In response to questioning in the House of Assembly last Tuesday and Wednesday, natural resources Minister Derrick Dalley confirmed that the provincial government is in secret talks with Norwegian oil giant Statoil to develop a new field offshore Newfoundland.
There’s was nothing in the local media about it until the end of the week when the Premier appeared to chance his position on the talks.
The Telegram’s James McLeod wrote:
Premier Paul Davis says that when he told his natural resources minister to wrap up a major offshore oil deal by the end of the year, he didn’t really mean exactly that.
As part of its deal with Nalcor, Emera will get its electricity from Bay d’Espoir, not Muskrat Falls.
The Business Post’s March 2015 edition reported that confirmation of the arrangement came from Emera Newfoundland and Labrador chief executive Rick Janega following a speech to the St. John’s Board of Trade on February 23. Janega took the view, though, that the company will get power from whatever source of generation was operating at the time.
As the Business Post reported, the “deal between Nalcor and Emera is not specifically to supply Nova Scotia with Muskrat Falls power, but rather to supply the equivalent of 20 per cent of Muskrat’s generating capacity from any source.”
Gil Bennett, Nalcor vice-president in charge of the Lower Churchill project, took some exceptions to comments in yesterdays posts on Muskrat Falls and electricity prices.
Rather than go back and deal with his comments in a re-write of the original post, let’s deal with Bennett’s comments here and link the two together so people can get the full effect.
For those of you who didn’t read the original post, go back and do so. It will help. In this post, Bennett’s tweets are in bold print. Your humble e-scribbler’s reply is in regular type.
On the last electricity bill to arrive Chez Scribbler, the price per kilowatt hour was a little over 11 cents, all in.
On Wednesday, Newfoundland and Labrador Hydro applied to the public utilities board for a six percent reduction in electricity rates pending a thorough review of electricity prices now that oil has dropped through the floor.
Nalcor claims that Muskrat Falls is the lowest cost way of meeting electricity demand on the island in the future. The truth is Nalcor didn’t produce any evidence that they compared potential sources of electricity before they decided to build Muskrat falls in 2006.
Konrad Yakabuski’ s column in the Monday Globe is an interesting one for people in Newfoundland and Labrador for a couple of reasons. ‘
First of all, Yakabuski pointed out the “broader credibility problem facing all of Canada’s provincially owned electric utilities.”
Second of all, for all those people in this province who are complaining that the Liberals won;t release any of their policies before the election, we have had lots of time to debate the energy policy of the current administration for a decade.
For all of that time, the people currently bitching about the lack of policy debate didn’t want to debate that energy policy despite the mounds of evidence that what the provincial government was doing with the former hydro corporation was headed for bad policy.
Prompted by Wednesday’s post on Muskrat Falls costs, a couple of readers drew your humble e-scribbler’s attention to a tidy little briefing note posted on the Nalcor website.
It’s not really obvious – some might say it is buried – but if you going looking you can find it and a lot of other useful information. That’s a shame, really because this little two-pager was far more informative than anything that’s actually come out of the mouths of the Nalcor brass or provincial cabinet ministers.
As it turns out, Ross Wiseman did a bit more than bugger up his fractions. And your humble e-scribbler was off by a bit in trying to unravel Ross’ version of things, too.
Twitter sometimes produces some gems.
Like on Tuesday when Tom Baird, a mathematics professor at Memorial pointed out that the province’s finance minister had a wee bit of a problem with basic math.
“Just do the math,” Ross Wiseman told Liberal leader Dwight Ball during Question Period on Monday. “ Based on the current projected cost of that project of $6.9 billion, our investment over time, over the life of that project, the construction of that project, will be about $2.3 billion…”. And that $2.3 billion, according to Wiseman was the 25% investment the provincial government had always said it would put into the Muskrat Falls project.
People interested in one of the big geological uncertainties that could affect the Muskrat Falls dam will have a chancer to hear from an international expert later this month.
Dr. Stig Bernander,an international expert on quick clay landslides, will deliver a public talk at the LSPU Hall, on Victoria Street, St John’s at 8 pm Thursday, October 30th. He will discuss quick clay landslides with particular attention to the North Spur, a key feature of the Muskrat Falls dam project.
Quick clay is clay material deposited under marine conditions upwards of 20,000 years ago. Exposure to rain (Read more…)
The St. John’s Board of Trade is about the only business advocacy group in the world that doesn’t actually believe in free enterprise.
The Board doesn’t believe that government should control public debt. They claim they are worried about it, but in practice the Board will shout with joy the more the government spends.
