thornton report on Friday raised
serious doubts about Nalcor’s pre-sanction justification for the Muskrat Falls
project.The report indicated enough
areas where weakly constructed assumptions would add up to show that the Muskrat
Interconnected option would not be the least cost alternative compared to the remaining
Isolated Island option.
Despite these very persuasive snapshots, the Inquiry may only have
gotten just what it asked in terms of the forensic audit’s time and budget
limitations from a team with little experience in electricity utilities.The story is not yet complete enough and the
Commission should pursue reconstruction of Nalcor’s cost models using an
extensive revised set of assumptions developed by an experienced utility
consultant.It’s a significant
undertaking but one that appears essential to allow the Commissioner to
concisely explain the project’s economic fallacy. ……
The decision by Equinor (formerly Statoil of Norway) and Husky
Oil to further assess the feasibility of developing the Bay du Nord oil field,
located some 500 km offshore in the Flemish Pass region, represents good news
for the province. Unfortunately, the Ball Government turned what was a good
news day on July 26, 2018 into one of disappointment and disbelief.
That the provincial government thinks it is solvent enough,
knowledgeable enough, or savvy enough to deal with one of those major oil
companies — with their mixed portfolio of huge capital assets — is a prolongation
of the same pretense that facilitated the reckless decision to sanction the
Muskrat Falls project.
The Forensic Auditor's main conclusion was that based upon
its “findings and observations, at the time of sanctioning” a “combination
of…potential misstatements may have resulted in the Interconnected Island
Option (the Muskrat Falls project) no longer being considered the least cost
option at the time of sanctioning.”
In coming to this conclusion, Grant Thornton has confirmed long
held suspicions that Nalcor planned
to advance sanction of the MFP regardless of the consequences. Essentially, the
Auditor chronicles a narrative that suggests recklessness on the part of Nalcor
Energy. The Forensic Audit was made public by the Commission of Inquiry September 21, 2018.
Hydro Reliability This Winter - At the Mercy of the Weather
The Liberty Consulting Group is a specialist frequently
utilized by regulators to provide critical analysis of how utility businesses
are performing, especially in the wake of major failure.The NL PUB hired Liberty in 2014 to assess
the causes of the January 2014 outage event known popularly as Dark NL and to
subsequently monitor NL Hydro’s plans to upgrade the system.Liberty has evaluated Hydro’s winter
readiness every year since and is monitoring the Transition To Operations (TTO)
efforts to integrate Muskrat Falls, the Labrador Island Link and the Maritime
Dwight Ball kicked off the Windsor Lake byelection claiming that ratepayers and
taxpayers – both – would be spared the burden of the Muskrat Falls project he
wasn’t being fanciful; he was being dishonest. Hyperbole is seldom a sidebar in
any election.But this time the sheer
size of the promises surely made them the main event.Particularly disconcerting is that Ball's rate
mitigation claims lacked any proof of viability.
sensible politicians will avoid over the top promises especially when they know
that they are playing a limited hand. The Premier squarely placed himself among
the less disciplined. Likely, for that reason, the public seemed to treat them
with something ranging from scepticism to derision.
side has been exposed before. His doubtful narrative around the sacking of former
CEO Ed Martin and how the latter still ended up with a multi-million-dollar severance
package contains the same insincerity.
Notice of General Meeting of the Muskrat Falls Concerned Citizens Coalition (MFCCC)The first meeting of the Coalition will take place at 7:30 p.m., Wednesday, September 12th at the Holiday Inn, 180 Portugal Cove Road, St. John’s, to bring our members up to date on our preparations for the hearings which will commence on Monday, September 17th.
This meeting will also be broadcast Live via our Facebook page for those not able to attend in person.
Please let us know if you will be attending in person by RSVP to firstname.lastname@example.org.
The Muskrat Falls Concerned Citizens’ Coalition, headed by David Vardy, Ron Penney and Des Sullivan (the latter also hosts this Blog) wrote the Premier on September 3, 2018 seeking specific commitments and clarity following his statements to the effect that ratepayers would not be expected to bear the costs of the Muskrat Falls project and offered to reinstate the authority of the PUB to set rates.
Following receipt of the letter, the Premier made a further statement on September 6 which fell far short of his earlier commitments. This is the text of the Coalition's response to the Premier's latest comments. This post also provides a link to the full text of the letter sent to the Premier.
Politics is not so comfortable an arena that politicians need only do soft-sell through photo ops and nice-sounding press releases.
Sometimes public policy issues are complicated, require intervention at a high political level and demand considerable analysis. Solutions to the big problems require political shrewdness, dexterity and good relationships at the Cabinet level.
If the politician, even having been appointed to Cabinet, doesn’t grow in the job and fails to learn how to get things done in that highly competitive business, likely he/she will have little to report at the next Poll. While many politicians prefer the soft-serve of social media platforms, the savvy ones — and survivors — will spend a good deal of time making political alliances and setting the stage for when they will need support on a make-or-break issue.
