P3s - GOVERNMENT STILL IGNORING HIGH RISK

When candidates from either political party engage the public in this General Election, they might hear exasperation over the financial state of the province. Now that the Government has discovered a (relatively) new financing tool, Public Private Partnerships (P3s), with which to fund capital projects like hospitals and long-term care centres, everyone needs reminding that this new credit card has to be paid, too.

In 2017, Mary Shortall, Federation of Labour and CUPE local President, vigorously opposed the idea and issued her position following Ball’s announcement that the Corner Brook hospital would be built via P3. Unfortunately, her concerns sounded far too self-serving and the subject went quiet.

In the two years since, the Ball Government has taken a deep dive into the locally-untried P3 arena. Employed on occasion by most provinces, it is a scheme in which private contractors design, construct, maintain and finance facilities, often for a 30-year term. Typically, the government takes ownership of the facility when the contract ends.

WHEN DOES DECEPTION BECOME A CRIME?

Guest Post by David Vardy
Have Nalcor and government officials transgressed against the law or have they simply neglected their duty to serve the province, notwithstanding the consequences of their actions? That is the question. 

Section 7 of the terms of reference of the Muskrat Falls Inquiry reads as follows:

“The commission of inquiry shall not express any conclusion or recommendation regarding the civil or criminal responsibility of any person or organization.”

This suggests that any action based on legal transgressions must begin outside of the Inquiry. As the Inquiry progresses through its second phase there may be evidence which will point clearly to violations of civil and/or criminal law. The question now is whether sufficient information has been compiled to determine what recourse the people of the province have as a result of the injury and damage to the public good.

PIXIE DUST SHOWERS SPRING ELECTION

Except for the ardent cynic, a sprinkling of magic transforms even the dullest bore. The Liberals hope that the majority of us still believe. That may explain the recent resplendent shower of pixie dust.

In February an MQO opinion survey put the Liberals (44%) and the Tories (42%) in a virtual tie. What has changed since then to bolster Liberal fortunes? Why call the election now rather than later? Why are Liberal election missiles falling from the sky?

In all likelihood, the numbers were not as bad for the Liberals as the MQO Poll indicated. While polls are a mere snapshot in time, any analysis gets weaker as statistics are bundled. The MQO Poll combined “decided” and “leaning” voters. 

GILDING THE LILY ON 61 CENT POWER

Guest Post by David Vardy
At the recent Nalcor AGM CEO Stan Marshall repeated his mantra that Muskrat Falls will “finish strong”. He said that its costs are comparable to, if not lower than, the unit costs of other Canadian energy projects. The Chief Financial Officer bragged about the growing asset base and spent little time warning of the large liabilities.  When asked about dividends at the Muskrat Falls Inquiry the CFO said they were “rock solid”.

Nalcor’s annual report spoke in glowing terms about the project and about the profitability of Nalcor. The prospects of growing dividends were glowing. Suddenly the problems had vanished and we were living in a world of milk and honey. What had changed to spark this bright and cheerful outlook in the face of a financial disaster? Was Nalcor “gilding the lily” along with the politicians who are looking to sweep Muskrat Falls under the carpet in advance of imminent federal and provincial elections.

THE BUDGET: TRYING TO HAVE IT BOTH WAYS

On Tuesday, Finance Minister Tom Osborne delivered the Province’s seventh deficit Budget in a row. Only the Atlantic Accord arrangement, amounting to $2.5 billion, salvaged any pretense of the Government’s ability to manage the public accounts.

To hear the Finance Minister, you might have thought the Liberals had spent the last three years as a deficit slayer. In fact, all that has changed is a reduction in the capital funding for the Muskrat Falls project.

The Government’s first Budget in 2016 levied a bevy of taxes and fees on the public. They had no heart to right-size programs and operations. As it stands Current and Capital Account Expenditures have risen to $8.6 billion (Statement III). In contrast Revenues are only $6.2 billion (Statement II). The real deficit, in contrast to the numbers used by the Government ($575 million without the Atlantic Accord transfer) is actually $1.4 billion. Budgetary cash requirements exceed revenues by $1.86B.