That sounds ridiculous, but it is true.
The Board of Trade supports the Muskrat Falls project, for example. The project involves a massive increase in public debt. There’s no evidence it is the cheapest way to meet the provinces electricity needs. The only way it can work has been to create a complete monopoly in electricity production in the province that will force locals – including businesses – to bear the full cost plus profit, so that the provincial government’s energy corporation can sell discount electricity everywhere else except inside Newfoundland and Labrador.
The Board . . . → Read More: The Sir Robert Bond Papers: The Vision Thing #nlpoli
Over at Uncle Gnarley, JM’s at it again with the first of a two-parter on Nalcor and its problems with forecasting for Muskrat Falls.
Nalcor assumed that they would get 830 megawatts of electricity out of Muskrat Falls in the winter months when demand is highest. That’s the number they gave everyone else and, as you can tell by the language Nalcor uses, it was an assumption, not a solid forecast. Now they say they should be able to get 673 MW at Soldier;s Pond from Muskrat Falls. That’s a difference of 157 MW, not an inconsiderable difference.
Conservative leadership candidate Steve Kent may be running in third place in the race, but the guy makes bold promises.
His energy policy includes the pledge about Muskrat Falls that he will “bring this project in on time, and on budget.”
That’s a rather silly promise considering that the project – originally budgeted at $5.0 billion – is already officially estimated to cost $7.0 billion and will more likely cost something well above $8.0 billion before everything is done. For those of you doing the math, that puts the project officially at 40% more than when the project was approved in 2010 and more likely about 60% over budget.
Companies large and small in the province are under considerable stress as a result of Nalcor’s Muskrat Falls project.
The cause? This CBC story from Labrador mentions “steep wages” as the major issue:
"Over across the river, the average paying job is up to $40 an hour, and that’s before benefits and everything else, so it’s very, very hard to compete with," said [Mike] Hickey [of Hickey’s Construction].
According to CBC, Hickey’s been having a hard time keeping employees as a result. He just can’t compete with those kinds of wages.
Temporary premier Tom Marshall and natural resources minister Derrick Dalley released a 40-odd page document on Thursday. It’s was supposed to be a report of a committee of senior public servants appointed to provide something called “oversight” of the project.
Neither the report nor the committee actually reports on anything about the project. This first report is actually about re[porting on the project. More specifically it contains information about the oversight committee, all the other sources of “oversight” for the project, some boilerplate about project schedules and budgets, and a report from Ernst and Young.
That last document takes up about 12 pages of the total. It is dated July 25 and describes what Ernst and Young suggest would be the best way for this “oversight” to work.
If you wanted to know how to say absolutely nothing useful in 40 pages, this is the document to study.
. . . → Read More: The Sir Robert Bond Papers: Another tired dog and sway-backed pony show #nlpoli
Tony Collins loves Muskrat Falls.
He loves it so much that every now and again he takes the valuable space from his column in the weekend Telegram and lets loose with a verbal assault on the people who don’t love the project as much as he does.
The last time Tony got in a lather about Muskrat Falls was 2012. Back then, he was “tired” of discussing Muskrat Falls. Time to “get on with it”, he said, just like all the other blue-bleeding Conservatives.
The Telegram’s Peter Jackson used the most recent JM paper on consumer electricity prices and Muskrat Falls as part of his Wednesday column.
Peter made some worthwhile observations, so head over and read the column if you haven’t already. That includes pointing out that current forecasts have electricity prices in Ontario and British Columbia rising by 42% and 45% by 2018.
“All these numbers are maddening,” writes Jackson, “both in terms of scale and in terms of variability between Nalcor and critics.”
A couple of years ago, Liberal leader Dwight Ball said the Liberals would use earnings from Muskrat Falls to lower electricity prices for consumers in this province.
The Conservatives dismissed the idea at the time.
Then a couple of weeks ago, with news the cost of Muskrat Falls continues to climb, Premier Tom Marshall told the province that he and his colleagues had adopted the idea of using revenues from Muskrat Falls to lower consumer prices as their own policy.
That’s not all of it. To understand the importance of Marshall’s comments fully you have to start at the beginning.
Cost over-runs on Muskrat Falls as well as other costs not included in previous calculations by Nalcor will likely increase current electricity prices by almost double their rate in 2011, according to a recent assessment.
