DELUSION AND DECEPTION (PART III)

Written By "JM"

The New York Times recently published an article "Large Dams are Just Not Worth the Cost".  The opening line foreshadowed the main message of the article:

THAYER SCUDDER, the world’s leading authority on the impact of dams on poor people, has changed his mind about dams

Now in his 80’s, and after a lifetime of promoting large dams, Mr. Scudder has had a Gus Etchegary type of enlightenment.  He is now preaching caution against an industry that he spent his life promoting.  He was compelled to go public with his revised assessment after reading the Oxford University study released in March of this year.

The Oxford Paper, written by economists Ansar, Flyvjberg, Budzier and Lunn, is well worth the $10 purchase price for any person who is interested in public policy based upon mega-hydroelectric development.  It is especially relevant for those who want to assess the record of the Muskrat Falls project in a global context.  

The paper reviews the record of large dam construction on the basis of cost overruns, schedule variance, and overall benefit to the economy of the host countries. It is rich in historical references, and global context.  Had the research been available during the Muskrat Falls debate it would have provided an evidence based comparison with the performance of similar projects and provided a much needed challenge of Nalcor ’s billing of the project.   

WHAT WE CAN EXPECT FROM PAUL DAVIS

Inside the P.C. Convention Hall, on Saturday, Progressive Conservatives did their very best to display the intense excitement for which delegated leadership conventions enjoy a special distinction.  As the meeting headed into the second ballot Tories must have felt that, finally, the acrimony of the Dunderdale leadership and the Frank Coleman fiasco had passed into history.

But when the second ballot was counted and a one vote lead by Paul Davis still did not afford him victory, Tories must surely have felt under a curse.  Luckily, the third ballot confirmed what the second intended.  An incorrect and untimely interpretation of a ‘majority’ came close to splitting a Party already demoralized. 

Mr. Davis deserves our congratulations; his two competitors, John Ottenheimer and Steve Kent, can be proud of their participation in an important endeavor; after all, political parties are the foundation of our democratic system. Even when the process delivers a leader of questionable choice, but functions without self-interested interference, we are at least left with the confidence the system is still viable.

Whether Paul Davis is also Danny’s man will eventually become clear.

VISION BUILT ON DELUSION (PART II)

Written By: "JM"

When the Muskrat Falls story is fully written, the date July 22, 2013 may be given prominence as one of those pivotal moments when Nalcor management ought to have counselled the political leadership to change course on its strategy for Muskrat Falls. 

On the morning of that day, the Utility and Rates Board of Nova Scotia (UARB) rejected Emera’s application for approval of the Maritime Link (ML) stating the deal had to be sweetened by $700 million to $1.4 billion (Net Present Value); otherwise the construction of the Link would fail as the lowest cost option for that Province.  

That same afternoon, the Nalcor CEO was advised that Hydro Quebec (HQ) had filed a declaratory judgment in the Quebec Superior Court requesting clarification on the interpretation of the 1969 Power Contract. The contract clauses requiring interpretation by the courts initially appeared routine, perhaps even innocuous in nature.  However, this challenge threatens the very foundation of the Muskrat Falls business case. 

CONSUMER ADVOCATE SHOULD BE TAKEN TO WOOD SHED

The Consumer Advocate to the Public Utilities Board (PUB) is not on your side.

What other conclusion can be drawn from the actions of an Office that gives so much energy to providing cover for Nalcor's devotion to secrecy?  Newfoundland Power, another paragon of conflicted loyalty, is also unsure of the constituency to whom it owes the greatest duty.  It, too, needs a comeuppance.

What is going on?

The PUB has convened a “Paper Hearing” to deal with a request from Newfoundland Hydro (NLH) to quash the requirement that Nalcor answer a list of questions submitted by the Grand River Keepers (GRK) of Labrador and Danny Dumaresque.  Both GRK and Dumaresque are interveners in the PUB’s investigation into DARKNL.  The PUB is compiling information for Phase II of its Report dealing with the “adequacy and reliability of the Island Interconnected system over the short, medium and long-term…after the commissioning of Muskrat Falls”.

Nalcor does not want to answer GRK’s and Dumaresque’s questions.  It is telling the PUB that they are not relevant to the issue it is investigating.

What is wrong with those questions? Let’s take a look.

THE SNOW JOB (PART 1)

Written by "JM"

Edited by Des Sullivan 

The DARK-NL investigation being undertaken by the Public Utilities Board is playing an important role and not just by getting to the root cause of the Province-wide power outages last January. 

Robbed of the protection a narrow reference afforded Nalcor, during the 2011 PUB review of Muskrat Falls, the Crown owned corporation must now answer new questions posed both by the PUB, interveners, and others relating to security of supply after Muskrat is commissioned.  

The new information illuminates the deficiencies in Nalcor’s filings with the PUB, in 2011, and exposes key aspects of a plan which ought to have been released at that time.

The Public may now finally understand Nalcor’s true intent for the Province’s electrical system when the interconnections with both Labrador and Nova Scotia are completed. 

Let’s begin by asking: what has been identified as substantially different from the plan first proposed by Nalcor, in 2010, and what are the implications?   

PRESERVE MEMORIAL UNIVERSITY'S INDEPENDENCE

Memorial University represents not just a place of learning or of creativity meeting the academic needs of civil society.  Its very name is a commemoration of our young people who fought two World wars in order to protect democracy.

