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In my lifetime, about 60 years, except for the downfall of the Newfoundland and Labrador fishery, I think the two greatest financial happenings were the Churchill Falls deal and the Hibernia deal. I think the third greatest financial happening will be the Muskrat Falls deal.

Let’s do a bit of “what if.”

What if the government of the day for the Churchill Falls deal had made the bold step of footing 50 per cent of the cost for 33.5 per cent of the returns? I feel if the private investor could spend 50 per cent less and receive 66.5 per cent, they would have agreed to it. As of 2007, our share would have been

$30 billion, according to the Nov. 7 Telegram. That’s a good return on 50 per cent cost of developing the project.

If the provincial government of the day for the Hibernia project had taken a $2-billion share instead of the federal government taking it, the $2 billion would be long paid off and we would be getting an extra eight per cent of revenue instead of Ottawa getting it. A good return.

The government of the day is planning a major investment in the Muskrat Falls project. Is it a good investment? We don’t know and won’t know for a long time to come.

In the first two projects, there would have been a large public outcry about how we could not afford such undertakings. As it turned out they would have been excellent investments.

To get anything done, we have to gamble on it being the right thing.

I feel the Muskrat Falls project is the right thing and will lead to a better, cleaner future. The major benefits may not be seen in the near future, but in the long term, they will be.

Earl Johnson

Placentia Bay

Organizations: Hibernia

Geographic location: Muskrat Falls, Newfoundland and Labrador, Ottawa JohnsonPlacentia Bay

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Recent comments

  • Maggy Carter
    November 29, 2012 - 18:14

    Winston Adams is one of those people who has contributed in a very positive and transparent way to the debate on Muskrat. Adams has argued convincingly that NALCOR's projected increase in residential on-island demand (which NALCOR has not properly substantiated) can be offset by efficiencies in home heating technology. This is proven, off-the-shelf technology of the type widely employed in other jurisdictions. Ontario, for example, has formally adopted this strategy for reducing consumption and is well on track to achieving its goal of an overall 33% reduction in electrical heating demand. A number of related questions posed by Adams directly to NALCOR officials, which were submitted in response to NALCOR's invitation to do so, have been completely ignored. Some posters however (and by some I mean John Smith - NALCOR's anonymous spokesperson) have sought to undermine Adams' credibility by stating that he has an axe to grind - that he is motivated by self-serving pecuniary interests. Unlike Smith, Adams has been open and transparent regarding his identity, his qualifications, and his business interests. What objective, fair minded readers have to consider is this: The demand for more efficient heating systems will surge in this province irrespective whether Muskrat proceeds. If government were genuinely looking to the best interests of the customer, then it would include these technologies in an overall strategy to obviate the need for Muskrat. But if Muskrat does proceed, then the enormous escalation in residential rates will force ratepayers to find lower cost alternatives. Adams might be retired by that point, but people with his keen interest and knowledge in these systems stand to do very well. Either way, high efficiency heating is a growth industry and, by extension, Adams has no axe to grind. The same can't be said of John Smith.

  • Winston Adams
    November 29, 2012 - 13:53

    To Yeah Baby: If MF goes, power bills will go up 30 percent and maybe much more- so there will be a lot of demand for efficient heaters. This will drive down the power needs and unless Lab mining or something unforseen happens, MF will be a fiancial failure and a burden on everyone. If MF don't go, efficeint heaters will be the principle contributon to the isolated system when wind and small hydro will assist and there will be no shortage and power costs will be stable. Either way efficient heaters will take over. There will be considerable opportunity for refrig technicans, and electrican to wire up , and a control tech to do the start up , and a tech guy to size and do heat loss calculations. At 160,000 houses to convert over 10 or 15 years, there is significant work in every community. We will need more workers for this. Sloppy installations just won't work . Excellent systems when properly sized and installed. Nalcor should be running a open house to promote them as an alternative, and a salvation against the very risky MF. These thye jobs will be permanent going forward. Equipment life is 20-25 years. These units are Not only for conversions , but new houses also. They should be mandatory. When you say expand your business- if you are not technical, make sure you hire good technicans, then you have trouble free jobs.