I get no sense that the Minister of State for Veterans’ Affairs, Seamus O’Regan, either understands those rules or has the heft to position himself for the long game.
I am not quite sure who the new Leader of the PC Party, Ches Crosbie, is trying to impress with some of the positions taken in recent weeks.
While he shares the well-known Crosbie name, he is coming up
short in proving that he is his father's son. Regardless of the side of the
partisan divide upon which one sits, John Crosbie, Ches' father, could be counted
on to be forthright and to say publicly — in the Halls of Parliament and in the
provincial and federal Cabinets — exactly what was on his mind.
One example is often repeated in a CBC clip in which he is surrounded
by a throng of frustrated fishers following the declaration of the Cod
Moratorium. Crosbie the elder forthrightly answers one indignant protester: “I
didn't take the goddamn fish out of the goddam ocean!”
“We just want to clarify, there
is no way ratepayers in our province could pay or should pay for the burden of
Muskrat Falls.” The province will be “separating the
ratepayers from the Muskrat Falls debt.” It is a “tremendous burden… a debt
issue, not a ratepayer issue.” These are
all direct quotes which the CBC attributed to the Premier in a by-election
kick-off for Liberal Candidate, Paul Antle, in the District of Windsor Lake.
What else did the Premier
say? He said, “we are not
looking at increasing taxes for people in Newfoundland and Labrador.”
As others have asked, if both ratepayers and taxpayers will
be spared responsibility for the $12.7 billion Muskrat Falls debt, who is going
In PlanetNL12, an analysis of Government’s secretive two-tier
declining rate scheme calculated the impact on three types of electricity
customers.The unfairness of such a rate
scheme was made clear: the less electricity you use, the more steeply your
Government wants you to pay for Muskrat.This approach will tend to hit the many poor and working-class who struggle
to pay their bills especially hard.Meanwhile at the other end of the spectrum, the few who tend to have
large high-energy homes will be pleased with little difference they’ll find on
their power bill.
How did Government and Nalcor keep this unexpected twist of
rate design?Well, they simply didn’t
want to tell us and for about two years they carefully misled us.
18 c/KWh – Warning – Not Exactly as Advertised
The last day of NL Hydro witness testimony at the General Rate
Application hearings at the Public Utilities Board revealed a cruel and
regressive plot twist.
A senior NL Hydro manager on the witness stand indicated that
Government’s post-Muskrat mitigated rate target of 18 c/KWh was merely an average figure.He said Hydro was already considering a rate
design scheme that would be presented to the PUB in the coming months based on two-tier
declining rates.In other words, the
first part of energy used will cost more than 18 c/KWh but the rest will be priced
lower.When all residential users are
added up together, the increase will average out to a 55% over today’s rate.
We won’t know Hydro’s exact details for a while, but a model
is presented here that plainly shows not everyone will be hit equally.A substantial number will be hit hard while a
small number barely take a hit at all. ………….
My late brother, Brendan Sullivan, was one of
the first opponents of Muskrat Falls and wrote a pre-sanction article employing the term“voodoo economics”. It described a scheme contrived by Nalcor to lower power rates early in the
project by back-loading the equity repayment onto future generations. His post
of November 29, 2012 stands the test of time. He was efficient in his words of
caution, too. Brendan could see the project for what it was:
economic smoke and mirrors.
As NL Hydro looks for an illegitimate 6.5% rate increase —
smoothing in advance of socking you in the kisser with a Muskrat-sized punch —
Newfoundland Power (NP) has applied for a 1.2% increase also to take effect
January 1, 2019.
Electricity ratepayers are under assault at every turn.
The PUB has the best (legal) ammunition. It can say “no”.
The public shouldn't get careless either just because the
increase sought is smaller than Hydro’s. NP is attempting to establish a
Guest Post by David Vardy Premier Dwight Ball said this week that power rates will not
be allowed to double. This statement is an important step toward a better
solution. It recognizes that the take-or-pay power purchase agreement (PPA) is
not a workable solution to the question as to who will pay for Muskrat Falls.
The PPA places the burden on ratepayers which is unfair because ratepayers did
not ask for Muskrat Falls. It was imposed by an overbearing government,
supported by a relatively small group of people who stood to benefit.
The government proposes that ratepayers bear roughly half the
cost and that taxpayers pay the rest, citing 2021 rates in the Maritimes at 18
cents per kWh, compared with 12 cents on the Island. Such high power rates,
even when reduced from 23 cents to 18 cents per kWh, would still be
unaffordable for low income people. They represent an increase of 50%.
