Muskrat Falls for both pride and profit

Winston Adams

- November 15, 2012 at 17:20:54

Mr Wicks, as to your pride of the technological achievements of the Upper Churchill, I am old enough to remember working as a engineering student while Churchill Falls was under construction. I worked under a engineer , A mr Ken Weir , a engineer from California with Becthel, a large engineering firm. he was a civil engineer. I did testing on the compaction of the dam materials. As I recall we needed 95 percent compaction, and the materials had to meet certain critieria to get this. Below 95 percent ,the test failed and contractors could be held liable to keep up their efforts to reach this level. To me at first it seemed black and white but sometimes it seemed impossible to reach this level, and he would ok it anyway, as i guess the reality of time and costs issues were part of it and I guess they had some tolerance. To me , a student , the risk of not meeting the specifications and a risk of a catatrophic dam failure was a serious matter. I went on to do electrical engineering, not civil. But I realize that little of the expertise of the Upper churchill was from nfld. We had a handful of engineers in nfld at that time. And much of the engineering with developments on the island was and is via outside consultants. Our skills have been more on the operational side.Our contribution to the design of that project was little. It is now lower cost by far to use efficient technology locally for heating than to bring power at extremely high cost from a thousand miles away, and this is a serious risk to the demand forecast used by Nalcor. If you are ignorant of this fact then your pride is misplaced. Do a little research and reconsider your position.

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Winston Adams

- November 15, 2012 at 13:35:03

Ginn, my analysis for an alternative is as follows; Efficient heating for residential allows energy savings equal to the output of Holyrood and 1.5 times our 300 MW allotment from MF. When applied to commercial etc it covers our needs beyond 2030. This is self fiancing with a 8 percent add on rates and saves residents about 32 percent on reduced energy needs. 8 percent creates 52 million per year fund for rebates of 40 percent to residents to convert. Overall a consumer with 200.00 per month would save 53.00, and 300.00 per month would save 80.00 per month. Once most residential conversions are done the annual saving to residents would be 120 million and savings on oil at Holyrood 100 million. Cost for Nfld powers 151,000 customers for conversion is 1.5 billion for heat and hot water. And adding a little wind and small hydro we have sufficient for 2041 or longer. I leave it to you to ask Nalcor to refute this analysis, as they have ignored efficieny. Put another way, efficient heat and hot water reduces our average power cost from 11.2 cents per kwh to 6.4 cents. The cost of the equipment averages to about 2.5 cents. Total of 8.9 cents equivalent instead of 11.2. Compare that to the 16.5 cent blended rate with MF And all engineers apply this technology for larger buildings as a 'no brainer' since the economics is so compelling. Time we did the same for residents.

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ginn

- November 14, 2012 at 15:26:21

Indeed we have been held hostage to Quebec by a poorly negotiated contract. We may have made a billion dollars over the the 40 or so years, however as we all know Quebec has made almost 40 times that amount. It is time to throw away this chockhold and declare our independance from the Quebec yoke. Muskrat Falls will achieve this aim: it will also provide stable pricing for all of us. The propagandists against this project have not shown a feasible alternative. Until they do, why should we listen.

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  david

  - November 14, 2012 at 17:24:49

  1) A contract is a contract --- and that one is our fault, not Quebec's. 2) Two wrongs don't make a right. 3) Decisions made from emotion instead of reason are almost always bad ones. Anything else?

R Ryan

- November 14, 2012 at 03:55:36

Imagine.... no borders,no country....no greed or pride....come on give it a try :) We had nothing to do with where we were born..... Pride can cause alot of problems. Take pride in being honest and treating others around us with respect.Without any fanfare pick up some litter on that walk and refrain from beeping the horn at that slow car in front of you....breathe and smile ;)

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R Ryan

- November 14, 2012 at 03:40:12

Imagine.... no borders,no country....no greed or pride....hmmmmmm

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Doug Smith

- November 12, 2012 at 20:41:59

Mr. Wicks, I can’t understand why you are supporting Muskrat Falls. Perhaps you could clear up some concerns I have regarding the project. 1) The people of the province are not going to make a profit on Muskrat Falls so why get involved? 2) If Muskrat is such a good investment why has no private investment been involved? Investors love to make money. Shouldn’t this raise a red flag? 3) The billions the province has to borrow to finance Muskrat will more than double the provincial debt and if more oil wells are not found the province could face bankruptcy. Is this a good thing? 4) This project will raise not lower electrical costs for the citizens. How is higher electricity costs a good thing for the people? 5) Mr. Wicks you tell us that you were deeply disappointed in Churchill Falls when it became apparent their would be no meaningful return until 2041. So how do you justify Muskrat Falls when there is no projected meaningful return ever? Doug Smith, GFW

