ED MARTIN'S HYDRO PURGE OF 2005

Guest Post by Ron Penney

In my guest post of October 4th I explained how the 2002 Gull Island deal was scuttled by then Leader of the Opposition, Danny Williams, aided and abetted by the then Chair of the Board of  Newfoundland Hydro, Dean MacDonald, and board member Mark Dobbin.

When Mr. Williams became Premier in 2003 he proceeded to commence a series of personnel changes at Newfoundland Hydro which has led directly to the Muskrat Falls boondoggle.

The first was the appointment of Gilbert Bennett in 2003 to oversee the Lower Churchill project. Mr. Bennett formerly worked with Rogers Cable, whose work experience is in telecommunications. He is no doubt a bright and competent telecommunications engineer but it is hard to see how that experience readied him for his current role.

WILLIAMS TAKES WRONG PATH TO REDEMPTION

Danny Williams' inability to address the issues raised in the Grant Thornton Forensic Audit or answer for why the Commission of Inquiry is unable to find any detailed analysis performed by his Administration on the Muskrat Falls project seems not to have inspired in himself even a moment of reflection. Rather, he returned to the Inquiry evidently for his pound of flesh as early critics, David Vardy and Ron Penney, sat in front of the Commissioner, too.

Williams could be seen lurking on the sidelines, the former Premier still hoping that some of his dignity might yet be salvaged. He was waiting for his brother, Tommy, to land a few body blows on Vardy and Penney. He left disappointed. 

Observing Tommy brought to mind a well-known citation attributed to Napoleon, one I had hoped our legal counsel would be mindful of. A paraphrasing of the adage might read: never interrupt your adversary when he is in the process of self-destruction. 

FIVE WORRYING TAKEAWAYS FROM DANNY WILLIAMS’ TESTIMONY

Former premier Danny Williams fired back at critics at the Muskrat Falls Inquiry calling their opposition to the project "reckless, irresponsible and shameful." Williams went so far as to term them “bottom feeders”. Even the Uncle Gnarley Blog earned his wrath referred to as “Uncle Nobby, Nutty or whatever”. Eventually, it seems, the Commissioner had heard enough. This is an excerpt: 

But Mr. Williams we are living in a democratic society so you being a politician in the past would know that there are people who are going to agree with you and people who are going to disagree with you. So people have a right, I assume, to disagree and while you may not like the tenor of their statements I suspect that, in a democracy, we have to give people the right to express their views. – Judge Richard LeBlanc

The Commissioner’s rebuke of Williams’ disparagement of Muskrat Falls’ critics was one noteworthy moment of Williams’ testimony last Monday and Tuesday, October 1 and 2.   

MISSED OPPORTUNITY: SCUTTLING OF THE 2002 GULL ISLAND FRAMEWORK AGREEMENT

Guest Post by Ron Penney
MISSED OPPORTUNITY: THE SCUTTLING OF THE 2002 FRAMEWORK AGREEMENT FOR DEVELOPMENT OF GULL ISLAND 

The full development of the Lower Churchill consists of two projects: Gull Island and the much smaller Muskrat Falls project. Gull Island is projected to be a 2250 megawatt project as compared to the Muskrat Fall’s 824 megawatts. Gull Island was always felt to be the far more economic project.

In 2002 a draft Framework Agreement was negotiated with Hydro Quebec to develop Gull Island. A link to that agreement is found here.

At the time, the then Chair of Newfoundland and Labrador, Dean MacDonald, and another Board member, Mark Dobbin, broke with the rest of the Board, and opposed the agreement. The then Leader of the Opposition, Danny Williams, became aware of the agreement and mounted a vigorous and ultimately successful campaign to scuttle the agreement.

This represented the most recent attempt to develop Gull Island and led directly to the Muskrat Falls debacle.

CHES CROSBIE TESTED: "MISTAKE" TO REPLACE MADNESS?

The recent Telegram interview with newly-minted Tory leader Ches Crosbie leaves a disturbing impression of how he will address the challenges of a Party recently described on this Blog as “broken”.

The Telegram article saw Crosbie shifting the blame for the Muskrat Falls project onto the Liberals. “What they should have done was make sure that a proper stopgo analysis was done as soon as they got into office. They frittered that opportunity away,” he was quoted as saying. Crosbie is correct on the point, but he needs to deal with the ghastly mistakes of his own Party before he is ready to throw stones at his rival.

Not to his credit, Crosbie asserted: “… PCs are like everyone else in this world: we’re only human. If mistakes were made we’ll have to take the approach that that was then, and this is now,” he told the reporter.

TRUTH RUINS NARRATIVE FOR WILLIAMS, MARSHALL AND COADY

Life might be so much simpler if, like innocents on Christmas Eve, we would only believe.  

