‘”Pride is a big factor” a manager at Muskrat Falls told the Telegram’s James McLeod on Monday during the latest media junket to the Big Dig North. People come to work every day and say “I built this.”
Pride is the essence of Muskrat Falls.
Go back to 2012.
All the business people who looked forward to making a fortune off the project never talked about risk, profits, cash flows, return on their investment, and other stuff you’d expect business people to talk about.
They say stuff like “We believe in good things for our province.” Or “… we believe we have the courage to harness the opportunity before us and make these things happen.”
The New England governors and eastern Canadian premiers were in town on Monday for a quick meeting.
The only thing that seemed to make local news was talk about electricity sales. This is old hat for regular readers, but it is worth going over again.
New England wants to buy electricity. They can get lots of it very cheaply thanks to shale gas lately. How cheaply, you may wonder? Well, in August it was running around four to five cents a kilowatt hour wholesale, not including transportation.
To put that in Muskrat Falls perspective, it is less than half the cost of making electricity according to the estimate five years ago. Where the price is these days is anybody’s guess.
Ontario and the faltering Conservative administration in Newfoundland and Labrador are talking about the possibility of developing Gull Island to supply Ontario with renewable energy.
CBC’s online story on Monday said exactly that:
Ontario eyeing Lower Churchill hydroelectric power from Labrador.
But if you listen to what grim-faced energy minister Derrick Dalley said to CBC’s David Cochrane during the supper hour news on Monday, there is a lot less to the announcement than first appeared.
All the country’s provincial and territorial leaders – except for Saskatchewan and Nova Scotia – are in Newfoundland and Labrador this week for their annual conference.
What an opportunity for Paul Davis in an election year. He gets to show himself off looking all leader-like and premieral or whatever the word is for it.
The first day of the meeting the premiers and territorial leaders discussed aboriginal issues in Goose Bay. In the afternoon, Davis laid on an all-expense-paid trip to the super exciting megaproject at Muskrat Falls.
And then everything went horribly wrong.
The public utilities board asked Liberty Consulting to review Hydro’s decisions in 11 projects.
Hydro is looking for a rate increase. The board wanted to make sure the increase was justified.
Of the 11 projects, the consultant found:
“Liberty found Hydro’s decisions and actions imprudent in seven of the eleven specific projects or programs set for examination by the Board. Liberty identified adverse cost consequences associated with six of these seven projects or programs, laying a foundation for consideration of the propriety of their recovery from customers. Liberty found planning and execution of the seventh project imprudent, but concluded (Read more…)
The reports you will likely read in the conventional media all peg the Muskrat Falls project as behind schedule.
That’s what the latest project update from the provincial government and Nalcor says.
The media reports are also citing an overall number that has the project modestly off schedule.
You need to look at the whole report.
An exchange on Twitter reminded your humble e-scribbler on Wednesday evening of the power of false information to persist despite either being disproven or, in this case, being an obvious nonsense.
Not surprisingly, the discussion was about Nalcor, Emera, the Maritime Link and a block of electricity that Nalcor gets under the Muskrat Falls deal. There is a lot of false information about these subjects that just won’t die. Let’s just deal with the free block of electricity.
The provincial government will balance its books this year by borrowing $2.1 billion.
Lots of people don’t know that, as Michael Caine would say.
The government included in its budget plans this year a hike in the HST of two percent.
The tax hike will bring in $200 million.
That $200 million will just about cover the interest in one year on all the new debt the provincial government plans to add between now and 2021.
The $2.1 billion this year is the tip of a very big iceberg of new debt, you see. The new debt will go on top of the other $12 billion we already owe. The total cost just to pay the interest on that debt in 20201 will be $1.0 billion.
When people found out about the HST hike, they lost their minds.
Fast forward to 2017.
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…)