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Missteps

- November 12, 2012 at 08:45:18

Mr. Wicks admits that we will receive a “meaningful return from our asset” (Upper Churchill) in 2041. He implies that there is an “opportunity” for us to get it right this time but to disregard the findings of our Environmental Review Panel and our Public Utilities Board and to stifle our Office of the Auditor General and omit all our key public agencies from the process entirely just because they wouldn’t play ball is beyond reproach. The effect of this erosion of our public agencies has tainted Nalcor’s credibility. Having thrown out all legitimate backing, their strategy of reaching up to the kitchen shelf for a bevy of paid-for propaganda implied financial motive. They’ve embarrassed the public and in the absence of facts, they then tried weaving a yarn out of the unknown. Along with these MISSTEPS, the head of Nalcor is touted in the media as the official hand-holder of politicians but it’s not the coach we came to see. It’s the performance of the athletes. In the court of public opinion, these and other inconsistencies make Muskrat look like an unbelievable client seeking to extract undisclosed multiple Billions of dollars from the general public based on uncorroborated stories and wild speculation. I’m just a commoner but I would humbly suggest that you go back and re-evaluated all of the evidence. No matter how much you think you know, there is always something to learn.

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Fintip

- November 12, 2012 at 01:36:09

As a concerned citizen, I welcome Mr. Wicks’ contribution to the debate. Every resident of this province is, of course, entitled to an opinion and Mr. Wicks has offered his. Unfortunately his arguments ring hallow. As with Ms. Dunderdale's most recent appeal to Newfoundlanders, they are predicated almost entirely on shameless nationalist pride. The bible warns us, of course, that 'pride goeth before a fall'. Indeed it was Smallwood's appeal to our pride, mirrored by his own supersized ego, that lead to the disastrous Upper Churchill contract. But as much as Smallwood's scheme cost us dearly in lost opportunity and lost economic rent, it posed no direct threat to the province's solvency. The reason, of course, is that the costs and risks of Churchill were not underwritten by the Newfoundland taxpayer; nor was its viability contingent on enormous rate increases to the Newfoundland homeowner. Given its depressing circumstances, I find incredulous that Mr. Wicks would refer to the pride of Newfoundlanders in the ‘technological marvel that is Churchill Falls’. It is a fallacy. There is no evidence of such pride, which is hardly surprising. Newfoundlanders had little to do with Churchill. We didn't finance it; we didn't design it; we didn't engineer it, and - except for some low end jobs - we didn't build it. Indeed the Upper Churchill contract gave first consideration to the residents and corporations of Quebec. I recall vividly the spectre of Newfoundlanders and Labradorians being marginalized on their own project because they didn't speak French and because most of the management positions were held by Quebecers. There might’ve been room for some pride had we, at the very least, been able to claim the brains behind a deal that allowed Newfoundland to extract even a modest economic rent from our own natural resource. In reality, of course, our leaders were the unwitting – if not witless – pawns in one of the greatest giveaways since the natives sold Manhattan. So frankly Mr. Wicks, I wouldn't go around telling people how proud you are of Churchill Falls - not unless you were born in Quebec. You take an even greater leap of logic in concluding that, because Churchill was a success (for Quebec), then so too must Muskrat succeed for Newfoundland. Yes, the Anglo-Saxon route removes Quebec as a 'monopoly customer' for Muskrat, but unfortunately replaces it with the Newfoundland ratepayer as its only captive buyer. Except for you and I as ordinary homeowners and ratepayers in this province, there is no other market that is willing to pay for Muskrat power near what it will cost to produce it - let alone allow us, as owners, a profit. Nor is the Newfoundland ratepayer a 'willing' customer. We can buy our power at arbitrary, inflated prices or we can sit in the dark. Even if, as ratepayers, we opt to sit in the dark, we will still be forced to pay for Muskrat as taxpayers. Wicks’ assertion - almost as an afterthought - that Muskrat’s viability is assured by the DG3 results is simply not true. That claim to viability is predicated on a series of interlocking, interdependent assumptions - the failure of any one of which to materialize could easily tip the scale toward financial ruin. In other words – it is a house of cards. Its economics hinge on a take-or-pay contract from NALCOR to NL Hydro which, in turn, is predicated on a speculative at best - implausible at worst - forecast of Island demand. Moreover, MHI has offered the absurd observation that there is an equal likelihood that capital costs will ultimately be less, as opposed, to more than budgeted. MHI should stop smoking dope and take a glance at the real-world experience with publicly funded mega-projects (including the 86% cost overrun on its own Wuskwatim project in Manitoba). Finally, as proof of its profitability, Mr. Wicks cites support from three other players. One - EMERA's prospective investment - ignores the fact that Nova Scotia is not obligated to participate and can withdraw from the project up to a year and a half after Ms. Dunderdale sanctions it. The second assertion is that the federal government would not support Muskrat if it weren’t viable. But the feds have not yet signed off on that undertaking and there is considerable skepticism within its own bureaucracy. The very fact that a loan guarantee is necessary is an acknowledgement that the project cannot stand on its own merits. Thirdly is the assertion that Muskrat must be viable if the banks are lined up to underwrite it. Again, debt financing is not yet assured. If and when the banks do come on board, their involvement will come in spite of the weaknesses in this project, rather than its strengths. The banks will take comfort from the federal loan guarantee and from the uncharacteristically low debt-to-equity ratio that serves to limit the bank's exposure. That equity, of course, is courtesy of the Newfoundland taxpayer. Wicks states categorically that the bank financing will be 'non-recourse'. Legally that means that, in event of default, the bank’s recovery efforts are limited to the sale of the asset itself - i.e. it has no recourse to the crown to make up the shortfall. This is nonsense on two fronts. The first is that there would be no practical way in which the bank could expect to recover its losses from a failed asset of this nature. The second is that, by virtue of any federal loan guarantee, the debt cannot be construed as non-recourse. Moreover it would be silly to expect that the government of Canada would agree to a guarantee that can be called by the bank without the borrower (Newfoundland) first exhausting its ability to make good on its own obligations. The entire Muskrat scheme is riddled with gaps and contradictions of this type. I would have expected that, as an experienced lawyer, Mr. Wicks would be able to see those flaws and would be among those pressing for real independent scrutiny by an unfettered legislature and by a public utilties board established for just this purpose.