Stan Marshall, Danny Williams, Siobhan Coady — each one has a narrative that doesn’t fit with the facts, that can’t stand up to the scrutiny even of youngsters. Interestingly, the truth could easily favour Marshall and Coady, but they are unable to resist “spin”; other versions, supposedly, are more worthy of gratitude and acclamation. 

For Marshall, it’s this comment to reporters following Nalcor’s AGM: “Any megaproject in the world would be happy to be where we are.” Presumably, the CEO is referring to the progress made on Muskrat in 2017 which he, ostensibly, influenced. Problem is, he omits that productivity for its major contractor is still only around 22% (that's an average 2.2 hours of work on a 10-hour shift) and that much of this performance is related to poor management by Nalcor. Should we await another multi-million dollar claim by Astaldi?

DANNY WILLIAMS - BUFFOONERY MAKES NEWS

It is tough to keep up with the craziness. 

A few weeks ago Danny Williams was in the media saying that the Muskrat Falls project is still a good deal for the province and that we shouldn’t be concerned because all megaprojects experience overruns.  

He repeated an assertion that should bring howls of laughter (derision actually) that the project will bring in hundreds of millions of dollars to the province. At $11.4 billion and counting you have to be pretty brazen to make the claim, as did Williams, that your biggest concern is that "someone is going to screw it up."

Even the recognition by Nalcor CEO Stan Marshall, that the current project represents a cost to rate payers of 21.4 cents per kWh and that revenue on export sales will represent a reduction of less than a cent per kWh, seems not to have blunted the ardour of the former Premier. (Note that Stan Marshall is referring not to the cost of MF power but to a "blended" price and he makes no reference to the fact that the rate applicable to MF power generation is not even the full price in the early years after commissioning - so even at 21.4 cents per KWh Marshall is quoting a price designed to avoid "rate shock".)

Now, Williams wants the entire Province up in arms because Stan Marshall is said to be negotiating away Muskrat Falls, Gull Island, and the Upper Churchill (again) to Hydro Quebec. 

CAN A DISGRACED P.C. PARTY SURVIVE?

The abrupt end to the Opposition filibuster in the House of Assembly on June 8^th served to underscore the larger issue of the Tories’ legitimacy as Her Majesty’s Loyal Opposition.

Government House Leader Andrew Parsons told the media that the Tories “were agreeable to finishing up”. As well they might have been. Even if the Liberals’ budgetary measures were misguided, as many deem the case, only the mindless would be capable of denying that Tory fiscal mismanagement was the root cause of the debate in the first place.

The Sitting was the first of the 48^th General Assembly. In the preceding General Election, the remnants of the Progressive Conservative Party had been sent to the Opposition benches less by a Liberal juggernaut than by its own determination to self-destruct.  

A province is facing penury from overspending and a reckless energy strategy devised by a bunch of ‘rink rats’. A vulnerable society, one perennially on the edge, has seen its tenuous financial stability frittered away in less than a decade.

Opposition Leader Paul Davis still recites lines that reflect blissful economic ignorance of our current circumstance. More frequently, Keith Hutchings is sent out to play the Opposition role. The smiley Member for Ferryland tackles important budgetary issues as if he were commenting on a sporting event. Gravitas is lost to sound. Incredulity is grafted onto light-weight. Bemusement is the consequence.

VAMOOSE YOURSELF, WANGERSKY!

A feeling came over me like I had received a kick in the guts. It wasn’t just the Budget. That news had been delivered days earlier by the Finance Minister. She was clearly a party-pooper. And Dwight had confirmed he's no Danny.

This was Monday. I was reading “Get out if you can”, by the Telegram’s Russell Wangersky.

“That would be my advice” the award winning writer warned, as one might caution a neighbour of an impending tsunami. “If you’re young, not tied down by investments like a home you might take a financial bath trying to sell, if you have an education or a trade that you can use to get a mainland job, just go. Go because we made this mess and you shouldn’t be forced to pay for it”, his rant continued.

I found myself gripping the edges of the kitchen island, on which I had unfolded the broadsheet, holding on tight as a wave of anger struck like an angry sea, making me nauseous.

MUSKRAT FALLS NO HOOVER DAM

Guest Post written by Ron Penney

Premier Davis has recently compared Muskrat Falls with the Hoover Dam project.

The Hoover Dam is one of the wonders of the modern world.

It was constructed during the Great Depression and came in under budget and two years ahead of schedule.

It cost $219 million dollars (Canadian), which is equivalent to $3.3 billion dollars today. Its capacity is 2000 megawatts.