  • saelcove
    November 29, 2012 - 13:53

    Don,t need investors when you have suckers

  • Yeah Baby
    November 29, 2012 - 13:07

    MF, bring it on I say. I see an opportunity to expand into the efficient heating business. Cha-ching.

    • John Smith
      November 29, 2012 - 17:41

      sorry yeah baby...winston already has that market cornered...LOL

  • Winston Adams
    November 29, 2012 - 12:06

    Remember the 60s and 70s, the baby boom generation, the families of 8 and 10 kids now all adults building houses and using up that electric heat. And houses poorly insulated, big energy users. Compare the family size and the energy now used. Here's an example. The average house used 5.7 kw at peak load during cold snap. The average house is only about 1200 sq ft. My son has a R2000 , double the size of the average house, but uses less power that the average. To save more he recently installed efficient heaters, he allowed 6 kw to handle a cold snap, Presently at these temperatures of minus 1 c, he is using 1kw for heat. Likely won't exceed 2kw when it gets down to minus 15. That's where technology is now. Wake up John. We've past the time of needing a big project like MF. By the way Our power companies are now planning to to a pilot project for these efficient heaters, but just a concept with them yet!. Really on top of what happening. 10 years after on the market in canada. Hundreds installed, and more than a few by power companies employees, as they know how effctive they are, just don't let the common people know. I'm 3 years ahead with my research. They don't want my data, and won't say what research they are doing, or who is doing it!A study can keep this quiet for another 5 years.And John can preach about all the power we need.

  • Winston Adams
    November 29, 2012 - 11:43

    How Much do we need for Vale INco John? You said 100MW .What to change that ? Paying 50.00 today for the correct answer. 15,000 pages John and you don"t have the answer! 100 is not factual John. Come clean and admit it.After two days you have no answer. Can't wait much longer John.

  • Cold Future
    November 29, 2012 - 11:33

    John, as usual there is not a whole lot new in you rantings except the usual messenger shooting. Yaysayers will benefit in the short term. The Baie Despoir comparison is good. It involved the total electrification of the province. Its present cost would be about $1.5 billion (INTEREST DURING CONSTRUCTION INCLUDED) which illustrates how bad the ecomonic parameters of Muskrat are. Muskrat including about $ 4 billion in interest during construction would be about $11.2 billion. You describe Muskrat as a deal. As far as is known the only deal part is the agreement with Nova Scotia which trades one quarter of the plant production for the price of the gulf cable. It is assumed that NS can make deals to wheel the warehouse of power through NS, NB and New England and sell it in New York and Quebec. But if the genious prevails we would shut down Holyrood ( even though it can produce economical power well into the future) and would not need the deal because then there is no power to sell from the warehouse to the mainland. John, you do have to agree that it is time to call a moriatorum and go back to the drawing board on this Muskrat f-----co - don't you think?

  • Cyril Rogers
    November 29, 2012 - 10:35

    Mr. Johnson. as others have ably pointed out, there are HUGE differences between Muskrat Falls.......and the Upper Churchill and Hibernia. The latter projects were true MEGA projects and their costs, relative to their potential was much more in line. However, the Muskrat Falls project, at an average output of 500-600 MW is a MINI project with MEGA costs. Therein lies the most significant difference!! What that means is that the cost of its power is astronomical...... in proportion to its actual output. And, it is being paid for with taxpayers' dollars through the money being siphoned off to NALCOR by the government, with no actual accountability to us, the owners of those dollars. You may argue that it comes primarily from oil revenues...but don't we, the people, OWN these oil revenues? Furthermore, the money being borrowed to pay for Muskrat Falls will be taken directly from us, the ratepayers, and there is little, if any, chance of any revenue from any other source. Even if they did sell power, it would be a losing proposition, since it will cost more to make and distribute than any actual revenue received. It would look good for NALCOR, simply because we will be forced to make up for any resulting deficits while they can show a paper profit. It is more slight of hand than any real profit though. Some jobs will be created short term but only businesses will truly profit....but it will all be at our expense.

