Wednesday, 17 April 2019

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.

 In addition, Debt charges and financial expenses are nearly $1.4 billion, second only to the amount budgeted for Health Care. Where is the evidence that the deficit is under control?

Those figures alone suggest that we are ignoring the consequences of a debt ceiling and that the ‘drunken sailor’ within still has control of our spending habits. But there is more. When the ‘real’ rate mitigation plan arrives this Budget will be judged a travesty.

A $796 million (current account only) deficit is projected for 2020-21 and — get this — a surplus of $23 million surplus is forecast for 2022-23. That happens to be when the incumbent government will be heading back to the Polls.

When neither the Tories nor the Liberals have made a serious attempt to reduce spending over the past seven years, who really thinks that the next Administration is going to eviscerate government programs to the tune of $819 million — in just two years — when re-election is a more self-serving option?   

It won’t surprise anyone that the direct debt is $14.5 billion, even having booked the full $2.5 Atlantic Accord settlement. The Total Public Sector Debt is nearly $23 billion.

It may surprise you — though it shouldn’t — that, immediately after the Premier released his “Rate Mitigation” Plan, the larger $23 billion figure became the real “Direct Debt”. Ball’s Plan (which, by the way, is just as fake as Ches Crosbie’s “CHEAP” Plan) assumes very little revenue from the sale of Muskrat power — implicitly awarding the whole Muskrat Falls “investment” the status of “sunk cost”.

Otherwise, for the past two weeks the skies over the Province have been abuzz with Scud missiles raining gifts down on a public not quite ready to engage about their fiscal future. Taxi drivers, lawyers and artists alike filled the air with a sense of unwarranted expectation, all in a tizzy over the dreadful prospect that the goodies had run out before the Budget was even read. The Finance Minister did not let them down.

Elections licence fiscal insanity in politicians inured to virtues of responsibility and common sense. Neither rain nor snow — nor an empty Treasury — could silence the removal of the 15% sales tax on automobile insurance or the end of the deficit reduction levy. From no one could he heard the words: ‘we can’t afford that’. As desirable as those measures might seem, doesn’t the prospect of hitting your head against a debt wall warrant something more than “aw shucks”?

Why does the seventh deficit Budget (effectively) in a row not scare us? Have repetitive deficits dulled us into benign anticipation of the event? Is there no point where, collectively, we become wary of our own complicity with reckless leadership? When do we abandon the pretense that this can end well?

Let’s be clear.

There is nothing new in people fooling themselves. It’s just that many forget that not everyone will be harmed by a failed Treasury.

The well-to-do and the entitled will do just fine, thank you very much. For everyone else the Government has an effective PR machine, but only until the money (borrowing, that is) runs out. Accordingly, why would a new penitentiary be any less ideal for re-announcement than, say, the Corner Brook Hospital? What better substitute for aggressive and decisive fiscal measures to deal with the deficit than to downplay the enormity of the problem? Doesn’t the announcement of hundreds of millions in capital projects belie the fact that a debt problem even exists?

Failing rescue with the price of oil, haven’t we just left the problem to be fixed, not by political leadership, but by happenstance?

For that reason, doesn’t serendipity now qualify as a legitimate ballot box substitute?

Who, Liberal or Tory, doesn’t get this?

As to the NDP, what can be said except that they either don’t understand that a hand-up for the socially and financially needy is threatened by the gross mismanagement of plentiful resources, or else that they are afraid to articulate the fact?

The real tragedy of Newfoundland and Labrador’s democracy is that it enjoys neither good government, good opposition nor a public prepared to put themselves out in pursuit of either. The public’s complicity with governmental dither only advances the edict of the bondholders. There being no evidence of change and the bill for this collective collusion not having arrived, it seems people just hope against hope that, when it does, their own interests will not be submerged to the public interest.  I guess there isn’t much chance of seeing protesters collide on the parkway demanding a few cuts.

For all those reasons, as we head into the Province’s 21st General Election, Tuesday’s Budget is less a forecast of revenues and expenditures for the current fiscal year than it is a financial metaphor for a society that actually may be far less in denial than has been suggested. More likely, we just want to have it both ways.

39 comments:

  1. Reminds one of the Great Bank Crash! Or the AB election:-)

    https://www.aci-iac.ca/art-books/alex-colville/key-works/horse-and-train

    Good luck all.

