Province teetering on the brink

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By J. F. Collins

Is it too late for rescue? Though already one-fifth the way down the path to disaster, must we still go the other four-fifths over the cliff?

The reference is, of course, to the monstrous Muskrat Falls sleight-of-hand. Shamelessly trading on the credulity of the Newfoundland people for legacy and corporate hubris purposes, with little regard for negative effects on the majority of people affected, that self-serving venture is now blown out of the water through its own cynical machinations.

Hopefully the Nova Scotia regulator report is widely read. Have our people (and seemingly naive government) finally taken that devastating decision to heart?

Crux of the problem

A once-strategic ploy of the whole undertaking has spectacularly backfired, i.e. the embroilment of a historically wily player (Nova Scotia) in a hugely expensive (for Newfoundland and Labrador) linkage to that province.

Nova Scotia is now to be guaranteed most (60 per cent) of Muskrat Falls output at minimal cost, leaving this province with 40 per cent  egg on its face and 80 per cent of the total expenses. This is much worse than the Upper Churchill.

The big question now, however, is not how did we get ourselves into this, but are we going to get ourselves 100 per cent out of it?

Salient points

• Completing Muskrat Falls as proposed will cause an 80 per cent increase in Newfoundland and Labrador Hydro “blended” wholesale power costs.

• $255 million paid annually by Newfoundland and Labrador ratepayers in out-of-province subsidies are designed solely for Nalcor’s benefit.

• Whereas Nalcor and the government builds its case for the province’s “power need,” Muskrat Falls, in fact, will not add even half the grid megawattage (MW) needed to get us to Upper Churchill rescue.

• The Newfoundland and Lab-rador government’s and other equity investments in Muskrat Falls  adds $6.4 billion to our real public debt, costing an extra $300 million per year for 50 years in budgetary outlays.

• Nalcor forces another $130 millions yearly from Newfoundland and Labrador to cover Muskrat Falls expenses. A total of $685 million ($260 monthly per average family) leaves little left over for those other annual public investments regularly necessary to keep the economy on track.

We will also need funding to transition 2041 Upper Churchill power to this province’s energy demands, and for real export income.

Public response

An understanding of these financial implications is woefully lacking at the ministerial level. Citizens must insist on suitable remedies. Lessons from the past must be re-called. There have been many.

• Brinco’s failure to pre-plan sensible power market sales is emulated exactly by Nalcor (with Nova Scotia in place of Quebec.)

• The ill-considered, secretive Stephenville linerboard project support hugely matched by today’s Nalcor distain for public and experts’ inquiries.

• Sprung Greenhouse, with followup royal commission advice  which is completely ignored, specifically against government joint-venturing (see Newfoundland and Labrador Power’s sensible attitude) and for fully independent advisers.

• Government’s recent blunder in expropriating the Grand Falls mill, stemming directly from absent advice.

How many more history lessons must we suffer at great cost before avoiding history repeats? To date, served up are legislated review barriers ( Bill 29 and PUB inhibition), and public duress through unsanctioned project initiation.

What now?

At a minimum, to prevent ongoing financial damage: there must either be a government ban or a legal citizens’ injunction against on-site activity, preferably with the federal government’s concurrence.

An appointed expert, independent review of project profile and corrective revisions.

Amending/rescinding offensive parliamentary acts (including the 2007 Energy Corporation Act), and a submission to have the Supreme Court  reconsider the 1982 Water Rights Reversion Act (prior objectional features expired).

J.F. Collins was provincial minister of finance from 1979-1987. He writes from St. John’s.

Organizations: Newfoundland and Labrador Hydro, The Newfoundland and Lab, Energy Corporation Supreme Court

Geographic location: Muskrat Falls, Newfoundland and Labrador, Nova Scotia Quebec Stephenville Grand Falls

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Recent comments

  • Winston Adams
    October 05, 2013 - 08:09

    And, while MF power costs, on a yearly basis, 8 times more than fuel for Holyrood, Holyrood use has been trending downwards, from 30 percent our our production a decade ago to 10.5 percent last year. And this 10.5 percent can be reduced further with cost effective Efficicncy programs as they do elsewhere. Most important is efficient heating. The cost for this? About half the cost of oil. Holyroood oil costs about 19 cents per kwh. Efficient heating systems cost about 8or 9 cents per kwh. We spent almost 100 million per year on oil and 5 million on efficiency improvements. 50 million per year on efficiency improvements would contribute to a holyrood being a backup service instead of primary production. We have continued to prefer burning oil instead of investing in efficiency, which generated jobs locally also. Why are none of the political parties promoting efficiency which other jurisdictions are doing?

  • Mr. Squeaker
    October 04, 2013 - 17:11

    We have former RCMP members being hired by NALCOR as security, after serving the crown wonderfully in their actions against Todd Russell and his people.

  • Maurice E. Adams
    October 03, 2013 - 14:55

    When you visit my website (www.vison2041.com) you will see an infographic showing what it will cost ratepayers for Muskrat Falls power compared to the cost of fuel for Holyrood (Holyrood needs to operate at peak for only 5 days per year, 1.6% of the time, and some years not at all to handle our small winter peaking power needs).--------- My website shows that ratepayers will pay about $700 million per year for Muskrat power, while the 10-year average cost of fuel for Holyrood has been $92 million per year. --- Muskrat being almost 8 times more costly than Holyrood's fuel costs --- almost exactly in line with Dr. Collins' findings. Why isn't the opposition parties calling for a stop to a project that is designed to profit Nova Scotia, Emera, and Nalcor --- at a massive cost for 50 years for NL ratepayers, their children and grand children?

