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Ashley Fitzpatrick
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Nalcor AGM sees Crown corp leaders responding to all comers

Nalcor president and CEO Ed Martin speaks Tuesday at the company’s annual general meeting at the Holiday Inn in St. John’s. — Photo by Gary Hebbard/The Telegram

Before Nalcor Energy health and safety manager John Hollohan could offer a pre-meeting “safety minute” at the Crown corporation’s annual general meeting in St. John’s Tuesday, the questions began.

It was asked whether more time than what was allotted for the meeting might be provided — should questions from the floor and from those watching the live webcast push the event past its scheduled 11 a.m. close.

“We are going to try to steward to the time frame that we have,” replied Mike Roberts, Nalcor’s human resources manager. He offered responses after-the-fact for additional questions.

Objections were shouted and the room noise was rising.

“We’ll take some extra time,” interjected president and CEO

Ed Martin. “Sounds like a good idea.”

• • •

“The level of expertise and the approach to project planning and execution at Nalcor is truly world class and has positioned the company as a true leader in the global energy sector,” said director of the Nalcor board, Ken Marshall, formally opening the meeting.

“Support from our shareholder (the provincial government) gives Nalcor the ability to succeed in the energy sector and advance new energy opportunities for the benefit of Newfoundlanders and Labradorians.”

Presentations by Martin and chief financial officer Derrick Sturge followed. They touched on what was contained in Nalcor’s annual Business and Financial Report. As The Telegram previously reported, that document states a more than $125-million profit for the Crown corporation in 2011.

• • •

It was noted Nalcor is currently putting millions into upgrading and replacing existing energy generation and transmission infrastructure.

While capital expenditures were in “the $60 million range” in 2006, the total for 2011 has grown to more than $200 million.

“I’d be very surprised if 2013 wasn’t higher again,” Sturge said.

Age is a main reason for the spending, particularly with Newfoundland and Labrador Hydro assets.

“The majority of our assets are in the 40-45 year timeframe,” Martin said, adding the longer the infrastructure remains, the greater the risk for additional downtime, outages and costly repairs.

Hydro’s capital expenditures have jumped from $30-40 million a year in 2006 to the $80-million range as of 2011, Sturge said.

“We’re probably at the highest re-investment level we’ve ever had in our system.”

Despite these costs, the corporation has been improving its bottom line in terms of its debt-to-capital ratio. Nalcor managed to drop that ratio from 42.5 per cent to 38.5 per cent year over year, in preparation for the Lower Churchill project.

As spending increases, Nalcor’s debt is expected to rise to 60-65 per cent debt, Martin said.

Looking 10 years down the road, the corporation is expecting its oil and gas arm to bring in “hundreds of millions” of dollars to help support its bottom line.

The Telegram will have more on Nalcor Oil and Gas in the coming days.

• • •

Meanwhile, Daniel Escott of the Canadian Youth Federation asked Martin about the goal of the Lower Churchill development, reading out a statement made by Premier Kathy Dunderdale.

“I’ve heard that quote from the premier and I’m not seeing a change (in reasoning) in my mind,” Martin replied.

He pointed to the province’s 2007 energy plan and the potential in wind and small hydro projects to follow Muskrat Falls hydro.

“It’s a matter of understanding the overall context,” he said.

Asked about energy markets, he spoke about the potential to export Lower Churchill power through the Maritime link, through an Emera partnership.

“I’ve heard too much of this business of there’s no market out there,” he said, walking through the basics of the U.S. clearing market.

“There are markets. We’ve protected ourselves from a cash flow perspective. (Lower Churchill development) stands alone without that money. And it’s the right thing to do,” he said.

The subject of natural gas energy from offshore Newfoundland was raised. Martin said Nalcor staff had reviewed recent assessments released on natural gas, finding they had not taken into account several factors that would increase costs.

For example, he said, operating costs for farming the gas were not considered and there would be a need to drill additional subsea wells.

“The costs are just too high,” he said.