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  2. Is it reasonable for the Federal Government, having enabled Muskrat Falls, purchase it from us for what cost to construct? It is supposed to be an asset, right? If Canadians think it is a bad investment, then ask, why did the Federal government aid and abet this criminal act on a tiny population of half a million people?

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    1. Because the "criminal act" was committed by a tiny band of L'il Trump Williams muskrateers, aided and abetted by the fawning votes of that teeny tiny population. Look in the mirror, you're one of the culprits. Info from inquiry seems to suggest that critical information was withheld, which would constitute fraud, and the elected officials of that teeny tiny population were asleep at the wheel.

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  3. Can't analyze the budget, will leave that to the experts, but some numbers that jumped out at me, or seem important.
    Operating cost or expenditures has been held at just over 8$ billion over the last 4 years.
    Deficit 575$ million.
    Borrow 836$ million.
    Nalcor (491$ million) Still borrowing almost half billion to sink in muskrat. (Imagine)
    Total public Debt 23$ billion.
    Debt charges per year, 1.4$ billion.
    Servicing debt up 4 percent
    Now 19 percent of revenue goes to service debt.
    When that number reaches 25 percent, nearing bankruptcy.

    UG says not an accounting of expenditure and revenues, but rather a society in denial. People are just fooling themselves.
    By all indications an election will be called in a day or so without passing this budget. So we could say the election is a referandum on the budget. Now where is Chesses budget??? Now if he had presented his budget or a good indication of what his numbers would be, we would have an alternative, but with only one choice, do we say yea, or nay. Is the devil you know better than the devil you don't know????? People will have to decide...soon...and I am still predicting a hung jury...a minority govt. Joe blow.

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    1. Joe, both parties represent the same old colonial trickle down ideology. You might say that even a numerical minority will bring about a continuance of the "rape and pillage" of the offshore petro resource, subject to price setting by the Trump Allies.

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  4. Where do you turn when there is not a viable alternative to our current politicians? They are all self serving bureaucrats.

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    1. You put on your GiletsJaunes. None of the three parties are fit to govern, and there is no way people like Des,Dave,PlanetNL etc would ever be selected to be a party leader because they would upset the status quo. In Canada, if you don't toe the party line, you are kicked out by the party leader. We are in big trouble. It more like a dictatorship in disguise. Do we fight, or take the lazy route and wait until we default on major obligations and a commission of government is forced upon us, again.

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    2. Considering Des does exactly the same as Danny Williams did, NL would not be in any better position with him as a leader. He is anti-Qc, he keeps searching for responsibility outside of NL, he blames without bringing any solution of his own, he has the permanent victim syndrom and more. In all cases, there is not enough money in NL to fix the mess. Qc is the only province with surplus, is the one controlling UC, is the one in position to sell / use that surplus energy, etc. Until we find a leader who is ready and capable of acknowledging that and materialize that to a agreement for Qc to babysit us, there is no hope.

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    3. Dude, do you even know what "bureaucrat" means?

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  5. You reference total public debt to be 23 billion. However, this ignores the fact that Nalcor is the publics too. If the Government chose an amalgamation policy for its crown corporations rather than as an investment our total debt would increase by more than 50%. As of September 2018 Nalcor debt was 13 billion. Amalgamtion would also increase our net debt substantially considering capital assets are below the net debt line. Our financial situation in total is a disater and the Government is hiding it. Just think they say We need 200 million of 726 million from the feds to mitigate hydro rates ..we are borrowing 1.9 billion a year to operate.. and we can bring ourselves back to balance in 3 or 4 years without the feds? They spin words to appease the public without giving them the whole truth.

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    1. The whole truth is a rare commodity, Todd. Bruno claims to speak the truth, and I challenged him two days ago on his truthfulness, and so far no response, which is unusual for Bruno.
      On the other hand, Average Joe uses the handle Average Joe, Joe Blow etc, but his summary @ 10;03, I think, truth be known, he is a cut above average, on his analysis. What was our interest payout in 1932, was it 30 % or 60 %, just guessing, thinking 60?
      Winston

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    2. This is from 2018 "Nalcor debt troubles bond rating agencies"

      https://www.cbc.ca/news/canada/newfoundland-labrador/newfoundland-labrador-credit-rating-1.4757834

      So, if we were to add up all the core government debt as well as all its crown corporations, what would we get? 30+ billion?