  • Maurice E. Adams
    October 03, 2013 - 11:38

    Those of you who have visited my website (www.vison2041.com) will perhaps recall that for more than a year now I have shown an info-graphic comparing what it will cost ratepayers for Muskrat Falls power compared to the cost of fuel for Holyrood (which needs to operate only at peak for about 5 days per year, 1.6% of the time, and covers our small winter peaking power needs).--------- My website has shown that ratepayers will pay about $700 million per year for Muskrat power, while the 10-year average cost of fuel for Holyrood has been $92 million per year. --- Muskrat being almost 8 times more costly than Holyrood's fuel costs --- and almost exactly in line with Dr. Collins' findings. Why isn't the opposition parties calling for a stop to a project that is designed to profit Nova Scotia, Emera, and Nalcor --- and at the massive cost and to the 50 year expense of NL ratepayers, their children and grand children?

  • Mr. Squeaker
    October 02, 2013 - 19:47

    All three political parties worked together all year to get this project where it is today. We have no Loyal Opposition working for us. Whenever Ball or Michael had the opportunity to ask direct questions in the House, they time after time deferred to wasting their windows of opportunity on asinine debates about racist comments or twitter feeds, or other foolishness best left out of the house, and reserved for the open line shows. Now the only Liberals who opposed the project are only too happy to manage the "fallout" of the project, and never would oppose it now that it is HALF built!?! When your opposition does not oppose, is it treason? Treason never prospers, the reason being, if it prospers, none dare call it treason, but they will indeed manage the fallout for us, how noble.

    • at bennett
      October 05, 2013 - 10:04

      The limited amount of time I could watch news from the Muskrat Falls opposition members led me to understand they could not wrench information from Government. I also understood that to be the reason for the longest filibuster in our House of Assembly history.

    • at bennett
      October 05, 2013 - 10:08

      The limited amount of time I could watch news from the Muskrat Falls opposition MHA's led me to understand they could not wrench information from Government. I also understood that to be the reason for the longest filibuster in our House of Assembly history.

  • Coco
    October 02, 2013 - 13:23

    Another fine example of our history is Premier Thorburn's loan in 1888 to buy the stock of the General Water Company of which he was one of the shareholders. http://www.ucs.mun.ca/~melbaker/trial.htm

  • Maggy Carter
    October 02, 2013 - 11:47

    Dr. Collins is absolutely correct in his assessment of course. The parallels between the infamous Upper Churchill contract and the slow motion disaster now unfolding are striking - and very disturbing. Both stem from the naivety of a Newfoundland government that proceeded with construction long before the precise scope, cost and economic viability of the project was known, before markets were defined, before project financing was in place, and before detailed agreements with partners or investors were concluded. In the case of the Upper Churchill, Brinco and its subsidiary CFLCo proceeded on the strength of a letter of intent with Hydro Quebec. Hydro Quebec played the naive, narcissistic Smallwood like a fish, hauling back hard on the rod only when it was certain the hook was set. Brinco had spent itself into near bankruptcy. The project and the province's water rights were now in jeopardy. Smallwood had announced the project so often and so loudly that his political future now depended on it. Reeling him was child's play. Each time Smallwood would agree, or stand by while Brinco agreed, to a major concession - another demand took its place. The final agreement looked nothing like the letter of intent or the bill of goods that Smallwood had sold Newfoundlanders. Those - like Dunderdale and Williams - who ignore history are doomed to repeat it. It begins with a project that barely makes sense. Replace Quebec with Nova Scotia and watch as the latter province exploits Newfoundland's ineptness and desperation. After a deal is ostensible done, Nova Scotia uses its own UARB to extract concession after concession until a muskrat finally smells like a skunk. Replace Smallwood with a modern day replica - a lady intellectually out of her depth and whose pride will allow her neither to admit mistakes nor to seek advice from outside her close cabal of empire builders and carpetbaggers. Paranoid and defensive to the point of legislating a cone of silence over the whole sordid mess, Dunderdale staggers from one body blow after another. First the North Spur which NALCOR had downplayed, then the UARB ransom note, and finally the crafty Hydro Quebec wading in at the eleventh hour with yet another legal challenge that is certain to be upheld by a partial Quebec Superior Court. In the end, as with the Upper Churchill, the Muskrat Falls project will benefit everyone except the ratepayer and taxpayer in this province. Senior bureaucrats will have built entire careers on it, politicians will have retired to their pensionable Valhallas on the promise of it, corporations engaged in criminal conduct will have extracted unseemly profits from it, and other governments and jurisdictions will once again advance themselves by exploiting Newfoundland's resources entirely at Newfoundland's expense. As Dr. Collins points out, the only difference between the Upper Churchill and Muskrat is that Muskrat is far scarier because it exposes this province to financial and economic risks far beyond the former. Peckford, who led one of the most honest - if not entirely effective - governments in this province's history banished himself to the other side of the country to escape a $20 million gamble gone wrong. How far will Dunderdale need to go escape her legacy of Muskrat Falls?

    • Tony Rockel
      October 02, 2013 - 22:01

      A wonderful summary of this province's infamous hydro-history. When the Muskrat project finally implodes, Dunderdale might consider signing up for the one-way trip to that recently proposed colony on Mars, though I doubt that they'd want her there, either.

  • Too Funny
    October 02, 2013 - 08:11

    That's funny. Collins, must be a "do as I say, not as I do" kinda guy. For some reason we like to elect people that are quite willing to repeat historical mistakes.

  • Pauline
    October 02, 2013 - 05:39

    Why don't some one do a interview with Charles Murphy of corner brook, concerning muskrat fall's, you would be surprise to find out there is a light at the end of the tunnel.