TIME FOR NALCOR TO TELL THE TRUTH TO THE PUBLIC

The recent Decision of the Quebec Superior Court rejecting Nalcor’s interpretation of the Upper Churchill Renewal Contract constitutes a very significant loss for Newfoundland and Labrador. 

The loss is felt not just because Nalcor was barred from accessing surplus energy from the Upper Churchill. It skewers the concept of water management on the Churchill River, a Plan essential to maximizing the power potential of Muskrat Falls - especially the plant's capability to meet maximum scheduled demand. Water management is pivotal to any claim to viability of the project.

The Water Management Agreement (WMA), approved by the provincial PUB, is best understood as an “energy bank”, one that makes provision for an independent coordinator to record power delivered to the Upper Churchill from Muskrat and from the Upper Churchill to Muskrat when the plant was capable of producing surplus energy. In that way the water flows are coordinated and their conversion to electricity maximized.

Water management is a perfectly sensible idea. But it can’t be implemented if the legal authority to operate it is void.

THE QUEBEC SUPERIOR COURT GIVES NALCOR NOTHING: WATER MANAGEMENT A PIPE DREAM

Introduction

Just as the pilot signaled readiness for take-off to Saglek in northern Labrador, word arrived that the Quebec Superior Court had delivered its verdict on Quebec Hydro's challenge to Nalcor's interpretation of the Upper Churchill Renewal Agreement. 

Delayed two days in Goose Bay by foggy conditions on the coast, the other members of small group heading out for two weeks of hiking and kayaking seemed energized by the sheer thrill of the opportunity to complete a northern Labrador adventure including the uncertain expectation of committing to the outdoors in an often harsh cold region, 150 miles north of Nain. 

Though I hate the cold, it was less the thought of subzero temperatures and rough seas that sent a chill down my spine. Nalcor, a reckless and uncontrolled crown corporation, one seemingly determined to bankrupt the province, instills in my bones an even worse terror. 

Let's face it: the Quebec Court was never expected to diminish the powers vested in Quebec Hydro under the 1969 Upper Churchill contract. Sober watchers knew that Nalcor had thrown caution to the winds in its bid for Muskrat sanction long before Hydro Quebec acted. Hubris, compounded by hapless government oversight, created the conditions for the Nalcor leadership to ignore the impact of a total judicial loss in a Quebec-centric Court. 

BULLSHIT STILL SELLS IN NEW YORK

The only surprise contained in Moody’s decision to downgrade the Province’s credit rating from Aa3 to Aa2 was that it wasn’t lower. Whether the Ball Administration realizes it or not, Moody’s incomplete analysis of the province’s fiscal position constitutes a small break for a crowd that has so far handled the crisis with hamfisted dexterity.

Possibly it is no break at all. The “market” may well be ahead of companies engaged in the bond credit rating business.  After the U.S. mortgage meltdown in 2007/8, precipitating the U.S. financial crisis (when bondholders discovered they held useless “paper” based upon unwarranted high ratings), no one would be surprised if investors were a tad more savvy these days.

Certainly, if the recent record of borrowing by the Province — which is still dominated by short-term treasury bills (T-Bills) — is any indication, this is a place under careful scrutiny.

Still, for an outfit of Moody’s reputation, it is surprising how poorly it accounted for the so-called “equity” flowing into the Muskrat Falls project.

HYDRO ENGINEER WRITES "OPEN LETTER" TO NALCOR CEO STAN MARSHALL

Guest Post Written by James L. Gordon, P.Eng. (Ret'd)

OPEN LETTER TO NALCOR CEO STAN MARSHALL 

Dear Mr. Marshall,

I write concerning safety issues with respect to the Muskrat Falls Project, and specifically concerning the North Spur.

You have probably been advised by your staff that, while the North Spur does indeed present significant technical challenges, they have been addressed by competent professionals, and so are no cause for concern.

In my professional opinion, such a conclusion is incorrect, and dangerously so.

Let me summarize the current situation at the North Spur, as I see it:

The North Spur Dam at Muskrat Falls will be the first dam ever built containing quick (or marine) clay in the dam body, and on a quick clay foundation.