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  david

  - November 12, 2012 at 16:54:33

  Think of the major point you want to make. Then say it. Then stop.

Virginia Waters

- November 11, 2012 at 18:55:10

This is presumably the same Mr. Wicks who is a partner in the law firm founded by Danny Williams - the architect of the Muskrat project. It seems that a lot of the Muskrat defenders have some connection with Williams, with NALCOR, with the Dunderdale government or are in a business that might benefit from a project like Muskrat. They are entitled to their opinion of course but their letters warrant particular scrutiny to make sure there is some rational basis for their support. Unfortunately the letter from Mr. Wicks lacks any sound technical, financial or economic argument for Muskrat. Instead, he appeals to our sense of pride. He tells us how proud he was two years ago in November when Williams announced plans to go ahead with Muskrat. Like a lot of other Newfoundlanders, I also welcomed that announcement. I assumed Williams had found a way to develop Muskrat such that it would guarantee Newfoundlanders a return on their investment, and lower the burden on electric ratepayers - not increase it. I waited for the details to emerge that would confirm that this was a good deal. What followed, unfortunately, were more questions than answers. We heard a lot of rhetoric and generalities without a shred a proof that this was a viable project. Everything NALCOR and government have done since then has been designed to sell Newfoundlanders on a project that is fundamentally flawed and that poses huge risks to local taxpayers and ratepayers alike. If, as a lawyer, Mr. Wicks was to question a witness on a matter with this many holes in it, he'd be asking the judge to throw the whole thing out.

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Maurice E. Adams

- November 11, 2012 at 15:10:25

EVERYONE will make money off this project EXCEPT ratepayers. The take or pay contract will GUARANTEE that whoever invests in this will make money because no matter how little power the island needs or how much it cost ratepayers --- THE LIGHT BILL MUST BE PAID, and if not, the provincial government will have to pay by using our oil revenues and/or increased taxes.... I would expect the final agreement to show some private sector ownership ---- and I wonder who? Most likely many of those pushing and/or supporting this yoke around he necks of ratepayers, our children nd grandchildren.

