THE LABRADOR ISLAND LINK IS “SUNK COST”

We should be worried that GNL will double down as big problems persist and costs continue to rise on Soldier’s Pond and the LIL, all the way to Muskrat Falls. It seems destined to be a victim of the "sunk cost" fallacy which describes a tendency to sink more money into a scheme in which a large investment of time and money has already been made, regardless of whether the costs outweigh any benefits.

Last week’s post described the chief conclusion of the second Haldar and Associates report that the Labrador Island Link transmission line (LIL) is under-designed and may need salvaging as often as every six years.

The Report was ultimately conducted for Public Utilities Board which wanted more data to help forestall a repeat of the 2014 outage known as #DarkNL.

#DARKNL WAS BAD. A NEW REPORT ON LIL WILL LEAVE YOU COLDER.

 The recent release by the PUB of the second Haldar Associates Report represents a timely and sobering analysis of the findings of its investigation into, among other things, the reliability of the Labrador Island Link (LIL).

The NL public should not need to be reminded that last week marked the seventh anniversary of #DarkNL. That was a week in which many people, especially those living on the Avalon, came face to face with the worst consequences of public sector incompetence, a matter confirmed and chronicled by the Liberty Consulting Group for the Public Utilities Board (PUB). 

It also caused the downfall of an incompetent Premier. Sadly she was replaced, successively, with a bevy of incompetent successors.

GNL LOST IN PUBLIC POLICY WILDERNESS

The Furey Administration’s decision to cut $20 million from funding for offshore seismic surveying, a program ostensibly intended to enhance bidding for explorations rights in the offshore oil sector, is the right one. Unfortunately, the decision is a pause rather than a cancellation.

The distinction is self-evident, but at issue is that the Government of Newfoundland and Labrador really hasn’t spent five minutes on the broader public policy questions of how best to pare the expenses of the Government in pursuit of the balanced budget objective described in the PERT Report.

Cancellation, rather than pause, should have been an easy decision in this case, because more objective industry players, which do not include either OILco or NOIA, will remind that majors and supermajors - Suncor, Equinor, ExxonMobil, Chevron and others - are cash rich again, and more than capable of performing their own seismic programs. Global oil prices are replenishing their coffers, enabling them to pay down debt, buy back shares, and in some cases, double the dividends to their shareholders.

This issue should be viewed in conjunction with Government’s recent referral to the banking firm of Rothschild of an unconfirmed number of assets for valuation. Together, the decisions confirm that provincial public policy remains a haphazard, ill-defined, even kneejerk process.

BOOSTER BUMBLING

 Guest Post by Ron Penney

ON A WILD GOOSE CHASE - SEARCHING FOR THE ELUSIVE BOOSTER SHOT 

Like those of you who are of a certain age, I was very much looking forward to getting my booster shot, particularly with the advent of the omicron variant, which has proven to be much more contagious, although so far a much more benign variant. 

The evidence is that the two doses does not provide much protection from getting  the variant but does protect against hospitalization and fatal outcomes for those who are fully vaccinated. The booster shot gives much more protection from infection and lessens the severity of symptoms even more. 

The objective has to be to not overwhelm our hospitals, as they also experience the loss of health care workers who have to self isolate because of possible exposure. So far our hospitalizations are very low, but the experience of other jurisdictions demonstrates that this is unlikely to last. 

PUBLIC SHOULD BE MORE WARY OF PREMIER FUREY IN 2022

Premier Furey’s year-end declaration that the “deficit must be tamed with broad action, not big bombshells” might sound encouraging if only we could point to any plan, even a “broad” one. But Furey has no such intention. He and his little band of insiders, Cabinet passively looking on, are focused on the sale of NL’s most valuable strategic assets. At any cost he isn’t prepared to impose on the Government — and the public — spending practices that reflect the more responsible behaviours employed in other provinces.

Following release of the PERT Report of Moya Greene and her advisory committee in May 2021, Furey commented that “this is the pivotal moment in our collective history… the problem is clearly laid out before us. We are not on a sustainable path.”

The statement reflected a fiscal circumstance which Greene defined as total provincial debt obligations of $46.3 billion, an abominable figure in a place occupied by only a half million people. Otherwise, the Government’s response was silence. Moya returned to London to be heard from no more.