Nalcor will post video of the annual general meeting on its site Monday, June 11.

afitzpatrick@thetelegram.com

Organizations: Nalcor board, The Telegram, Newfoundland and Labrador Hydro Canadian Youth Federation

Geographic location: Muskrat Falls, U.S., Newfoundland

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Recent comments

  • Not John Smith
    June 06, 2012 - 21:51

    Not associated with Nalcor or the PC Party? Bahahahaha. Good one John. I hope you're going to perform at the St. John's Comedy Festival. You crack me up.

  • William Daniels
    June 06, 2012 - 13:35

    I agree George. John Smith is probably a staffer of some sort. That's been obvious for a while. I started reading his posts at first looking for information but quickly discovered his job is to confuse, discredit, and muddy the waters when it comes to information on MR. If he thinks he is helping this project in any way he is grossly mistaken. It is having an opposite effect. His boss needs to reel him in.

  • George S.
    June 06, 2012 - 12:33

    A really sad element to the story and comments is that "John Smith" is likely a staffer of the Government, Nalcor, or M5 and taxpayers are paying for his salvos. Here is a cogent thought for you, John Smith. Developing the natural gas offshore NL is the wrong idea now. If it was the right idea, the operators who own the resources would be pushing that lower cost option. The better approach is to import natural gas on LNG regassification vessels and create a market for a time when gas prices will rise and make development economical. Then we can use local resources for local energy needs. And John Smith, before you twist off with your arguably mindless dribble, LNG regassification technology exists and is used around the world; there is a surplus of vessels available; gas is cheap, and LNG is NOT pressurized. (That would be CNG. You need to check your billing sheet from April when you tried to strike the cord of fear about 'pressurized LNG' in Coception Bay.) The authorities need to come clean about the real driver behind Muskrat Falls, because economics alone do not present a compelling story as evidenced by the effort to craft the message, PUB review and MHI's and Navigant's regurgitations. If this is a massive energy play enabling Nalcor to play the spark spread with wind, hydro and natural gas with transmission deal tension created between Emera and HQ....great! Good move, but not for Nalcor. Just get out of the business of withholding information and be the public utility you are. Get rid of all the handpicked directors who came from Williams-owned firms (Cable Atlantic, Spectrol, etc.). Put in place a strategy, have it approved by the House, and then call for bids from private sector energy players. Stop putting $8billion of our money at risk for a power play. That is the role of giants like Trans Canada. Nalcor is a crown-owned utility and not a publicly traded multinational. And that should not change.

    • John Smith
      June 06, 2012 - 14:32

      LOL...as usual, not one argument against the project. No, as I have stated many times before I am in no way associated with the PC party of NL, Nalcor, or any other entity relating to this project. I am just a rate payer who has the intelligence to see that this is our only hope of getting off middle east oil, and to stop the never ending increases in our rates. George b'y...if anyone is spouting mindless dribble, do you think it's me...or you? I am arguing for proper utilization of a renewable resource, that is non-polluting, and will remain at the same, or near the same price for at least the next 100 years. You want to ship gas, from somewhere, in some sort of container, to be used where? In Holyrood I guess, which will cost billions, pollute, and is subject to huge price fluctuations, and will eventually run out??? Yet it is me who is twisting off with mindless dribble? You guys are not even worhty of debating this subject, but to be pitied or laughed at...or both...

  • Cold Future
    June 06, 2012 - 12:07

    When the government and Nalcor comes out to say that the NL consumer rates will be stabilized with no increase for a substantial period of time, that the take or pay contract is not required to trap the consumer in NL into subsidizing power sales into the mainland, that the price of $45 per MWH fetchable on the mainland is adequate to pay for the project and therfore the $ 45 a MWH will pay the annual payments, the NL consumer can then sit back and be comfortable. Otherwise, how can any sane person believe this will not be a larger giveaway that the Upper Churchill.