In contrast, the Muskrat Falls project is almost 50% over budget, nearing $10 billion, and rising, and its capacity is 824 megawatts. And it is well behind schedule.

So the Muskrat Falls project is at least three times the cost of the Hoover Dam for less than half the power.

WHEN LEGACY TRUMPS COMMON SENSE (SOES PART II)

It is fine to suggest the Province ought to have a ‘Crown Jewel’ like Hydro Quebec or Statoil. But, when the motivation for a monolithic State Owned Enterprise (SOE) comes from a Premier, whose business experience is chiefly in the ‘regulated’ economy and whose motivation is legacy, you can imagine other questions abound.

It seems easy enough. Find a need, like electricity; design a hydro project, develop a set of estimates, engage the markets and the public purse to finance it, execute a power purchase agreement requiring the public to pay it all back and then some.  What could be simpler!

Of course, it isn’t simple at all.   

What if the hot economy isn’t conducive to controlling costs, the management team is limited by a lack of basic construction experience, the captive market needs only 40% of the power, possibly less, and you need to achieve 100% cost recovery from just that market?  What if you are forced to give away 20% of the project’s power potential to achieve export access?

What if you agree to incur 50% of the cost overruns on that transmission link and commit all your remaining ‘surplus’ power to keep your export partner happy; what if you are given a not so gentle reminder all the risk is yours and that the benefits of the Federal Loan Guarantee belong to Nova Scotia! 

What if you are told by the Nova Scotia regulator: take it or leave it. 

P.C. CONVENTION COMMITTEE BACKS OFF. WILLIAMS, TOO!

The P.C. Party’s Convention Committee has backed away from plans to use the “Delegate List” chosen for the recent Leadership Contest. The Committee has issued orders to start over.  

A new Leadership Race became necessary when Frank Coleman stepped aside this week, having become the Premier Designate when Bill Barry dropped out.  The new delegate selection process will run from July 14 to August 14, 2014.  Nominations for leader will open on Monday, June 23 and run until July 7, 2014.  The PC Party will now elect a new leader on the weekend of September 12th and 13^th.

Some Party insiders were irate that candidates running in the new leadership contest might have to be chosen by delegates selected for Frank Coleman. It seems Party members, elected to the Executive of District Associations during the same meetings, will keep their positions.   It is too early to say if their status will still be a bone of contention by candidates entering the new contest.

COLEMAN'S GONE. THE NEW “FIX” IS ALREADY IN

The resignation of Frank Coleman, as Premier Designate, has given the P.C Party another chance for change though Tory insiders report the opportunity already squandered. 

There is no way to categorize the Tories’ current circumstance other than to characterize it a mess.  While it seemed improbable, at first, that former Premier Kathy Dunderdale’s unsuitability could be outstripped, the grocer version of the gong show has surely upped the ante.    

We are asked by Frank Coleman to take his word that the reason for quitting was due to a matter “significant” and “challenging”.  Yet, he has no storehouse of credit with the public against which such a huge good-faith demand might be charged.

The P.C. Party is in disarray and he, personally, can claim a goodly part of the responsibility. His acquiescence to Williams’ meddling, in the Leadership Campaign and his own engagement in the Humber Valley Paving affair, leave a Province more cynical about its politics and its patience tapped out.   

WHERE HAVE YOU BEEN JOHN C. CROSBIE?

The recent combative, even feisty tones of John Crosbie somehow triggered my memory of a couple of lines from an old Simon and Garfunkel tune:

Where have you gone Joe DiMaggio

A nation turns its lonely eyes to you (Woo, woo, woo)

It may appear improper, even unfair, that anyone should possess large and unwieldy expectations of an octogenarian, especially one who has served the Province long and well. 

But when John Crosbie came out swinging, on Monday, with Danny Williams in his sights, he stirred up memories of the “old” days; after all his reputation wasn't built upon a single "we got it" which quickly evaporated.  

Inside political hot houses he was referred to, respectfully, as “JCC”.  Those barely weaned, in the ’60s and ‘70s remember him for his fearless rebuke of Joe Smallwood and his cronies, especially the carpetbaggers John Shaheen and John C. Doyle. Later generations remember him, too.  

VIRGINIA WATERS SENDS AN UNMISTAKEABLE MESSAGE

No one expected the District of Virginia Waters to be a cakewalk for any of the Candidates and it wasn’t.   Still, a 40 vote margin of victory by Liberal Cathy Bennett must feel like Everest climbed.  In so doing, she has executed an almost miraculous repetition of the Harbour Grace-Carbonear byelection.  She has proven beyond a doubt there are no safe Tory seats in the Province.

It is a tough loss for Danny Breen; he deserves our congratulations, as does Sheilagh O’Leary.

