(In the last
item, Uncle Gnarley reviewed JM’s submission to the PUB and comments on Nalcor’s use of inappropriate econometric
modeling resulting in an incorrect determination of electrical demand to
justify building the Muskrat Falls project.)
Uncle Gnarley continues his narrative:

Newfoundlanders are not that different from Albertans or Torontonians, or the
British or the Scots, Uncle Gnarley offered. Like the rest of the world, we
have purchased all sorts of modern conveniences; but, in the same way your car
needs less gas today to drive one kilometer, technology did not stand still in
the electrical field either.  What is
interesting, is the fact that many of these appliances need less electricity to
operate now than they did just a couple of years ago. So, even you, Nav”, Uncle
Gnarley delighted in emphasizing, “can see how the problem begins to build”. 

Add to this the
fact, if you will, that 33% of our population will be about 65 years old by
2025 (we’re a group not exactly preoccupied with having babies at our age are
we, laughed Uncle Gnarley heartily, as if both to mock Nalcor and recall some misspent
years).  Recognize, too, that our rural
areas are being decimated literally in front of our eyes! Given these and many
other considerations, Nav, the problem of forecasting becomes vast, indeed”.

“Now the
kicker is, as our man JM points out, Nalcor wants to extrapolate, based upon the
demand forecast for 2010-2029, the power required for the years 2029-2067.  Now, that’s a mugs game, if ever there was

“It’s like one
other economist, a fellow Brendan Sullivan I do believe, writing in the
Telegram recently, observed about Nalcor’s pricing methodology.  He said, it was based upon “voodoo
economics”.  Perhaps this is a future
subject, Nav, when you have taken your grip off the few last dregs of that very
fine Scotch, the old man laughed again. 
The point is though, Nav, Nalcor’s demand numbers are also based upon “voodoo
economics”.  And, unless you want to be
vilified by the Minister of Natural Resources, or some other low minded
politician, you are expected to believe the data and, at the same time, have
faith that the multi-billion dollar decision based on these data, are actually in
our best interests.  Of course, here we
arrive at the “bigger fool” theory, which is not solely the purview of
economists, heh, heh, Uncle Gnarley laughed uproariously, at his own humour. You
ought to know all about that theory, Nav”.

“Now, any
student of mine, who engaged in this kind of analysis for the purpose of
influencing government or industry, would have his arse kicked right out of my
classroom. It is simply not worth the paper it is written on. And the arsehole
that gets impressed by high sounding phrases, like ‘econometric modelling’
should also get what is coming to him”.

The great
man was building a head of steam, getting redder by the second, as he railed
against the bureaucrats and politicians who have so unnerved him over what, he
earlier confided to me, is the riskiest scheme in the entire history of the

Nav, let me
tell you another little tale and I will finish up my story for today.  This is the part that proves JM is not some wet
economist.  It’s about Nalcor’s track
record of predicting electrical demand in the province. I tell you, my
horseshoe club boasts a better record”.

“Indeed, I
can say, without fear of contradiction, that Nalcor has not gotten a single demand
forecast right in the past 20 years; Nav, not one. This is the same group who
believes they can predict the future, out to 2067, anyway!  My god, man! 
What confounded arrogance! The strangest part, Nav, is that there are
people out there who actually believe them”.

But, it
actually gets better. They want us to reward them by offering up $5 billion so
that they can prove they are wrong, once again! Ah, yes, the greater fool

The man was
clearly exasperated and started to show signs of cluing up.

Now that
would be fine, Nav, if Ed Martin or Jerome Kennedy were picking up the tab for
their stupidity. But alas, that is the taxpayers job, and that is the sad part;
the taxpayer pays, whether they want to or not”, he added.

It is not an
easy job to feel sorry for an old curmudgeon, but, as he arrived near the end
of his story, Uncle Gnarley actually looked sad.  I wondered whether other Newfoundlanders felt
that way, or if they were too busy pulling in big pay cheques, or just
preoccupied with their ipads.  I wasn’t
sure. His next comment seemed to make him even more depressed. Unfortunately,
he added, “neither Martin nor Kennedy will be required to fall on their own swords,
and that’s a pity”. 

Gnarley grew restless and started to get up. “There is more to be said about
our JM, Nav.  Whatever his name is, he is
a hero in my book!” 

“But if the
demand numbers don’t work, he continued, it would be frivolous to continue this
conversation”.  I thought that perhaps
this was not a good time to suggest that the words ‘monologue’ and ‘conversation’
were mutually exclusive.

“I say Nav”,
Gnarley concluded, “it is time I headed back down the shore. There must be some
sensible people down there who I don’t have to explain econometric models to.  And one more thing, Nav; the scotch was fine,
indeed. My advice, buy more of it now. 
Likely enough, in a few years, you will need the cheaper stuff to keep
warm; I don’t think you will be able to afford those power
Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.


Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.


This is the most important set of negotiations we have engaged in since the Atlantic Accord and Hibernia. Despite being a small jurisdiction we proved to be smart and nimble enough to negotiate good deals on both. They have stood the test of time and have resulted in billions of dollars in royalties and created an industry which represents over a quarter of our economy. Will we prove to be smart and nimble enough to do the same with the Upper Churchill?


  1. Mr. Nav

    It is with great humility that I read your post which reviews my own written presentation to the Public Utilities Board. I must make a simple correction in that I am not a economist, nor have I ever been accused of being an academic. I am just an interested Newfoundlander who started to read various exhibits and presentations over the X-mas break, while sipping an old Sam and coke. As Uncle Gnarley may likely say "Nothing says X-mas like an old Sam and Coke".

    I worked on the research on my own time. The toungelashing received from my wife was second only to the abuse that the PUB commissionaires have received from the government. However, I was pleased to see that my work did get referenced in the final report. It validated the sacrifice of all those lonely nights.

    I am impressed by the insight offered by this wise Uncle Gnarley. I am interested to here what he disagreed with in my own dissertation. Hopefully that may be a future post on this blog.

    I am now a regular reader of these chronicles. Give my regards to Uncle Gnarley.