For that reason alone, Memorial must never flinch from its obligation to be a source of vibrancy and transparency for our democratic institutions. It should never become a convenient vehicle to promote government policy. It should rebuke government when it uses it fiscal muscle to diminish the University’s independence from political influence.

There is growing concern that such influence is growing inexorably. 

There is no better example than the attempt, a few years ago, by former Premier Danny Williams and his Minister, responsible for Post-Secondary Education, to subvert the process of appointing a University President.

THE TORY LEADERSHIP RACE: IT WON'T BE LONG NOW

For most political parties a leadership contest represents opportunity and renewal.  It is a time not just to listen to voters but to re-connect with them in a way that helps to refurbish frayed nerves and replenish lost hope. 

For some, such competitions are only about policy; a candidate must be perceived an agent of change. Sometimes, it will suffice that the message is believable; the candidate is straightforward and his intentions are simple and clear.

For others, leadership contests are about giving men and women, who have already completed modest missions, a larger stage and to see which of them will shine.

Because each of us has different expectations and recognizes different qualities in the same person, such democratic competition assumes a respectful, even hopeful, multi-dimensional character. 

At the end of it all, each of us want to see contenders who have invested everything in their personal pursuit of high public office; to exhibit the wear and tear of a warrior, the exhaustion of one who has laid bare not just their body but also their intellect and their very soul. 

Even if they are not loved, the hope is they have, at least, engendered respect; a foundation of goodwill on which to build.

When such contests are characterized with such vigor and intelligence, we have reason to believe our democracy is mature, resilient, and progressive even if we chose to vote for the other Party.

Then, there is the reality.

PPA: ABSOLUTE, UNCONDITIONAL AND IRREVOCABLE

The Power Purchase Agreement (PPA) is not a sexy subject though it is important; far more than suggested by the negligible attention it received two months ago.

The PPA defines the terms, conditions and amounts ratepayers are obligated to pay Muskrat Falls Incorporated, the Nalcor subsidiary holding the generating assets of Muskrat Falls.  A separate Agency was established for the purpose of holding and financing the Labrador Island (LIL).  It is not clear if the 51 years of “Base Block Payments”, rising from $148.5 million in year 2 to $933.3 million in year 50, include the transmission costs, too,  or whether we ought to expect a second PPA.

This PPA details, in 196 pages of legalese, a host of obligations on ratepayers via Newfoundland Hydro (NLH).  In typical Nalcor fashion, no details accompanied its release.

Your attention is drawn to Section 4.2(C) (d) (pp. 37-38) regarding “Base Block Payments” which the PPA calls an “Irrevocable Obligation”.  It states:

“Notwithstanding any other provision of this Agreement, including Section 15.1, until the date on which the Initial Power Purchase Agreement Page 33 of 76 Financing is Paid in Full, NLH’s obligations to make the Base Block Payments shall be absolute, unconditional and irrevocable, and shall not be subject to any reductions under any circumstances whatsoever.” (Emphasis added).

Fundamentally, that means Nalcor can lose the Water Management case now before the Quebec Superior Court, the turbines coming from China can seize up, the water can dry up but your obligation to pay is “absolute, unconditional and irrevocable…”

Just possibly, the Consumer Advocate might awaken from his blissful slumber and report to ratepayers, on the implications for them, of this and many other parts of the Agreement.

ED MARTIN’S UNFETTERED SPIN MAKES NALCOR ONE BAD SOE

When Governments run State Owned Enterprises (SEOS) the public have a right to be confident they will be operated professionally.  There are many ways to measure credibility, including Nalcor's.

One might be to count the number of residential style generators installed since DARKNL. Just recently, I saw one group of workmen lift a monster version onto a concrete platform for a private dwelling.  It was attached to a 146 gal. fuel tank!  Is this the low point of confidence in Nalcor? I pondered the question doubtfully.

Another benchmark might require the evaluation of how Nalcor’s senior management treats the public. Are they respectful? Do they treat the public like the the shareholders they truly are? 

Off the top, I suggest SEOS should be more than non-partisan; any politics ought to be minimal. In the same way you never hear of the CEO of the Newfoundland Liquor Corporation bolster any but the policies of that Agency, so, too, has that been the case for CEOs of Newfoundland Hydro; until now. 

THE OVERSIGHT COMMITTEE: STILL NO OVERSIGHT!

If the hot summer sun is making you testy, you’ll get no shade from the Government’s Oversight Committee on Muskrat Falls. 

The Committee released its first Report last Thursday, July 31^st.    

Partisans will say Muskrat critics can find nothing right in this project; I suggest the latter profess the hope they are wrong.  But, hope has a spiritual undertone; a large construction project is a purely commercial undertaking, one to which hope is supplanted with solid planning, analysis and oversight, too. 

On March 26, 2014, following Tom Marshall’s establishment of the bureaucratic oversight committee, I wrote a post entitled: WHY MUSKRAT OVERSIGHT COMMITTEE IS A FARCE. It noted: “… the Premier eschewed demands for project reviews when he was both Minister of Finance and Natural Resources. He supported Premier Dunderdale’s position on ‘oversight’ even as he watched his colleague, Jerome Kennedy, bolt the Cabinet over the issue.” 


Given Marshall's long held refusal to acknowledge the importance of oversight, it was difficult to see how a Committee, one not independent of government, could effectively function.