- July 09, 2014 - 17:26
Somehow, is not a word that carries any weight whatsoever in either the accounting or engineering professions. 'Somehow' seems to be an acceptable measurement of Government performance and some editorials it seems. The reason I object to the MF project is more basic. Energy markets have changed drastically over the past ten years. This change occurred as a result of the massive shale oil and gas production increases. This resulted in huge decreases in wholesale electricity prices in the NE US, (over 50%) and an increase in the number of new, clean natural gas generating plants being built. This drastic market shift has resulted in a huge surplus of electricity in the marketplace, most notably in Quebec. Hydro Quebec produces some 35,000MW annually, and they are expected to have a surplus of 30 terawatt hours this year. This has resulted in the cancellation of all new projects, and the Quebec energy review commission is recommending the cancellation of the last two phases of the 1550MW Romaine River project. We, in NL however, continue blindly on our way towards the edge of the cliff. Romaine power was expected to cost $0.0600/KWh. Muskrat Falls power will certainly cost much more than double that just to produce, but Ed Martin didn't tell his projection....somehow. The shale gas reserves in the US today are enough to last 100 years, with much more than that inferred. The US drilling will not stop. You say the 40% of MF production slated for export is just gravy and not taken into account. This is a ridiculous premise, and no industrial development ignores 40% of it's production under any circumstance. The only financial picture in NL today is the fact that we have spent at least $18 billion in oil revenues, and are now running huge deficit budgets ($500 million this year). This will continue until the next oil project fills the coffers again. The production in the abundant shale gas reserves started to increase massively some 8 or 10 years ago. Our little energy company (minus the 5400MW produced by CFLCo, it only produces about 1750MW) evidently took no notice, because of the solely politically motivated drive to build MF... at any cost. Both the PUB and Manitoba Hydro conveniently did not have the mandate to examine NG or LNG alternatives. Remember when the PUB was removed from any involvement in the process? Currently, very clean combined cycle NG plants go for about $1 million/MW in overnight capital cost. We could have replaced Holyrood complete with LNG storage for under $1B. LNG is much cleaner, cheap and abundant. 2041 is not that far away, and we will need back up then anyway. Nalcor, and our Government chose to completely ignore that option, simply to satiate some egotistical demand, and as a result the people of NL will pay an unnecessary high price for power for a very long time.....'somehow'.
- Auntie Gull on the End of the
- July 09, 2014 - 15:23
Will Inuit-British-Metis land claims come imto play over and above water rights contracts and can Romaine River shed light on Muskrat Falls? Tom Adams wrote: Hydro-Québec is constructing a comparable hydroelectric complex on the Romaine River, 350 kilometres closer to southern markets. It will produce about twice as much power, but require a total investment less than the current estimate for Muskrat Falls. Romaine will start up before Muskrat Falls construction can begin in earnest. For all its competitive advantages relative to Muskrat Falls, Romaine will need a massive turnaround in electricity markets to break even. In response: Adams does not state that RR is a sound business venture, he merely highlights areas where it is more economical and strategic than MF. The focus of the article is MF. This is why the man agreed to speak with you about MF. I took this phrase, comparable hydroelectric complex, as a comparative reference to the same ecological, economic and strategic flaws existing in both projects. Both are examples of an unnecessary disregard for nature at the expense of the public, for the profit of our business, construction and political leaders. Both are examples of gross government, and crown corporation subservience to the private sector hunger for a "smart grid". Both are unnecessary if bottom-up planning (taxpayers/res. users and demand) was a factor. My main point is that he has no better overall opinion of RR than MF, merely states that RR is better in the only ways we can (or are allowed to) measure. He does this to show how flawed MF is by contrast. He does not say RR is good or better, just less flawed, but still uneconomically practical in the current market. What is his unsubstantiated point of view? Its not like he called in to proclaim Jesus as divine King of the universe! Yet, he received less airtime (deducting his stuttering) and civility than those who did today. I know nothing about anything