      As for the asset side of things, we have many billions in deferred maintenance. MUN, hospitals, roads - everything is just barely patched together. We have abandoned facilities that we'd be lucky to sell for $1, or worse, will incur massive environmental clean up costs. Then, with talk of global warming and increased rainfall, we need billions to add berms, larger culverts, higher bridges, etc.

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    3. Now Todd and others, as average citizens we have to stick as close to the facts as we can, and the 23$ billion does include nalcor debt. But if you were right and add another 50 percent we would have a debt in excess of 30$ billion, and that would put us well over the 25 percent borrowing to service the debt, and according to Hollett and his source of quoting Marc Joffe would would be in insolvency, and our ability to borrow would be lost now. Average Joe. And I just put these numbers out there for others to consider and comment, but be reasonable or explain your numbers in more detail, without throwing in all the kitchen sinks too.

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    4. Seems we are on the slippery slope, and the slope keeps getting steeper, as to borrowing and amount of interest being paid out each year, a ticking time bomb. We were in no position to abandon the LEVY TAX, nor the auto insurance tax.
      We pay HST on electricity, yet for most it is essential for heating and basic uses, as necessary as food. So too for people with paying for home attendant personal care for wiping your bottom, assisting bathing etc, are HST applicable. Yet 60 million a year now lost from the auto insurance vote buying. If we were not so much in debt, all tax reduction would be welcome. Yet all Liberals are smiling, Don't Worry, Be Happy, The Way Forward.
      Like the Titanic sinking, time to get out hymn book ......what did they sing? Nearer my God to Thee? They were in a rush for a record crossing were they? And too, Muskrat was a MadRush. No prudence. No risk avoidance. Insanity with oil on the brain. Still oil on the brain, lets double production, no risk, it will save us?
      By the way, Roosevelt's chat with Churchill, (Malone's book I wonder), Roosevelt said Nfld was probably a good place for raising sheep.
      Was that part of the recent 1 million study?
      Reading about a woman in Iceland who stopped a hydro project, maybe about the size of Muskrat, to flood an area in her valley similar size. She opposed it and was successful to stop it. She is a shepard, a flock of 500. Never hear about sheep farming promotion here, with The Way Forward,yet in the past many raised sheep.
      Winston

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    5. Lol...you are right on the money Winston , about raising sheep. Saw it somewhere a couple days ago included in the way forward, where it was mentioned, salt water lamb or salt water mutton. Also agree with you on the slippery slope in borrowing. Where are the economist, finianciers, MUN graduates and faculty, government servants, teachers, lawyers, doctors, trades persons and fisher persons, they all understand this madness. But of course we know only about 50 percent will even take the task of going out to vote. More seniors in the homes will vote than the other sigament of the population as the vote will be brought right to those in the homes, as they can be told how to vote. Happens every other time so sure it will this time too. So those in positions of authoritywill be able to rake in all the senior votes. If you are in too coshey of a position to vote, better do it this time before your cosheness runs out says Joe blow.

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  6. MORE ON BRUNO BATTERIES;
    Pumped water storage, (not assessed for the Isolated Option), works something like years ago, when everyone in the house used the same water in the pan to wash your face. Reuse the water, not that dirty, just rinse the facecloth in the water after each use. When you had to lug it in buckets, it was not wasted.
    So, as t pumped storage, when there is a surplus of electricity from the water generators, you can pump the same water back up and reuse it again. It uses energy to do that, but is about 80% efficient, so very economic.
    Will Bruno (Tesla batteries) be cheaper and better to store energy?
    There are presently 78,000 MW of pumped storage to come online by 2030.
    Present worldwide PS is 9000 GWh
    The potential worldwide for PS is 22 million GWh, which if my arithmetic is right, is equal to 220,000,000 Bruno batteries the size of the large one Tesla supplied to Australia, 100 MWh for about 120 million canadian dollars, and which Nalcor is considering for Nfld, that can give a few minutes of stored energy. Bruno batteries is seeing some application to aid renewables, but so far, little uptake and expensive, and limited capacity.
    Pumped storage is referred to as the "World's Water Battery".
    One might say, water is one of God's best inventions as a storage device, including the once familiar hot water bottle.
    Can the Bruno battery displace God's Water Battery, as to cost effectiveness, and if so , when? MUN should provide the answer pronto?
    Winston Adams

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    1. So now we have "Winston Water Batteries":-)

