Time to Come Clean

Time to Come Clean

By: Ryan Young

It was a bitter pill for many to swallow last week when the premier finally confirmed that the principal beneficiary of the Muskrat Falls project would not be NL, it would be Nova Scotia and Emera. It becomes even harder to swallow when you consider that the entire reason for going through Nova Scotia in the first place was to give the finger to Quebec and ensure that we would be the ones to benefit from our own energy production. Danny’s $7 Billion-dollar tantrum will likely turn into a $20 billion dollar noose before a kilowatt of power ever flows from the Lower Churchill River, if indeed it ever flows at all.

At the time of sanction, we were told that Emera’s generous Maritime Link deal was good for this province because it would ensure access to southern energy markets without having profits hijacked by Hydro Quebec. It was an easy sell to a province that never got over the bad deal on the Upper Churchill. Unfortunately, as the project has progressed and bits and pieces of the truth about Muskrat Falls have been dragged out of politicians, it seems like in our effort to screw Quebec, we sold the farm to Nova Scotia.

The premier came clean in the House of Assembly on March 9^th, telling the province that Emera’s share in the Labrador-Island-Link (LIL) had risen from 29% to 59%. Ball was quick to shift the blame to the PC’s saying that "This was not my idea. This was not the idea of anyone on this particular side of the house." While that might be true, it still doesn’t explain why it took a premier who campaigned on openness and transparency 16 months to let the people of the province know that they wouldn’t even own a majority share of the LIL, despite the fact that the ratepayers would be the ones covering the cost overruns. Emera will enjoy an 8.8% return on their investment, with zero extra financial risk to them, and all paid for out of your rising hydro bills.

How could this happen? Well, as the Uncle Gnarley blog has been saying for quite a long time, ratepayers in Nova Scotia were protected by their public utility board, the UARB. The UARB ensured that their stakeholders would get the best deal possible, and even sent Emera back to the bargaining table to make sure that Nova Scotia would get a better deal than the original 20/20 deal signed by Danny Williams. Our own PUB has had no such oversight and has been shrouded in secrecy as far as Muskrat Falls is concerned. As pointed out in this recent Uncle Gnarley post, the PUB didn’t even have the terms reference to look at the Emera deal during their 2012 review.

With Danny’s hand-picked puppet, Andy Wells, at the helm, the PUB has failed to protect Newfoundland and Labrador ratepayers and has not offered any sort of meaningful oversight for the Muskrat project at all. It will be interesting to see if Wells will throw his hat into the ring for St. John’s mayor again this fall. With Dannyland aka Galway nearing its initial opening dates, good King Danny may need a puppet more in City Hall than at the PUB. Now that Dwight Ball and Cathy Bennett have made it quite clear that it will be business as usual at Nalcor, Danny can breath a sigh of relief, and Wells’ work at the PUB is done.

For an $800 Million dollar investment, Emera will earn an annual profit of $70.4 million for at least 50 years. That should finally kill the myth that Dwight and all the premiers before him have perpetuated that there will be profits for NL from Muskrat energy. In case anyone out there is still confused, there will be NO profit from the sale of Muskrat Falls power, other than what the rate payers will be forced to pay each month on their electricity bills. Then Why didn’t the PUB raise any alarms over such a deal? How could they have remained silent and secretive when we were knowingly selling ourselves up the river in the name of getting Muskrat built or bust. Sadly, it looks like even if it does ever get built, it will still be a bust for the people of NL.

So, if we can’t trust Nalcor or government and we can’t trust the PUB, who do the people of NL have to turn to? As good as the PC’s have been in the official opposition role, you will not hear them ask any tough questions about Muskrat for obvious reasons. The NDP have done a fairly good job of asking tough questions, but with such a small caucus their attack is limited and their questions almost always get blown off with spin by the premier and his ministers who know that they only have to be a little long-winded and wait out the clock. Paul Lane has done an admirable job of engaging the public and raising major issues in the media, but with limited resources and no questions in question period, it has been difficult for him to get the government to acknowledge the issues at hand when it comes to Nalcor and Muskrat Falls. The Auditor General is currently investigating Nalcor, but with only a small team and limited resources and no clear mandate from the premier, it could take years just to go through the books, let alone all of the other issues that deserve a look.

Where does that leave us? If people want answers, they will need to stand up and demand them. They will need to find a way to force the government into opening up Nalcor and the Muskrat Falls project in particular. While many have been very vocal, many more seem to be perfectly fine with allegations that could possibly include criminal acts, and at the very least the squandering of billions from the provincial treasury. In a recent poll, however, for the first time since it began, more people were against Muskrat Falls than were for it. This proves that people are willing to change their minds, when given a chance to look at the facts.

When Dwight Ball promised openness and accountability for Nalcor, people expected more than just asking their buddies at EY to do an expensive study on the cost. Why hasn’t the premier opened things up and come clean with the people of the province? He is quick to point fingers at the PC’s every chance he gets, but he has the power to reveal the truth about Muskrat and he refuses to do so. Why? By opening it up and showing the people the truth of the extent that we will be burdened by Muskrat Falls, they might even be able to earn enough credibility to keep a couple of seats in 2019. Instead, they have decided to keep us all in the dark and stay the course set by the previous administration that they are always so quick to blame.