Paddy, the following is a little bit of my opinion on it. Usually I keep it to myself, but the end of the world is at hand, and I feel like going into the afterlife unburdened. You will likely not get a chance to read this anyway. This project will give us a debt of four billion dollars, plus cost overruns, ignoring the only independent, and unfavorable, review (The Joint Review Panel), dismissing the PUB outright, not even considering demand management technology to get us to 2041, nor natural gas options, yet taking 50 year demand projections on faith as well as the existence of a U.S.A. market which is satisfied by economical shale oil and gas. Muskrat Falls project is driven by the propaganda of employment promises (despite the lack of local skilled labour and long-term negative effect of temporary, high-wage jobs), environmental stewardship (without considering the GHG emissions created by watershed flooding and intense construction) and long-term stable electricity rates (predicted in times of global economic instability and accelerating change). The 2041 group will never be right. Even if Cabot Martin was a time traveler, returning from 29 years time to tell us how we lost in court to Hydro Quebec and Holyrood is now burning bunker D- and turkey bones. Mumbo Jumbo Metis are trespassing on their own land, just like the Innu Nation did in Voisey' Bay in 1995! Quick! Get Keith Russell to put his foot up their arsehole, and then into his own mouth, repeatedly. Gross. The government of Newfoundland and Labrador advertises that the power is in our hands. Is this a polite, energizing way of saying the average resident will be left holding the bag as our collective credit is being torqued out of our hands and pushed to the limit. Kathy Dunderdale and Peter Penashue are nearly innocent spectators in this game of regional Monopoly: Multi-millionare Edition. Penashue has the endearing, silent nature of the Gerber baby. Dunderdale has the cutesy, fizzy confidence of a tiara-crowned pageant toddler. Kathy Boo Boo. We cannot scapegoat them for doing what everyone else is doing; crawling toward self-preservation. Even if that self is a childish one, so what about it. It is never too late to have a happy childhood, especially when Daddy Danny Warbucks is proudly honoured. Jerome Kennedy has his grade 10, in trailer park boy parlance, so is superior to the fool Eddy Joyce. Logically, since Jerome is a full 4 grades ahead, we must reject all opposition outright. The only real power our compromised political muskrats have, is the power to walk away from the compromise and enter the fabulously frigid world of political pariah-hood. Hard to do that with the Hockey Dads, Danny & Stephen, respectively, emphatically, shouting from the wings "Work it Smoochy!" Dunderdale and Penashue may be considered traitors of the worst kind if self-salutary neglect of their own people is the criterion. As native, rural apologists they are quite effective at serving corporate interests above their constituent's, and smiling. Advertised as "about putting Newfoundland and Labrador first", this project appears to be just the opposite. It seems to be about putting favored shareholders, lockstep contractors and colluding consultants first. The Mishtashipu (Hamilton River, or Churchill, as recently renamed by colonial scholars) is a long way from St. John's. It is a long way from true utility, in the John Stuart Mill sensibility. Some might crudely state that Nalcor is subcontracting the overall task of money laundering to SNC-Lavalin through an incredible EPCM contract. This is not true. SNC-Lavalin will just pass this task on to other consultants and contractors. The only jail-time will be served by some hippy/hillbilly from Port Hope Simpson who chopped up a light pole. This two-dam project seems to be a debt-creation endeavor, the physical justification for a clandestine corporate-siphoning of provincial public funds, now co-signed and sanctioned by our federal government with a loan guarantee which allows Emera and Nalcor to play nice now, and pay 30 million apiece if they opt out. We are poised to be railroaded again, figuratively and literally. At least the Hells Angels Motorcycle Corporation and the Ndrangheta refrain from willfully destroying sensitive, pristine ecosystems. The foxes are not only in the hen house, they have rode off on the farmer's tractor with the deed to his land Closing Search & Rescue? Closing schools? No money to build hospitals and no money to staff them if we did. We can't afford seasonal workers. We can't afford civil servants. I pity you and Randy Simms, having to find moderation in all this. At least you are not the mayor of a suburb Paddy! :) should be a limit to comment characters like CBC! No one likes endless prattle. Is quoting, linking Ed Hollett's anonymous sources better to get your own economist!