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    2. Cute Robert, made me smile.
      Someone else on this blog mentioned pumped storage before me but was anonymous, so I can't claim title to the Water Battery.
      There are several PS in Canada and some more now proceeding. Many PS worldwide are 1000 MW or bigger, one in the USA almost 3000 MW.
      I was surprised to see Bruno batteries on Nfld Hydro's recent plan for options sent to the PUB, and given MF boondoggle, should be considered with caution. So I ask the question as to cost effectiveness, as others may have insights. PS would have long life, unlike batteries.
      As to Bruno, I was pleasantly surprised to see he referenced to you an item from Scientific Americian , instead of his usual sources. Not sure how he interprets what they say as to batteries, but SA is a reliable source. Lowest cost, reliable renewable power is desirable, and as we see MFs has not worked out.
      You are as sharp as ever, Cheers.
      Winston

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    3. Anyone know if Hynes Lake or Cat Arm sites use pump storage.

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  7. On Ramona (CBC Radio) today, she had a topic "how to attract and retain immigrants to NL". Who in their right mind would come here to live if they had a choice of nine other provinces? With the way this province is run (not 100% the governments fault mind you, because the majority are happy if the province goes in the hole as long as they get what they want- examples are too many to mention). Yeah, move here? You must be crazy !!

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    1. Attracting immigrants to improve our province is a moronic concept. If we had low unemployment (instead of 13%), our people wouldn't have been leaving in the first place. Our population is about the same as it was in 1970 because of out migration driven by unemployment. Our population should be a few million. If we fixed these problems for ourselves, immigrants would move here because of the vibrant economy, not because of special programs.

      There seems to be something obscene about funding immigrants to stay here when our own children have to leave because they can't get a job, find waiting lists for trades programs or can't get the hours needed for apprenticeship, don't qualify for EI or welfare etc. and have to chose between living with their parents, or moving away for a good job, training and better life.

      In St. John's I often ask immigrants (often running small restaurants) what they did before. Often you get amazing responses like "I have a Ph.D. in Analytic Chemistry!" These people are unlikely to stay here permanently any more than our local graduate students will.

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  8. This Budget is nothing but an Election stunt, there is no commitment,numbers are just to confuse the voters. First question we should ask, Do we need election now and why?.Why 6 months ahead of the mandate? Best time would be to combine with Federal election and have savings for NL Tax payers or wait until the term expires.So think before you cast your vote.

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    1. Ball is supposed to testify at the Inquiry, and wants to avoid the fall out of that. Right now he can blame totally the Tories, and the Inquiry adds to that so far. Now Ball is fearful of the Inquiry, as to oversight etc under his watch. He could have paused and reassessed, he could have fired Ed Martin with cause, and maybe much more, now he is ignoring the PUB and other reports files with the PUB as to issues of rate mitigation, as he has bypassed that to say 13.5 cents.
      PF

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    2. PF @ 23:43:

      No doubht that DB should have acted more prudently when moving to terminate EM - unfortunately, he did not and EM was terminated without cause. Interesting to note, even if EM had been terminated with cause he still would have gotten about $4m - without cause meant $6m - so, really the issue was with the employment contract.

      Have you seen any language in the FLG that says 'pausing' MF was an option - my reading says there isn't and pausing would have lead to default, because changes by the COD must be accepted by Canada and Emera (NL doesn't get to change costs of COD on our own). The forensic audit doesn't even mention 'pausing as an option - GT says once the FLG was enacted NL was committed to completion.

      Also worthwhile reading the commitments we have under the Emera-Nalcor power supply agreements I posted earlier this week.

      I also suspect that the FLG might have some impact in how Nalcor is broken-up - certain pre-existing assets must remain connected to MF, while new assets aren't related to MF when considering security of the FLG.

      PENG2

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    3. PENG2

      I could not find language per se identifying MF "connected" assets versus others. (I agree it would have been logic thought)

      What I saw was of ALL Nalcor assets. Also it included Nalcor's obligation to maintain/preserve those assets from degradation or disposal.

      With those kind of collaterals, ANY lenders/investors/institutions/pension funds could have provided that loan guaranty.

      At that stage (and with NL's resolve to proceed), MF was a go anyways you look at it.

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    4. Ex-Eng @ 11:07:

      OK, we have a bit of mis-understanding here - I agree all Nalcor assets are connected to MF via security (no distinction for LIL, LTA etc), so I agree even our Island hydro assets could be affected.