  • John Smith
    November 29, 2012 - 10:10

    Mr. Johnson, I agree with you, the Muskrat falls project will lead to a better and cleaner future. However, I think a better comparison would be the Bay D'Espoir hydro development. That development was designed, and created to provide us with the additional power we would need. It is about the same size as muskrat, and the dam would have cost about the same in today's dollars. There was the same naysayers, warning of doom and gloom, and evviromental catastrophy, and bankruptcy, some are probably the same ones we hear fro today concerning this project. This project is not about profit, like the UC, or the Hibernia deal...that is not why governent is doing the project. They are doing the project because Nalcor has come to them and said...look guys we will need more power in the next few years, here are the options we have to access it. The muskrat deal came in 2.4 billion cheaper than the nearest alternative. So..no brainer...right? Nope, the know nothing naysayers rare their ugly heads again...the outright lies...the innuendo, the unmitigated hyperbole, then they sit back and watch the result and have a good chuckle. The professionals at Nalcor go to work, they have nothing to gain from this deal...yet we have many, even the oppsition, basiclly calling them all liars...cheats, all corrupt...it is totally ludicrous of course, but hey...that's the nature of their game. The people who work for Navigant, MHI, Wade Locke...they are all in on the conspiracy...all corrupt. The only ones who are seemingly good, innocent people are those who want the project stopped. They have no viable alternative to offer of course...they don't care...they turn up the electric heat, flick on the TV...and complain if the power goes out for an hour during a storm. Laughable, idiotic, mindless, baseless, rhetoric...the babble of fools. But I digress...so I think that the Bay D'espoir project, or even the Cat arm project would be better comparisons....projects not designed to make money, but to provide us with the power we will need for the future here in this province....too bad we didn't have a few more large rivers here on the island...this would have been built by now....

  • Cold Future
    November 29, 2012 - 08:06

    The difference of Muskrat from Upper Churchill and Hibernia are great. Upper Churchill had a purchase contract for its life and the purchaser took all the risks. The project was constructed by a private company that had to make a profit from the venture to survive. Hibernia was built and is operated by a private company that makes a profit. It took all the risks and the canadian government chipped in to assist with the risk. Muskrat by contrast is to be paid for by the people, the people take all the risks.Nalcor is a government corporation that has no incentive for profit or cost control. Just throw money at the project until it is done and tax the people accordingly. Those methods are workable for smaller projects although the people still pay- examples are the ferry boat construction and the renovation at confederation building.On top of all of that the Muskrat is more than double the cost of comparable projects under construction in canada which makes its energy much more expensive. As such its energy would have to be sold at a loss in mainland markets and subsidized by NL taxpayers.

  • Craig
    November 29, 2012 - 07:55

    The difference in both Hibernia and Churchill Falls is that PRIVATE enterprise invested in it. Private enterprise saw it as a good investment and were falling all overthemselves to get a peice of the action. Yes governments did offer incentives and did invest as well but GOVERNMENTs we not the ONLY investor. The difference today is there is not one cent of private money going into Muskrat Falls. Private and corporate investors we offered a peice of the pie but when they were offered it they ran from the room quicker than if you pulled a fire alarm! Mr. Johnson, maybe you should read what your PC party buddies ask you to put you name on before you do it blindly!

  • Coco
    November 29, 2012 - 07:11

    Mr. Johnson, The investment isn’t the problem. Residents and taxpayers have no idea if they can afford Muskrat because of the exclusion of the PUB and the Auditor General. The present government has gone to great lengths to shroud it in secrecy. The information they release is not the kind of information the public needs. Can householders, residents, taxpayers afford it? Does the same government, who mismanaged a $20 Million renovation project of their own offices, have the ability to manage the biggest expenditure of taxpayer’s money ever in the history of our province? If it was your own personal money, would you be so eager to “gamble on it being the right thing”? Moreover, would you hire the people who run Confederation Building to manage it for you? I don’t gamble Mr. Johnson because the odds are that you will lose more than you will win but if you give me all your money and tell me to go place a bet for you, I’d think you a fool but I’d do it because that would be your money to play with or throw away – not mine.