But it is the Liberal Party’s and Cathy Bennett’s victory.  She has confirmed that a quiet political revolution, one insistent and possibly inexorable, is working its way through the political fabric of the Province.  The Liberals are coming!

Still, there is finality to every democratic vote.  Likely, the Tories long ago forgot that it is also within the purview of the voters to be arbitrary.

Many people will want to read the entrails of this byelection.  I have the following observations:

COLEMAN: BORING AS A EULOGY AT FILLATRE'S

My decennial vacation forced me to rely on reports for what Frank Coleman said when he announced he was seeking the leadership of the P.C. Party.  This Blogger confirmed six weeks ago that the “fix” was in; Danny had recruited Coleman and the Caucus had fallen in line, just as it had for Dunderdale.  Still, rumours of Coleman’s wobbling abounded until the decision became official. 

Minutes before sitting in a kayak to navigate the warm waters of the Baja Peninsula the internet confirmed Coleman’s move.    It reported a story, too, that Steve Kent, John Ottenheimer and Shawn Skinner had contracted a case of weak-knees.  Williams had given them the evil eye, it seems, a look evidently so malevolent that it melted their already half-completed nomination forms.  They know they must never shag with the dark forces.  But, what of it, if deference is their strong point.

Back on Terra Nova, I asked one wit how Coleman’s Press Conference had turned out.  He replied: “B’y it was as boring as a eulogy at Fillatre’s”.   (Fillatre operates Funeral Homes on the West Coast).  That seemed an odd if not depressing characterization of Coleman’s coming out.

FRANK COLEMAN A RELUCTANT BRIDEGROOM?

The Tory Leadership Contest is slower than a cold engine on a frosty morning.

The field remains crowded only by Bill Barry.   

Senator Manning has bowed out; Derrick Dalley has done himself in. 

"All Hale Premier Frank Coleman" , posted last week, spoke not only to the fact that Danny Williams has placed his velvet glove on Coleman’s shoulder.  It confirmed that the whole Caucus is gazing west for signs of white smoke. 

Only Steve Kent remains a potential contender from Cabinet; but, even he is just pretending.

On the outside Shawn Skinner and John Ottenheimer are still mulling it over.  The price tag of running a credible campaign still daunts them; if Frank Coleman confirms his candidacy, both will fold. 

According to insiders, they are emboldened because rumours abound Coleman is having second thoughts. 

DANNY WILLIAMS: PITH AND CIRCUMSTANCE

“No Brainer” says Danny Williams, as he urged the new temporary Marshall Government to build a third transmission line to Labrador West, substantially at public expense.

I’m not sure when the public will grow tired of Mr. Williams.  I wish they would ask him to stop trading on the goodwill with which he was rewarded while in Office.  

Danny lets no one forget his popularity.  Even his Notice of appointment as a Director to the Alderon Board is careful to point out: “Mr. Williams served as Premier of Newfoundland and Labrador from October 2003 until November 2010, retiring from the position at a time when his government had an approval rating of over 80%.” 

The Chinese Government, through Hebei Iron Ore, the largest shareholder in Alderon must be very impressed.

There is nothing wrong with a retired politician, even a former Premier, continuing to contribute to public life.   But there is a great difference between a public policy role and engagement for the purpose of corporate self-interest.

ALL HAIL PREMIER FRANK COLEMAN

A new name has emerged in the race for the Tory Leadership.   Frank Coleman, scion of the well-known Newfoundland business family, has confirmed to the media that he is interested in the job.  A decision is imminent.

People who know Frank Coleman personally (I do not) describe him as bright, analytical and thoughtful.  The same people describe him as possessing a charisma that is “quiet and reserved”.  In all likelihood they are fans.

Even if this picture is only partly correct, Coleman would not be making this decision on a whim; he would have the overwhelming support of the P.C. Caucus.  More likely, their support is unanimous.

Coleman’s expression of interest in the role of Premier is significant and not just because he wasn’t on the media’s list. 

Frank Coleman is being courted. 

GIVE THAT MAN AN OSCAR

Nalcor’s precursor, Newfoundland Hydro , for many years, was a quiet Crown Corporation responsibly meeting the Province’s electricity needs. It never tried the movie business. Management, then, were serious folk, eschewing glamour for its own sake.

Then, along came Danny Williams. 

Reportedly, he had struck it rich in the ’regulated’ world of cable television.  The experience had left him marked with the magic of guaranteed returns.  On the public stage, he demanded a script suggesting that such profits could easily be replicated, by public servants, applying the leverage of taxpayers’ money.  That’s the problem with ‘showbiz’; it’s hard to distinguish fact from fiction.