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  • Maurice E. Adams
    April 08, 2013 - 08:54

    James, it is the making of a simple issue very complex that is what is creating the confusion --- and intentionally so. Once people are confused, it is easier to mislead, to hide the truth, to put opponents or those who might have a glimpse of the truth off balance and thereby easier to move ahead with one's own agenda...... That is what we have and that is what we have with all this talk of "net debt", whether MF affects "net debt", etc. etc. etc. ..... Obfuscation, at its best. If you had focused more on the value of this so-called 'investment', you would have been getting closer to the heart of the matter, and thereby at the very least you would have skirted nearer the edges of the truth

  • Maurice E. Adams
    April 08, 2013 - 07:20

    It seems James that you cannot see the woods for the trees. You have allowed yourself to be hoodwinked by gobbledygook --- purely accounting terminology --- all of which may be technically correct, but only "from a purely accounting perspective". I could go on and on and explain how Muskrat Falls is not a good investment, how practically all 'revenues' are from ourselves, how objective evidence shows that demand will fall (not rise), etc, etc., but that is not really needed. Other posters have already gotten to the heart of the matter and see the deception for what it is.

  • Michael
    March 19, 2013 - 17:09

    Of course the investment in MF doesn't add to the long as the investment is never impaired. What this also doesn't consider if that if the government spends money on MF, then they have less cash available for other expenditures. This means they may have to borrow/incur debt to finance other projects, pay the bills, etc. This means interest expenses which vary depending on your level of debt could be high or low and would most certainly would add to a deficit. An investment made in MF today would not increase a deficit in this fiscal year (most likely) but it could definitely have an impact in future years if the investment is revalued and falls below its current book value.

  • Blue PooP
    March 18, 2013 - 09:01

    No, dunderdale only needs enough money to give to nalcor and to get a loan. 2 Billion i thunk. Now the province will make make 20 million back over the life of the project, so says Tommy Marshall. Then she'll tick the rest of the money on behalf of the taxpayers of the province and unborn NL's to come for almost 60 years. Now don't forget the perks and the instant wealth to be given away.

  • James G. Learning
    March 12, 2013 - 17:11

    I don't see Mauruce chiming in here. So I do believe MF is still pee and shell game. After all, how can Nalcor compete with Hydro Quebec? Nope it can't be sold compeitively on the North American Market unless the NL Taxpayers hold it up. So yes it is an expense.

  • Dave
    March 12, 2013 - 14:35

    It certainly seems shady even if you can follow the accounting rhetoric. The issue I see that remains is that assets aren't worth full value in reality when it comes time to cash in. If I buy a $2 billion car, that car's only worth half to the next buyer as soon as I take it off the lot. Plus, while I own the car, there are further expenses to keep it on the road, like tires, gas, repairs, and so on. Similar costs will come with a megaproject, and it will increase the price. So, for the $2 billion invested, I would think we lose half the value right away and then we'll be expected to cover an incidental costs on top of that. It's highly misleading for our government to spin it like they do.

  • jockoontherocko
    March 12, 2013 - 12:17

    You're wasting your time James b'y. No matter how you explain it, the ones that supprt MF's will understand and the one that oppose it will call you a liar and a PC supporter. No one wants to read this and try to understand it. They hate the government and that's all they see. Lots of ignorance floating around and to many are making assumptions based on partisan politics.The people who oppose this would not or cannot see anything good in this. What a shame that we have a chance to better this province and partisan politics and ignorance might ruin it. I for one will give the benefit of doubt and I am trying to understand this in hopes it can benefit NL. I might be wrong but I hope not. Unlike others I don't want this to fail. It seems some are wringing their hands in hopes that it all fails so they can say I told you so and have something to lay at the feet of PC's. So much for NL's future if that's how it's going to be.

  • doug
    March 12, 2013 - 11:42

    You/ve been duped, Jimmy.

  • Tom
    March 12, 2013 - 11:22

    This excellent thanks for this. Of course, this means the budget situation is even worse than I thought - we are running billion dollar deficits on top of all the money we are blowing on Muskrat Falls. I wonder if the bond market considers Muskrat Falls spending is debt neutral transaction.

  • Concerned
    March 12, 2013 - 11:13

    James... The issue is that the department of finance believe that the money they spend on the Muskrat Falls plant and the Labrador Island link is what the "book value" will be. I personally would like a third party auditing company (PWC, DEloitte, E&Y) to confirm this. The value of this combined asset should not be based on the value of the power for what it is to be sold in Newfoundland (which is their assumption). Rather the book value should be based on what this asset is worth on the open market. On the open market the power is sold for about 50$/MWhr, it is being sold to Newfoundlanders at 200 $/MWhr. If things go to sh$t then the value of this asset is ~200 million a year (once you remove the 1TWhr of energy being provided to Nova Scotia). The debt payment alone (on debt and equity) is about 400 million. I can not see how any accountant can recognize the full book value on the asset, when really it only has 25 cents on the dollar on the open market. What happens if NL Power dont need all this additional power from Muskrat? As an analogy it is if I spend 500 thousand to build a house in Flowers Cove. It may have cost 500 k to build, but is it truly worth 500 k if it could only fetch 150 k in the local market. I am not an accountant, but this makes no sense to me.

    • concerned
      March 12, 2013 - 13:43

      In 5 minutes of reading the Generally Accepted Accounting Rules the value of the asset may originally be taken as the initial cost. This is what the government is assuming in this explaination. There is no net deficit/debt as the value of the asset is placed on the book value. However, the level that the asset should be depriateced would objectively be determined by the earning power of the asset. I hope that the province has retained the services of their bonding agencies to confirm this assumption. As the earning potential of Muskrat Falls on the open market would only provide a equivalent value of half of what we are paying for how does this work? This is all smoke and mirrors in any regard. The people of the province has to pay off this elephant. JAMES -- A great blog post...

  • steve
    March 12, 2013 - 08:30

    Question for you James - the $245 million that was given to Nalcor, even if I agree with you that that amount doesn't contribute directly to the deficit, isn't it true that when you subtract $245 million from your available funds and park it somewhere, it isn't available for expenditure on other programs and services? Isn't that $245 million that the govt. now has to borrow in order to pay for those services, so isn't it now part of our deficit indirectly?

  • Are you serious
    March 12, 2013 - 08:09

    That has to be the worst explanation that I have ever heard. The truth of the matter it's smoke and mirrors. What about the financing costs? Where are those coming into play? The simple fact they are playing with reporting methods and hiding behind this type of garbage is to deceive the people of this province. If they included muskrat falls in the budget figures people would puke more than they are now.