  • John Smith
    June 06, 2012 - 11:37

    As usual, not one cogent argument against the project...just mindless blather. Blah blah blah...biggest giveaway ever blah blah blah...LOL keep it up guys, you are among the the best things this project has going for it. The more the public reads this type of tripe, the better the project looks. The same thing happens at the AGM, and the latest round of info sessions. There is all the bluster and bravado on the part of the naysayers leading up to the meetings...then when the intelligent, competent people of Nalcor sit down to once again "slowly" explain things...nooen shows up. Those that do spout the usual non-sensical ravings of the lunatic fringe...as can be seen easily in comments from maurice or william. If you have a problem with this proposal, then state what it is so it can be exposed for the crap it is. Don't just say it's a conspiracy by Danny Williams, or the biggest give away ever etc. Explain how you came to your conclusions, proof, citation, documentation etc. In my opinion investing up to a billion dollars in a 50 year old pollution plant in Holyrood, and spending hundreds of millions on middle east oil every year is sheer lunacy. We will see an 8% increase on our bills in under a month, and a further 8% next year...yet no one cares about that? I can assure you I do. Muskrat falls will provide us with so much, like stable prices, a revenue source, a connection to the mainland, stopping pollution, paying into our own energy source....the dam will cost less then what we spend on health care in one year, yet will last for 100 years...then we have the William daniels of the world....blah blah blah...biggest giveaway ever grrrr...blah blah blah...hate Danny williams...grrr blah blah blah...give me a break...

    • David
      June 06, 2012 - 12:12

      This post is not even an example of pot calling out the kettle...this person is just nothing but pots....pots, pots, pots. And tomorrow? More pots. The most productive manufacturer in Newfoundland, this guy. Who knew we were so big in pots? That takes energy, right......?

  • William Daniels
    June 06, 2012 - 09:05

    This deal will be the biggest givaway in NL history with the select few making out like bandits.

    • Maurice Rogers
      June 06, 2012 - 10:26

      Right church, wrong pew. The biggest give away is still the Upper Churchill.

  • David
    June 06, 2012 - 08:23

    "...The level of expertise and the approach to project planning and execution at Nalcor is truly world class..." Seriously, is there any other meaningless jargon or catch phrase that someoen in governemnt could please devise, just for entertainment value, if nothing else? Every single thing ever attempted or dreamed in Newfoundand for the past decade has been called 'world class....many of them eventually becoming white elephants, total failures, or bankruptcies. Notr that Muskrat Falls won't fit into the pattern like a glove, but for a few billion dollars, at least come up with a better infomercial tag line.

    • Abu Simbal
      June 06, 2012 - 08:48

      Let me guess...you must be a cynic?! Maybe you should try a different breakfast cereal?

    • David
      June 06, 2012 - 11:07

      Guessing is what one can do when one doesn't know anything. Sometimes, that works. The other option is to stay quiet....that always works.

    • Abu Simbal
      June 06, 2012 - 12:43

      Hmm...you prefer that everyone stay quiet while you spout.....in that case, I suggest a high fibre breakfast cereal.

    • David
      June 06, 2012 - 13:11

      Your reading comprehension is poor. Poor is not good.

    • Oh You Again
      June 06, 2012 - 13:31

      Wait everyone. David is about to say something, perhaps something informative or optimistic or something of any use. No. Just the same old whining, complaining negativity. Too bad we can't make use of that.

    • Abu Simbal
      June 06, 2012 - 14:42

      My reading comprehension is poor....how do you know? Have you tried the cereal yet and is this an example of a spout?

  • John Smith
    June 06, 2012 - 06:56

    Why would any sane person want to invest billions into developing gas, which will do two things...rise in cost, and run out. When we have access to hydro, which will never run out, or increase in cost...The only people touting gas are those with an axe to grind with the PC gov. or those with a vested interest in the gas play here in the province. We must remember that Muskrat is viable without the loan guarantee, and without any money from sales to Emera. So if we factor those in the deal even looks better.The development of muskrat falls is the best answer to our upcoming energy needs, it gets us off oil, allows us to pay into our own energy source, eliminates a huge polluter, stableizes rates forever, connects us to the mainland, allowing us to persue alternatives for the first time. It is a very good project, and we are lucky to have the men and women at Nalcor guiding the process.

    • David
      June 06, 2012 - 09:15

      I would have thought a gasbag would be more of a proponent of gas. The political industry here, the only industry there is, would be 'powerless' without it.