      My point was assets a 'Nalcor type identity' (ie a separate O/G arm of government) develop after the FLG - if those assets are developed by a different entity, then they wouldn't be held up as MF security.

      Agree - MF was going ahead as of 2003, no matter what obstacles arose.

      PENG2

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    5. Thanks, it makes sense!

      And please keep posting; your hands on technical knowledge is very interesting to read. It also draws interesting debates.

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  9. What a spectacle today, seen on NTV, the election call.
    Ball and cronies, all smiles and applaud, the Way Forward, Onward not backward. Disgusting to watch, with hundreds of millions announced new spending, as we sink deeper in debt. Never noticed before, but Ball has a really big mouth, but says little of substance. The whole bunch reminds me of the mafia.
    Then Ches Crobie, best yet by far, as to performance. Ches is usually stiff, but today was relaxed, bit of John's style, with humour: "Dwight has no fight", and "Don't mess with Ches", but we need more than a smile.
    But then his warning Quebec about taxing Churchill Falls power or the water. After losing so many court battles with Quebec, why wasn't this done before if it has merit? Or just Quebec bashing, as Heracles says is a theme that works with Nflders.
    Both Liberals and Tories are betting heavily on the offshore for our salvation.
    The NDP leader talking more on the need to diversify our economy, and even mentioned climate change as an issue. She is an economist, so maybe knows the government should economise.
    Too bad Ches has the Tory baggage, and used Peckford's words about the sun shining again. Is Peckford really an asset now? Muskrat Falls is Tory baggage, worst project in our history, and Ches's Cheap Plan: Ball plan promised cheaper rates, even if a lie.
    I hope the NDP leader don't wave her arms too much when she speaks. It distracts from what she says. She says she'll wait for the PUB and their assessments before addressing rate mitigation. Sound sensible. She is new, and a short time to become known. All claim to be working for the average Joe.
    AG

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  10. Yes I agree, Ball should have "paused & reassessed" MF & not let Martin get away with huge payout, a very very poor performance by him & his Govt.In my opinion, this Liberal Team does not deserve 2nd chance. I hope voters will see how Ball is trying to confuse the public. 13.5 cents is another dream, Island consumers will pay either directly or indirectly through Taxes. Regarding MF I believe that consumers must get an apology from someone responsible for MF.Unfortunately todate, there seems to be no one responsible for this development.

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    1. MR @ 09:48:

      I agree - not much separation between rate payers and tax payers, the populace owns the $12.7b, about $550/yr for every 1 of the 500k people in NL for 57 years just to repay the capital.

      I also agree that DB is weak, but do you suggest we reelect the 6-7 PCs that voted for MF in 2011?

      You are off base in saying we had an 'pause and reassess' option for MF available after the FLG was enacted - NL was contractually committed, politically we were committed in 2003 by electing DW.

      PENG2

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  11. PENG2
    For sure I can not suggest how & to whom to vote, that is up to voters.Regarding "pause & reassess" there are examples for worse contracts, which were paused & reassessed . For example the new PM elected last year i Malaysia, paused a Rail & a pipe line contract with China, much bigger than MF & had a big penalty clause . They just renegotiated, no penalty and savings. In our case negotiation with NS or feds would have been nice.

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    1. MR @ 16:26:

      The difference with those contracts and MF is that Malaysia didn't have terms that allowed the other parties to come in and complete the works and just send Malysia the bill - with MF, that is what could happen if Canada or Emera were to refuse a NL request for a 'pause'.

      If we consider the timeline:
      Nov 2015 - DB elected
      Apr 2016 - EM out and SM in at Nalcor
      June 2016 - MF costs realigned to ~12b
      Nov 2016 - MF Inquiry called (granted I still think this is too early)

      I just don't see where a negotiation should have occurred with a pause in this timeframe - and we know that GT confirmed that cancelling isn't an option, and there is no language for 'pause' in the FLG so it would have to be asked for. Even if NL started negotiations for a pause in May/June 2016 this would have taken 1 yr or so (NL couldn't of our own accord stopped work, we would have been in default) - a pause would have been for the winter of 2017/2018, exactly when the Inquiry was starting up.

      What would the Federal Governments stance have been if they granted a 'pause' in fall of 2016 and then the province called an Inquiry (my guess is they would not have been happy)?