- Willi Makit
- July 09, 2014 - 11:51
Oh well, ''margins change'' say Peter Jackson. It's that kind of cavalier attitude that allowed this one headed project to proceed in the first place. Government and NALCOR used every best case scenario in the book to make the case in the first place. Had they been more conservative with their estimates, this debacle would have been put to rest ages ago. instead, the cheerleaders, including Jackson, played along with the idea of the Emperor having beautiful new cloths - despite overwhelming evidence to the contrary. Oh well, we'll get through it they shrug after their rationalization gets even too unbelievable for even the most ardent supporter to stomach. Absolutely sickening.
- Cyril Rogers
- July 09, 2014 - 11:03
Mr. Jackson, I may as we'll put in my two cents' worth. My question to you? Why are you basically still siting on the fence on this. You have pointed out all the reasons why MF is such a bad idea…then try to negate the arguments of us naysayers. Which is it, Peter? Are you "Yay" or "Nay? Others have very capably responded to your tepid arguments in favour….but I hope you can take solace in the fact that Ontario will be almost as badly off as we are. Small comfort that!! If even a couple of the worst axe scenarios emerge, we are going to have a very difficult time pulling through. The maddening thing about it is this….the self-inflicted misery to our fiscal health was not caused by outsiders…it was caused by the movers and shakers in whom we placed our trust. You know…... the ones who battled Ottawa on our behalf, only to pillory us fiscally for decades.
- Jon Murphy
- July 09, 2014 - 10:55
Excellent column, Thank you for writing this Peter. Big rewards do not come without big risks. I see you have really struck a nerve with all the doom and gloomers.
- Stop rolling the dice...
- July 09, 2014 - 12:16
Since when is government supposed to take 'big risks' with the public's money? You conjure up an image of Ed Marin sitting at a slot machine in a dingy bar somewhere. Exactly the point Maggie was making.
- July 09, 2014 - 20:52
Every investment government makes comes with some level of risk. Sorry if that is the image that comes to your mind, not what I had intended to do.
- Colin Burke
- July 09, 2014 - 10:32
I've suggested this before, in letters I've yet to see in print, in Tely or elsewhere: If all the people currently employed in building dams and making turbines, and in drilling for oil and refining it, were employed instead at making pedal-powered generators or in operating such, we might yet be able to maintain our current "standard of living" as an "industrial" society. And that would have the virtue of people's living by their own actions instead of profiting from mere movement in nature which remained inanimate.
- Maggy Carter
- July 09, 2014 - 10:27
Thank’s Mr. Jackson. I feel so relieved now that a columnist who, while acknowledging his limited grasp of numbers, says he's sized up the Muskrat Falls project and is confident 'we'll pull through - somehow'. Yes, he admits, better that it had not gone ahead, but nor is the sky falling. I won't rehash the secretive, shifting, deceptive, dishonest orchestration of this project by a handful of politicians and bureaucrats. Let's just say that its economics were so badly flawed that the strategy was to deliberately misdirect, obfuscate and complicate public discussion to the point that ordinary citizens could not reach an informed opinion. As Jackson points out, power rates were destined to rise in any event as they are in other jurisdictions. Some other day we can talk about the fallacy of comparing a province with substantial untapped hydro-electric potential with ones, like Ontario, that have little or none. Ignore also the horrendous implications for an aging base of ratepayers, many of whom will be on fixed income and might ill-afford a doubling of their electric heating bills. For now, let's just focus on the risk profile of this project. There are the outstanding technical risks such as the North Spur that could have a dramatic impact on costs. There is the financial and legal risk that any extended break in the1700 km transmission line (especially the underwater cables) would pose to the operator. There are the legal ramifications of a possible court finding in Quebec's favour regarding water management rights on the Churchill River. Such a finding could significantly reduce the effective installed capacity of Muskrat Falls while dramatically increasing the cost per megawatt. There is the construction risk - the prospect that cost over-runs could push the project well beyond the $10 billion mark, forcing the province into another round of borrowing. Finally, and perhaps most striking, is the market risk. This risk moves in lockstep with, but inversely to, the price of oil. What does the price of oil have to do with hydro-power? In our particular case, - a lot! If the price