By now it seems common knowledge that Dwight and Co. do not consider honesty and integrity to be part of their job description. They are fully committed to the spin and no matter how many times they say that they inherited the project, they can’t deny that they have failed to take any meaningful action on the file since they took over the reins. If they can lie or stay silent on things that are so obvious to so many, it leaves people scratching their heads and wonder what else they might be hiding. It’s time for the people to demand that the premier come clean.

Wind Power and Wind Bags

Wind Power and Wind Bags

By: Ryan Young

I am sure that I am not the only one who found it curious to hear our eminent sage and wind bag, Dwight Ball, talking up our renewable energy potential at the annual meeting of New England Governors and Eastern Canadian Premiers held last week in Boston. While Ball continued to blow the same regurgitated hot air about Muskrat Falls as a source of renewable energy that we have been hearing year after year, from at least five different premiers, he surprised many by pointing to our wind energy resources as a possible source of green power for energy hungry New England states.

It seems that after half a decade of being told that Muskrat Falls power was simply too expensive for the American markets, that somebody in government finally got the memo. Labrador hydro will never light the lamps of Boston, and everyone and their dog knows it. But still it was crunch time, and Ball was given the difficult task of making the case to the governors that everything is not arse-up in Newfoundland and Labrador, no matter what they might have been briefed. It must have become apparent at some point that the governors were simply not interested in talking about Muskrat Falls anymore so our government had to take a new line of talking points into the meetings to try to paint a positive picture of what we have on offer here at home.

I’d really like to believe that this government is interested in moving the province towards green energy generation. The American markets certainly want green energy but they also want it to be cheap. The only chance we have of developing our offshore wind energy is if we can develop it and transport it to the American market at a profitable price point. We certainly have the potential to generate the power, but can we sell it?

The biggest knock against wind energy in NL is that power is not always produced when it is needed and that we would still need a way to supply power to customers at times when production is low and demand is high. With Muskrat Falls and the Maritime Link, that problem will be eliminated and wind will become a viable option. The problem then becomes having more energy than we need. That would mean that we would need to strike a new deal with Emera to export wind power across the link to markets further south. Then we run into an issue of capacity. With Emera already taking up a third of the capacity of the 500MW link from their Muskrat Falls block, can we even sell enough power to make it worth investing in the development of wind technologies? This is certainly something that would be worth crunching the numbers on before heading into a meeting and pretending that we have all the answers.

One of the major selling points of Muskrat Falls was that it was supposed to be a cheaper alternative than wind. The independent studies by Hatch and Manitoba Hydro both weighed Muskrat Falls against an isolated island option that would require upgrading the thermal generating capacity at Holyrood. Neither considered the option of building a link to Nova Scotia (or another partner) to facilitate a two-way exchange of power to utilize our wind resources. The numbers that Nalcor presented based on the independent studies were not necessarily all wrong. They just didn’t paint the full picture of what other options were available. The desire to sanction Muskrat Falls seemed to override the need for a slow and measurable decision making process when it came to weighing other options.

 When you consider that a local company, Beothuk Energy, is currently developing a 1000MW wind farm off the coast of Nova Scotia that will supply power to New England via a 200km subsea link, it makes you wonder why a similar option was never considered to be weighed against Muskrat Falls. Nalcor tells us that our maximum reliable capacity for wind generation in the province is around 300MW, but in fact, Beothuk is currently constructing another, smaller, wind farm that will be based in Bay St. George on the west coast of the island. That project will produce 180MW alone, making the 300MW number offered by Nalcor seem quite small.  With Muskrat Falls and the Labrador-Island Link in place we will be able to produce as much wind energy as we want. Can we produce it cheaply? Beothuk Energy certainly thinks so and is working hard to prove their point. But with likely $15 Billion we will have sunk into Muskrat Falls by the time it is finished, will we be able to justify investing in producing even more energy that we can’t use?

I’m certainly not suggesting that we should abandon all of our offshore wind potential because of Muskrat Falls, but sanctioning another multi-billion-dollar mega-project to produce power will be a hard sell to the people of the province. More likely they should create partnerships with companies like Beothuk Energy to develop offshore leases that could provide royalties much the same as our offshore oil leases do now. Then it would be up to the producing companies and the purchasing consumers to take the risk of building the infrastructure and transmission links. With the boondoggle on the Churchill River front and center in people’s minds, I don’t see any other viable way to harness our wind resources at this time.

How different might the economic outlook of this province have been if there was a serious effort put forth by Nalcor and the provincial government to look at real green energy alternatives to Muskrat Falls? We will never know the answer to that question, but I hope that we have learned some lessons this time around that will guide us in our future development pursuits. We are still a very energy rich province, but years of mismanagement and deceit have left us unable to capitalize on our resources. I can only hope that Dwight or his eventual usurper will take a look to the past to help better understand our future. We can’t afford anymore hot air.