CEO MORE POLITICAL TOOL THAN ECONOMIST

Guest Post by PlanetNL
PlanetNL25: Nalcor CEO – Economic Skills Are Non-Essential to the Position

At Nalcor’s Annual General Meeting last week, CEO Stan Marshall offered up a view on Muskrat not heard before.  He has chosen to reframe the Muskrat Project as a combination of a good generation project saddled down by the burden of much too costly transmission systems.  Stan further suggested that had Muskrat energy been sold exclusively via Quebec transmission routes, it would be considered an attractive project, the envy of those other provinces still building their questionably expensive hydro projects.

In the PlanetNL17 post, entitled Exploding Transmission Costs a Terrible Blunder, the cost of Muskrat Project transmission was analyzed and found to be just as stupidly expensive as Stan says.  It’s nice to agree with the utility occasionally.  His assertion that Muskrat generation could be economic, however, is a long way from reality.  This post does some quick calculations to show that Muskrat Falls generation in its simplest guise isn’t viable in any market.

PUB REJECTS ROLE FOR COALITION IN RATE MITIGATION ISSUE

Guest Post By Muskrat Falls Concerned Citizens Coalition

When we applied for standing at the PUB hearing on rate mitigation we expected that the Board would welcome a broader spectrum of views than other intervenors could offer. We were surprised and disappointed to be turned down when the Muskrat Falls Concerned Citizens’ Coalition (MFCCC) application was rejected. The Board’s response of March 26, 2019 reads as follows:

TOWNIES vs BAYMEN – WILL TEMPERS FLARE?

Guest Post by PlanetNL
PlanetNL24: Time to Rezone the Island Grid


The matter of backup power needs on the Avalon, as analysed in PlanetNL23, brings into focus a bigger issue about fairness to the many off-Avalon ratepayers.  Nalcor’s Reliability and Resource Adequacy Study confirmed that Muskrat energy is to be delivered specifically to the Avalon end of Island grid to meet Avalon power needs.  The future addition of new Combustion Turbines (CTs) is also a response to  an Avalon-specific risk issue. The issue is not a new one – just an ignored one.  

The high cost Holyrood Thermal Generating Station existed principally to satisfy Avalon winter power needs while the off-Avalon portion of the Island Interconnected System (IIS) was essentially self-sufficient on low cost hydro-power.  Despite this inequality of need and inequality of cost of power, all IIS ratepayers pay an equal rate.  With Muskrat rate increases just around the corner, it’s time to put this issue under the spotlight and propose a fairer allocation of costs.

ATLANTIC ACCORD: DEAL OF A CHARLATAN

One word describes Premier Ball. That word is “charlatan”. Other synonyms offered by Wikipedia include trickster, fraudster and hoaxer. All describe a person who is not forthright. Ball is selling his “Atlantic Accord” deal as something to be proud of. It is anything but.

On Monday, April 1^st, the Premier announced in his own words “an agreement that ensures Newfoundlanders and Labradorians are the principal beneficiaries of their offshore resources, strengthens how those resources are developed through joint management, and will also achieve electricity rate mitigation.”

How “rate mitigation” for the Muskrat Falls project found its way into a deal about the Atlantic Accord, as former Premier Brian Peckford noted in his commentary, is baffling

NEW NL HYDRO CHIEF SHOULD START OVER

Denial and deception came easily to the politicians and bureaucrats who had the audacity to sanction Muskrat.  Jennifer Williams, the new NL Hydro President, should decide now if she will take a different path than that taken by the recent Hydro Executives who helped enable the project.

Hydro management remained quiet as Hydro’s Board of Directors imposed a 50-year “take or pay” contract on the province’s ratepayers — for the full capital cost of Muskrat Falls. This contract flies in the face of Hydro’s obligations to protect their customers and to supply power on an effective and efficient basis. The Board shares in the blame for the creation of an economic condition that threatens our economy and the affordability of basic heat and light.