Guest Post by PlanetNL PlanetNL11:
A Fair Rate Concept for Post-Muskrat
Dwight Ball has been justifying a massive rate increase to 18 c/KWh as fair
because he suggests it is comparable to rates paid in our neighbouring Atlantic
Canadian provinces.Such logic might
succeed if only it were true: in the last PlanetNL post, it was clearly
demonstrated that the expected rate in those provinces would be 12 c/KWh.
Premier’s admission of error has not been heard, therefore it appears Ball is
sticking to his plan to punish ratepayers despite the widespread harm it will
this post, a case is developed for a post-Muskrat rate that would be fair to
ratepayers. But it’s sure to be a solution the politicians will fear.The outcome may shock many. The future
proposed rate is coincidentally - and surely to Premier Ball’s chagrin - 12
Comments on blog posts bring fresh perspectives
and unknown issues to attention.
Wise, interesting and thoughtful comments come
from people in all walks of life, many of whom would never think of writing a
letter to an editor or calling a political office.Not all points of view need to agree either –
an exchange of views can enhance the posting under which they appear and
benefit many readers.Comments can also
be a source of considerable disdain for the posting author and many who read
the comments section.
– Atlantic Canada Energy Rates – the Deception of Parity
Muskrat Falls is concerned, the Government, regardless of party, has a clear
track record of getting the facts wrong. The trend continues as we transition
toward the operations and cost recovery phase of project.The latest misguided gem – being relied upon
by NL Hydro at the General Rate Application hearings last week – is Premier
Dwight Ball’s stated rate target of 18 c/KWh for residential rates.The Premier defends this as being comparable
to expected rates in the other Atlantic Canadian provinces.It doesn’t take much research and insight to
demonstrate that the Premier couldn’t be more wrong on this issue. …..
Noticeably more people, including readers of this Blog, want
to see public discussion of a resolution to the financial mess created by
Muskrat. While their numbers are still small, their voices are discernible. It
seems that most people are still in denial as to the scope of the problem. Delusion
causes them to believe that government would never imperil the solvency of the province.
Yet, as one Muskrat watcher observed recently, the public will be in a "rage when they learn just the simple truths" of what the project will cost them in relation to the cost per KWh of thermal generation at Holyrood. Likely, that rage will be compounded when people learn the extent to which the Tories and the Liberals failed to share with them the whole truth of the debacle.
features an interesting PBS documentary called The Race Underground dealing
with the technological, political and social challenges of building the first
U.S. electric subway, in Boston, in the late 1800s.
project had a lot of naysayers. Some were concerned about the destruction of
the historic city (especially Boston Common, America’s oldest public park);
others about the enormous financial risk described as “… a jump into the
unknown.”The superstitious and the
religious feared that going underground meant getting close to “the
netherworld”. Then there were the dangers of electricity.
vote “by the narrowest of margins” brought the matter to a close and the subway
was built. The people loved it. The subway cars were clean and clothes ceased
being fouled by sooty coal-fired steam engines. Congestion in downtown Boston
disappeared and allowed even more people to come in. The suburbs grew rapidly.
Not lost on anyone was the presence of far fewer stinky, slow horses on the
streets. For investors, the new system was more profitable than the old
must be nature’s screen; one that affords people the capacity to not be weighed
down by the skewed and self-serving utterances of others. Gord, an old University friend, had a single
word for them… which I plan to share with you.
surprisingly, the press release recently issued by former Nalcor CEO Ed Martin on
the heels of comments by Stan Marshall comes to mind.
the current CEO was attempting a little morale building — at the expense of the
truth — following the successful transmission of Upper Churchill “recall” power
across the Labrador Island Link. Understandably, he couldn’t wait for VP Gil
Bennett to get the lead out on the generation component of the Muskrat Falls
Guest Post by James L. Gordon P.Eng.(Retired)
Waybackin2014,myinterestintheNorthSpurstartedwhenIreadashortbookbyCabotMartin titled“MuskratMadness”.Itconcentratedonthequestionablestabilityofanaturalsidedamcalled theNorthSpurwhichcontainedlayersofsandysiltandsensitiveclay.IemailedCabot,amember ofthe2041committee,onAugust27thcommenting onhisbook,and have
commented several times on the Uncle Gnarley blog on the North Spur safety.
NALCOR describes the Spur as -
spur forms a natural earthfill dam,
witha crestelevation of about
60 m, and about one km long, which connectsthe
bankof thevalley…….The crest width varies
fromabout1,000 matits northendtoabout70m atits southend whereithasbeennarrowedby erosionandlandslideactivityinthepast.Theheadacrossthespur ispresently16mfromriver
stabilizationmeasuresarethennecessarytoensure itslong-termstabilityunderbothnormalandextreme waterlevels.Thesoilsformingthespur consistofacomplex interbeddedsequence
ofrelatively lowpermeability silty
sandsandsands, and sensitivemarine