of oil rises, for example, to $150/barrel and remains there for the next few decades, Newfoundland will easily survive Muskrat Falls. High oil prices mean that those using electric home heat will not switch to oil, and while they might opt for other energy efficiencies, the incremental gains in petroleum revenues can be used to offset any losses to NL Hydro. In other words, a bloated treasury would backstop any debt servicing risk the province might otherwise face. What happens if oil drops to $50/ barrel - as it did in 2005 and has been predicted to do again by a number of groups including the Paris based International Energy Agency. In that nightmare scenario, investment in NL offshore exploration and production dries up and royalties to the province quickly dissipate. A treasury weakened by years of drunken-sailor-like spending and the absence of a rainy-day heritage fund would be hard pressed to service a provincial debt - that as Jackson acknowledges - will be doubled by Muskrat alone. At the same time, Newfoundland homeowners faced with a choice of cheap oil and prohibitively expensive electricity, convert in droves to oil-fired heating. NL Hydro's ability to continue servicing its Musrkat debt is badly compromised. In an effort to keep up, Hydro pushes electricity rates even higher, but with each increase more ratepayers drop off the screen until Hydro reaches what economists call ' the point of diminishing returns'. When that happens, the Province is forced to pick up the slack - to dig into any reserves it might have to subsidize power rates or supplement NALCOR's mortgage payments. Given a shrinking population, collapse of the province's main source of revenue, a withering economy and a preponderance of households that won't or simply can't keep up with power rates, a fiscal death-spiral sets in. The province exhausts all remedies including recourse to the federal government. A desperate government sees only one way out of its predicament. It is an offer from Hydro Quebec to buy the entire Churchill power complex together with the transmission routes through Newfoundland - at bargain basement prices. An unlikely scenario? Yes. Everything that could go wrong would have to go wrong for this Greek tragedy to play out. Impossibe? No. We need only look at the best laid plans for the Upper Churchill. What these risks tell us is that Muskrat is not a thoroughly-vetted, prudent, well-conceived investment by a government acting rationally, responsibly with the public’s money. It is a roll of the dice and - as they say - we are all in. We will be holding our breath a long while in hopes the dice don’t come up 'snake-eyes'.
- Too Funny
- July 09, 2014 - 11:22
"while acknowledging his limited grasp of numbers,", well, that's more than anyone else has done that claims to have "sized up the Muskrat Falls project" - for or against.
- July 09, 2014 - 11:25
When the comment is longer than article then who bothers to read it.
- where did john smith go?
- July 09, 2014 - 12:25
Lee - maybe when the comment is better than the article!
- Ken Collis
- July 09, 2014 - 08:25
You're correct, Peter, that we'll pull through somehow. The people of Argentina will pull through too. The question is the cost both financially, and physically.
- Maurice E. Adams
- July 09, 2014 - 07:38
"... I'm sure we'll pull through -- somehow". ----------- A very reassuring, rational, evidence-based position, Peter!!! ---- Is that the standard that we should use as a basis on which to spend $10 billion that we do not have? I think we have all "pulled through" since the $20 billion Upper Churchill giveaway ---- and that type of thinking is OK this day and age? ---- Wake up, Peter. This time, we are doing it to ourselves.
- July 09, 2014 - 07:37
Whoa, whoa. Hang on there son. You're suppose to be on the anti-MF bandwagon.
- July 09, 2014 - 07:10
Good for you Peter! It's takes a lot of nerve to speak out against the anti-Muskrat Falls crowd, especially when you are such a public person. Goodness, you still have to work with Russell Wangersky and Pam Frampton, who seem to make their livings these days speaking out about the evils of Muskrat Falls. You are one brave person Peter, and I hope that you don't suffer too much personally because of this. After all, we still do live in a democracy, supposedly.
- July 09, 2014 - 06:10
Unfortunately for most, projects such as this do not get the attention needed by the average Joe. First of all because of the technical nature and secondly, the timeline. This project was ill conceived and will be to detriment of many in this province for years and years to come. The current government will be history and so will Ed Martin, but for everyone else it will be a thorn in our sides. For the low income and seniors on fixed income, ask Ed Martin to explain how they will deal with all the increases. Quite frankly we are in one hell of a mess and this government keeps digging a deeper hole.