BIG BALL PROMISES: LET'S GET THEM IN WRITING

“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 to pay?

This Post is not seeking an answer to this question today, though the Saturday Telegram's follow-up to the story has Ball backtracking. The Premier indicated that his plan "does not require wholesale changes to the project's financial structure" requiring a transfer of debt from Nalcor to the provincial government. Indeed, the contrary is true. Taken on their face his remarks were an explicit repudiation of the Power Purchase Agreement (PPA) - that's the "take or pay" deal which hooks ratepayers for the full cost of the project. 

A second issue arising from the Telegram article (kudos to Reporter David Maher) is that Ball's comments caused DBRS, a Bond Rating Agency, to seek clarification from the Government as to its rate mitigation plans. Having done so, DBRS vice-president Travis Shaw stated that the firm "still expects the Muskrat Falls related debt  to be collected from electricity rates..." This suggests that the Department of Finance told him that Ball's promises were nothing more than election talk which, in turn, allows DBRS to maintain the fiction - for bond rating purposes - that Muskrat Falls is self-financing; in other words, that the revenue required to service the project will all come from ratepayers.

The Premier also gave some (verbal) undertakings to the public last Wednesday which are critical to any resolution to the problem Muskrat represents. Those may have more practical considerations than any flight of rhetoric.

Let's begin here. 

Photo Credit: The Telegram

Again, quoting the CBC, the Premier affirmed:

      1.      That the Public Utilities Board (PUB) “will be brought back” to set “consistent, affordable” power rates.

      2.     That there are a “number of options” on the table, which will include talks with the federal government.

      3.     “The final cost of [Muskrat Falls] will not be known until 2021, 2022, so I just want to add reassurance to ratepayers in this province that they will not bear the burden of Muskrat Falls.”

Let’s take each in turn:

      
      1 .      The PUB was prevented — by the Tories — from assessing DG3 estimates for the Muskrat Falls project. David Vardy and others have advocated that the PUB should be returned the right to review the project based upon a “prudence” evaluation — an appropriate benchmark employed by rate-setting agencies like the PUB — to determine the amount of capital, if any, expended on the project which is legitimately the ratepayers responsibility.

The Premier should be asked to declare in writing — before the date of the by-election on September 20, 2018 — that when the House of Assembly opens for the Fall Sitting, he will table legislation with the effect of directing the PUB to perform this review. The Premier need not wait for the Muskrat Falls project to be finished, having already confirmed that the current cost is excessively burdensome for ratepayers.
  

      2.     The Premier has (finally) acknowledged that the options to deal with the MF issue will include talks with the federal government.

The complicity of the Feds in the Muskrat Falls fiasco has been dealt with extensively on this Blog. It is perplexing that the Premier has attempted to spare the Prime Minister from a serious error of judgment by the previous Conservative Administration under PM Harper.

Remember that the Feds were not just enablers; they were responsible for shoddy analysis and for having given Nova Scotia veto power over the Federal Loan Guarantee, which that province used to overcome a pliant Nalcor (see links below for full explanation).

Secondly, apologists for Muskrat — including PC Leader Ches Crosbie — ought to be able to do the math and realize that, under no circumstances, can the Province shoulder the burden of the $12.7 billion Muskrat Falls debt without seriously undermining basic services, and dealing a blow to fundamental aspects of civil society in this province.

For both those reasons, the Premier’s undertaking is late but still necessary. The Premier now should, this Fall, lay out - publicly - his plan for eliciting Federal support and agree to report to the Province by March 31, 2019 on the progress he is making. 

He should also have the courage to describe the support he has received from the seven federal MPs, all of whom are in hiding on the most critical problem the province has ever faced.
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Related:
Federal Complicity: The Untold Story of Muskrat Falls
A Debacle and Federal Governments Role in it (Part II)
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      3.     This item bears repeating. The Premier was quoted stating: “The final cost of [Muskrat Falls] will not be known until 2021, 2022, so I just want to add reassurance to ratepayers in this province that they will not bear the burden of Muskrat Falls.”

For me, an ominous cloud of scepticism hangs over those words. Is the Premier suggesting — and who would be surprised — that overruns beyond the figure of $12.7 billion can be expected? Would the Premier confirm whether or not this is the case?

If further cost overruns aren’t the issue, he can only be kicking down the road consideration of the sum of capital costs which will be borne by ratepayers. If that is the purpose of his rhetoric, I expect that the voters of Windsor Lake will not be happy.

Since his Administration took Office, the Premier has not handled matters well when they pertain to Muskrat Falls. Likely many in the Liberal Party wish he was more skilful and more forthright, too.

The Premier was unwise to make his lofty claims directly on the heels of a by-election. However, he can cure any cynicism that his remarks have evoked simply by committing his undertakings to writing, complete with deadlines for when the public can conduct its assessment of whether he has performed as he promised. 

Without such a written confirmation, last Wednesday’s rhetoric was likely just that.