NEEDED: THE "RIGHT" FEDERAL GOVERNMENT SUPPORT FOR MUSKRAT FALLS

Guest Post Written by David Vardy

Introduction

Overtures have been made to seek further federal support for the Muskrat Falls project by raising the $5 billion cap on the loan guarantee. The purpose of this paper is to propose an alternative mechanism for funding. Surely the federal government must bear a greater share of the financial burden. The previous federal government enabled this project to go forward. They were complicit in the approval and sanctioning of this project without normal PUB scrutiny and in defiance of the advice of the joint federal provincial environmental panel.

The sanctioning was done without a strong business case and without due process. The recent admission by the Nalcor Chair that the project’s capacity is far in excess of the energy needs of the province and admitting it to be a “boondoggle” confirms the position taken by the two regulatory tribunals and by many critics, including the undersigned.

IDEALISM BRINGS VIRTUE TO A NOBLE CALLING WRITES EDSEL BONNELL

GUEST POST WRITTEN BY EDSEL BONNELL

On June 13, the Telegram published a letter I had written under the heading: “It takes a province to stabilize the economy” In that letter, I expressed the opinion that “we are facing a critical period for the next few years, and our MHAs are mistaken if they fall into the mindset that only they have the sole obligation, right, and expertise to solve the problem.” I added that “it can’t be done in four years. It may take four times four years, and even different colours of government.”  I also noted that “the people of Newfoundland and Labrador have indicated clearly that they also get it; they understand and recognize the need to tighten belts, cut back on programs and find more efficient ways to run essential elements, and they even realize they have to pay more taxes.” They just seek less draconian measures!

On June 18, the Telegram kindly published a sequel to the June 13 letter in response to readers who had asked for details on how the public could be involved in the economic crisis, under the heading: “Involve the people in the process”. I suggested a four-step process which called for a meeting of the minds (and bodies) of the Premier, the Opposition Leaders, and the Independent Member of the House of Assembly to establish a dedicated Task Force “which would focus solely on our fiscal and economic challenges in order to develop a long-term strategy for getting rid of our untenable burden of debt while nurturing reasonable (not “mega”) but steady economic growth.” 

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.

MUSKRAT FALLS: A HERITAGE PROJECT?

Guest Post Written by Ron Penney

In his continuing defense of the Muskrat Falls project, the Consumer Advocate has described the Muskrat Falls project as a "heritage project."

My fellow "naysayer", David Vardy, and I had great hopes when we met with the Consumer Advocate following the announcement of the reference to the Public Utilities Board.

The reference followed our request to the then Minister of Natural Resources, Shawn Skinner, to lift the exemption of the project from the purview of the Public Utilities Board. While a reference wasn't what we asked for we felt that it was a positive response and there is no question that a lot of information came out of the process.

At our meeting, the Consumer Advocate outlined a process which would allow for public input into his representation of the public before the Public Utilities Board. That never happened and instead he followed his own inclinations and became a strong advocate for the project.

STOPPING THE PROJECT NOW: Weighing the Options

Guest Post Written by David Vardy

Introduction

When the government of the day sanctioned Muskrat Falls in December 2012 they subjected the province to enormous risks. They gambled the future of the province and inflicted what is proving to be great damage on a public which was far too trusting of their leaders. They bet the farm on increasing energy prices and we have as a society begun to suffer the consequences. 

Since 2012 the fiscal position of the province has eroded substantially, as indicated by the fact that the interest cost on our debt now exceeds our expenditures on education. Our per capita debt is higher than any other Canadian province and higher than beleaguered Puerto Rico. Our deficit, as a proportion of GDP, is 13 times that of the average Canadian province.  We are borrowing 35% of our total spending, a cash deficit of over $3 billion, at a rate which cannot be sustained.

IN PRAISE OF PUBLIC FLOGGINGS

Some people need to be hoisted on their own petard.

Individuals who are paid from the public purse, and who use a public platform from which they derive credibility, should be held to account when they use poor judgement by choosing to favour political interests over the public interest.

A society looks to all leadership, especially those who occupy important positions in our institutions. Memorial University’s Wade Locke is one such example. Such people are often given the privilege to counsel the highest leadership, and to influence public policy.

Others, like the Consumer Advocate, hold an official Office.

Such an appointee is thought to speak for the public at the exclusion of all other interests. The presumption is that he will keep his distance from those who would influence him for a less than honourable purpose.  

It is true that the explosion of “consultancy” roles in government and its agencies, especially during the recent years of free spending, has given rise to a new kind of “boondoggle”. Yet the proliferation of paid “advisors” does not justify the lowering of professional standards nor condone any less than the highest levels of integrity in those performing such roles.