      PENG2

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    2. MR @ 16:26:

      Just so we know what would have been requested of Emera and the Federal government at this time in 2016:
      1) additional loan guarantee
      2) further delays of the COD in June 2016 (ie SM delaying COD by 1-2yrs)
      3) further adjustments of the costs to complete in June 2016 (ie SM revising from ~7.5b to ~12b)
      4) the potential calling of an Inquiry


      I cant see a request from an incompetent party requesting a 'pause' in construction being well received especially since Emera completed their obligations on-time and on budget. I am sure NL didn't have the ability to accept more costs, so we would have been asking other parties to taken on costs that was our fault and pause request.

      I agree that renegotiation would have been nice, but I don't any leverage we had or even any incentive for Emera/Federal Gov to do anything - NL was in a very bad spot.

      Requesting a 'pause' would have been wasted effort in my estimation.

      PENG2

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    3. Madam, you are dealing with a hard core Tory in Peng2. You are entirely logical that a pause, cancellation, renegotiation, whatever, would have been prudent.

      Peng2 says just thinking about it was treacherous so stop thinking about it and waste billions more. He thinks the ink is dry and no other outcome could be possible. He's become rather tiresome with this view.

      Your view is entirely reasonable and let's hope the Inquiry asks Ball the hard questions about whether he considered it. I fear he took Peng2's view and I hope the Commissioner gives him an earful if so.

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    4. Peng2 says a pause would hve cost about 2 billion, besides money spent as sunk costs, but still much savings? Also Peng2 said to finish and not operate, so still have contract obligations to NS for power to them from the island.
      Peng2, remember does not deny that he is paid to comment on UG to influence opinion. Easy to do, if not true. Why not do it?
      PF

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    5. PF / Anony:

      Read the GT forensic audit - describes quite well while cancellation/pausing etc isn't an option. In short, Emera and Federal Gov must approve of changes to the cost structure and COD - otherwise we are in default.

      Considering the timeline:
      1) NL had an election in Fall 2015
      2) Nalcor had a new CEO in Apr 2016
      3) MF got a rebuilt cost structure in June 2016
      4) an Inquiry was called in Nov 2017

      Just where do you suggest in this 18months to take a 'pause and reassess' delay to the COD - and a prudent delay is needed (ie not the summers of 2016 or 2017 since that is most productive time)? Or are you just saying default and let Canada send us a bill?


      PF @ 23:16:
      Please quote correctly - I advocated complete to avoid default. Power from MF is independent of our supply agreement with NS - NL can pick the best source to provide the power via.

      But I guess if we were to reimburse Emera $2b upfront we could void the power supply agreement - or maybe they would insist in being reimbursed the commercial value the power supply agreement entitles them too? Maybe its time for you do the math on what you are suggesting?

      PENG2

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    6. Your words, Peng2: complete but not operate the MFs plant.
      Still, the power contract to NS to satisfy, and shortange on the Avalon to resolve.
      You say for me to do the math on what I am suggesting. You explain what you propose to solve that the issues of your proposal, and do the math to justify your rationale.
      PF

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    7. PF @ 11:12:

      Again, I have always said - 'complete to avoid default', please quote correctly.

      The reason for this is simple - operation costs (estimated at $110m) outweigh revenues from excess MF power. The cost of default is giving Canada the contractual ability to come in and complete MF and sending us a bill - or having Canada secure any of the Nalcor assets (including those related to O/G, UC interest or Island hydro etc).

      Considering the power contract with Emera, I posted several articles recently - either we provide the power to Emera, or we can reimburse them the costs as determined by Emera.

      The power contract and transmission limitation to the Avalon are not impacted either way by MF.

      Had you bothered to read any links I have provided recently or in the past, or any of my posts you would know this already - there is nothing new in anything I am saying vs what I said 2-3yrs ago.

      Another thing I said 2-3yrs ago - while politically unpopular, we should consider buying power from UC via HQ to supply the Emera amount - most probably cheaper and a more stable supply (ie that is less risky).

      PENG2

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    8. Peng2, you keep avoiding your statement that better not to operate MFs as to the North Spur or other risks.
      So your suggestion is to instead to buy UC power as needed to supply the Avalon and permit NS contracts for power?
      Can you clarify, and what is the capacity we can get from there,over those lines, and expected cost?
      PF

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