JM, a professional engineer who has worked extensively in the construction of large engineering projects, totalled up revised project costs and other factors including:
the most recent Muskrat Falls cost increases, the cost of a third line to the Avalon from Bay d’Espoir, a new line to western Labrador, lower-than-expected electricity demand, a win by Hydro-Quebec in its lawsuit, and, revenue from export sales of (Read more…)
Nalcor boss Ed Martin told everyone in the province last week that his pet project has increased in price by almost another billion dollars. It’s now more than $8.0 billion, when the 2010 price was $5.0 billion.
That wasn’t news. Martin and the provincial government knew that last December, as SRBP pointed out last December. We’ve known it since last year. Martin and the provincial government just refused to tell the people paying for the project about it when the people building it knew the costs.
Martin insists it is still cheapest. We know that isn’t true because Nalcor plans to buy cheaper electricity from elsewhere and import it here over the Maritime Link while charging local consumers for electricity that is far more expensive but that they aren’t getting.
Martin also said something to the effect that we are just paying ourselves for this project and the electricity . . . → Read More: The Sir Robert Bond Papers: Paying everyone but ourselves #nlpoli
$6.99 billion is the new cost estimate for the Muskrat Falls dam and the link to the island.
With that much money and with such a record of inaccurate forecasts, giving a cost estimate to two decimal places could only be a terribly cynical attempt at humour by the highly paid people running Nalcor.
Did Ed Martin, Gil Bennett and Dawn Dalley really think that people wouldn’t recognise the oldest and most transparent bit of retail psychology on the planet and think this project wouldn’t cost $7.0 billion?
It’s almost $7.0 billion.
Part of the problem the folks at Nalcor have had in trying to build support for on Muskrat Falls is that they never explain things completely, in plain English.
The result is that they look like they are hiding something .That is, they look like they are not being candid or sincere. They often come across as if they are not telling you the whole story.
Take as a fine example, the war of words that is erupting between Nalcor board chair Ken Marshall on the one hand and David Vardy and Ron Penney on the other. Marshall had a lengthy op-ed piece one Saturday, Vardy and Penney had a rebuttal on April 19 and now Marshall is back again.
Nalcor’s effort to have local taxpayers subsidize electricity exports to Massachusetts came up in the House of Assembly on Thursday.
Well, sort of came up.
New Democratic Party leader Lorraine Michael asked a couple of lame questions and got – not surprisingly – a few equally lame answers.
Here they are, in their entirety.
Muskrat Falls is over budget, big time. The latest estimate is $7.4 billion and climbing on a project stat was forecast at $5.0 billion just four years ago.
The project will wind up behind schedule, most likely.
There’s a good chance Nalcor won’t have enough control over water flows on the Churchill River to meet its forecast firm generating capacity from the smaller dam let alone the theoretical project at Gull Island.
But that hasn’t stopped Nalcor from pitching Muskrat Falls and Gull Island to the good folks of Massachusetts with electricity at prices that would be – conservatively – about one third of what Nalcor’s owners will have to pay for electricity from Muskrat Falls.
After 13 days, Nalcor boss Ed martin finally responded to a simple request from the Telegram’s James McLeod for an explanation of what impact a delay in construction might have on project interest costs.
Read McLeod’s original article from Wednesday Telly. it’s a tidy summary of what Martin told him about that specific issue.
The problem for taxpayers is that Martin did his usual job of only talking about what he wanted to talk about. He didn’t try to explain the whole thing to McLeod in such a way that he could actually get the full impact of what was going on.
Martin’s interview was highly political, in other words. Unfortunately for Martin, McLeod posted back-up information consisting of the audio of the whole interview plus a couple of pages of background from Nalcor. They reveal a lot more than the company has previously disclosed.
. . . → Read More: The Sir Robert Bond Papers: Muskrat costs at $7.4 billion … and climbing #nlpoli
People like things in life to fit together.
When things don;t fit together, people get upset. They get fidgety. They try to make things fit together.
It’s an idea regular readers know from other posts. Take this bit from a post from 2012 as a good example of how some people react when faced with a situation where what is happening doesn;t fit with their pre-conceived notions. The context was a decision by then-Premier Kathy Dunderdale to refuse to meet with the parents of a boy who had died tragically.
Some enterprising political science graduate student will be able to write a brilliant doctoral dissertation a few years from now on the parallel ideas in provincial politics and popular situation comedy.
She will find fertile ground in the Big Bang Theory, especially the episode the in which Sheldon explains a complex idea in physics theory using the analogy of a cat in a box that may be either alive or dead based on a random earlier event.
Nalcor, for example, is like a giant box filled with Erwin Schrodinger’s cats.