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Richard

- November 11, 2012 at 14:07:32

Pride and redemption? Spare me.

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More Propaganda?

- November 11, 2012 at 10:03:53

More propaganda from the rich or those who stand to make money from this project. Don't believe them >>>>>Nothing has been invested by private industry into Muskrat. The ppl are paying for this and to subsidize mines to make profits. >>>>> The taxpayer and ratepayers will only get the costly bills. There will be no benefits to regular ppl. Only expensive utility bills. The elderly, poor and disabled will suffer. So will the economy as households become drained with no money to spend on other things. >>>>>>The rich will walk away with pocket loads of money from the taxpayer and ratepayers money . Not ti mention deficits and debts starting again and oil revenues drained for this project.

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Cyril Rogers

- November 10, 2012 at 15:37:10

I applaud your pride, Mr. Wicks, but your rationale is full of holes. Let's start with the financial institutions argument. From what limited information the government and NALCOR have made available, we will be on the hook for about 45% of the upfront costs. In the event it costs closer to 8, and possibly as much as 10 billion dollars, we will have to come up with anywhere from 3.6 to 4.5 BILLION dollars in CASH. Where is that money coming from? From oil revenues currently being, or about to be, hoarded by NALCOR. IT'S THE PEOPLE'S MONEY, yet...government can hand it over to its "energy baby" with no accountability and no access to information. These funds will never go to a Heritage Fund, to pay for new infrastructure, or to pay down debt. ON TOP OF THAT, they will borrow another 4-5 BILLION dollars and add it to our already high debt rate. The only way to pay for it is to have the province's ratepayers do it via higher electricity bills. These bills may be "stable" in future but they absolutely guarantee annual increases that will see them double and triple over the life of this project. Sadly, that great project you mentioned earlier....the Upper Churchill....will provide us, if necessary, with ALL the low cost power we will ever need in 2041....with NONE of the risk associated with Muskrat Falls. We may be more educated nowadays...but I question whether we are any smarter, if we allow this to proceed.

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David

- November 10, 2012 at 13:09:09

Pride and Profit? Interesting order you put them in. You know what I think would LEAD to some pride? Doing something...JUST ONE THING...that is ultimately successful. Successful economic endeavors, by definition, means profit. But we don't "think" (for lack of a word to describe whatever it is we are doing) here, and certainly not on this issue. Here, exactly as the author inadvertently describes to a tee, there is a completely irrational, nationalist motivation for this lunacy, which will then (simply inevitable...no analysis required) be followed by profit and wealth. As Jon Steart would say...they pile it high on B***S*** Mountain.

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W Bagg

- November 10, 2012 at 13:03:50

I have no problem with developing Muskrat, my issue is letting the mining giants get the power cheaper than reasonable. I would even be open to letting them get it at cost. However I shouldn't being paying for their power with my home electric bill, or my childrens. The minerals aren't going anywhere and they certainly won't evaporate. Wait unitl they want to at least pay cost for the power, otherwise it is the same deal Quebec gets with the upper, power at less than cost. You could use the same argument in the 60s, it will be a world wide engineering marvel, biggest green energy, except we have the knowledge now about giving power away at less than cost. That's my only issue.

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  Rebel

  - November 10, 2012 at 15:56:24

  Actually, it is much worse than the Upper Churchill deal. Quebec is not buying power for less than we are producing it. They do, however, get for 60's pricing and selling it at today's pricing. We have at least made 1 billion or so on that project, and will continue to recieve money up to and after that contract ends, However, this is something that is impossible if we sell below cost. Also we did not use taxpayers' money to build the Upper Churchill. Let's face it, the only reason for this project now is to circumvent Quebec. We can do that but at what cost. Is it worth it? Sorry, but I need a better reason than sticking it to Quebec to approve of this deal.

George S.

- November 10, 2012 at 10:14:12

Excellent written fellate of an idea proffered by the same government that sole sourced his firm the mulit-million dollar tobacco class action file. Did you publicly boast of the advice your broker gave you respecting a RRSP that won'tpay out for fifty years? DDidn't think so.

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Concerned

- November 10, 2012 at 09:39:07

What side of the bed did you wake up on?

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  Eli

  - November 10, 2012 at 22:34:18

  He didn't wake up. He's dreaming.