QUEBEC APPEALS COURT BREAKS HQ STRANGLEHOLD ON MUSKRAT

The Decision by the Quebec Court of Appeal to overturn the Quebec Superior Court and grant CFLco the right to sell power in excess of the “Annual Energy Base” (AEB) seems to have reduced the province’s stress level. The obligations of CFLco in relation to the AEB is integral to the issue of water management and the abilty to efficiently run the Muskrat Falls plant. 

The Annual Energy Base was established in the original Upper Churchill Contract and states an amount of energy used to calculate minimum monthly payments by HQ to CFLco (and “ensure(s) a certain degree of stable revenue for CFLCo.”. This figure is also in dispute (footnote 53 of the Decision) but the amount is thought to be 28.97 million MWh — the figure used in three successive Nalcor Annual Reports.

MUSKRAT: THE BIGGEST GAMBLE OF ALL

Guest Post by David Vardy

Recent disclosures at the Muskrat Falls Inquiry confirm that the project is on track to become a financial tsunami. Former Finance Minister Cathy Bennett told the Muskrat Falls Inquiry that the Department of Finance was marginalized in the decision-making process. This was confirmed by former Deputy Minister Donna Brewer when she was on the stand this week. Yet the provincial government played a pivotal role in the financing of Muskrat Falls. In fact this pivotal initiative was the biggest gamble ever taken by this province.

PAUL DAVIS KEPT LID ON RELEASE OF COST OVERRUNS PRIOR TO 2015 GENERAL ELECTION

The Commission of Inquiry into the Muskrat Falls Project has heard plenty of evidence regarding how Nalcor CEO ED Martin failed to report to either the Board or the Government the truth about cost overruns and the delay in the project schedule.

Nalcor’s deceit is only one sub-text of a larger issue, to be sure. Another is that the Board and the Government — politicians and bureaucrats — supported and accommodated Nalcor’s secrecy, most effectively by suppressing bad news under the guise of “commercial sensitivity”.  

The Inquiry has now heard evidence that the September 2015 costs, which had grown to $7.65 billion (up from $6.99 billion announced in June 2014), were significantly understated. First power would be late by two years, too. Concerns that Nalcor had understated those issues made their way into a new EY Report in the early part of 2015. The Report’s existence created a big problem for the Paul Davis Government. The bureaucrats on the Oversight Committee understood foot-dragging well and Nalcor were never found without reasons why the truth hardly mattered.

FINANCE DEPARTMENT LEFT OUT OF MUSKRAT RISK ASSESSMENTS

Guest Post by David Vardy

Department of Finance Bypassed
Former Finance Minister Cathy Bennett told the Muskrat Falls Inquiry this week that upon her appointment to the Finance portfolio in 2015 she discovered the Department had been marginalized. Bennett said she was not going to allow it to continue. She invoked the Financial Administration Act (FAA) which provides broad powers to the Minister. She said that where there is conflict with Nalcor and its governing legislation, the Energy Corporation Act (ECA)  the FAA will trump the ECA.

Nalcor had been successful in bypassing not only the Department of Finance but also the Executive Council Office as well. Previous premiers had allowed the Nalcor CEO direct access to the Premier’s office and this allowed the Nalcor CEO to tell provincial officials that his actions had been approved by the Premier so they had better watch out. Most of these meetings went without formal record, unlike the Cabinet system where the Clerk issues official records of Cabinet decisions.

DOES CHES CROSBIE HAVE A FUTURE AS TORY LEADER?

The aftermath of the general election remains dominated by talk of recounts (especially in Labrador West), the NDP’s “balance of power” and, of course, P.C. Leader Ches Crosbie’s unscripted outburst on election night. In Minority Government Likely Short-Lived the Uncle Gnarley Blog allowed Premier Dwight Ball, at best, another year to get his affairs in order. A later Post entitled NDP Leader Alison Coffin Next Finance Minister? described the challenges that a mildly resurgent NDP will encounter as they navigate the terms for supporting Liberal dither.

Of course, the Tories didn’t exactly drop off the face of the Earth, having captured 43% of the popular vote in comparison with the Liberals’ 44%, and winning fifteen Seats. That is reason enough to consider what the election outcome says about the Tory Campaign and what it portends for Ches Crosbie.