Given all
the pomp and ceremony yesterday evening, you might have been left with the
impression that Muskrat Falls was sanctioned. I have bad news. Premier Dunderdale has less of a “sanction”
agreement with Emera than she has a “Loan Guarantee” with the Federal
Government. In truth, she has neither!
What should
have been a paragraph of unqualified consent, Emera’s Sanction Agreement runs 29
pages plus a Schedule.
have been a paragraph of unqualified consent, Emera’s Sanction Agreement runs 29
pages plus a Schedule.
What did we
get last evening? Essentially, a statement that Emera would play along with the
NL Government if it wanted sanction now but
only if NL was prepared to pay a big price AND only if they could still be
permitted to walk away. The sanction
ceremony was a big charade.
Let’s look at
some of the ‘conditions’ of the Sanction Agreement. It includes, in part: quote
Recovery of
costs on the Maritime Link project from NS customers remains subject to
regulatory approval in Nova Scotia. The project partners have committed to
ensure that the Maritime Link is built under the terms of The Sanction
Agreement. These terms include:
costs on the Maritime Link project from NS customers remains subject to
regulatory approval in Nova Scotia. The project partners have committed to
ensure that the Maritime Link is built under the terms of The Sanction
Agreement. These terms include:
•Agreement on
a mechanism for dealing with adjustments to rate of ROE
a mechanism for dealing with adjustments to rate of ROE
In other
words, “Recovery of costs” on Maritime Link (ML) must be recovered regardless
what the NS UARB decides. The sanction agreement
requires that Nalcor subsidize Emera if the NS UARB sets a “regulated rate” that
is less than that required to support the cost of the ML. Emera wants a “mechanism”
for dealing with “adjustments to rate of ROE” (return on equity). In short, this process is one that removes
any need for the UARB to set a rate high enough to pay for the ML. Why? Because any amount, less than that, will
be subsidized by the NL taxpayer.
words, “Recovery of costs” on Maritime Link (ML) must be recovered regardless
what the NS UARB decides. The sanction agreement
requires that Nalcor subsidize Emera if the NS UARB sets a “regulated rate” that
is less than that required to support the cost of the ML. Emera wants a “mechanism”
for dealing with “adjustments to rate of ROE” (return on equity). In short, this process is one that removes
any need for the UARB to set a rate high enough to pay for the ML. Why? Because any amount, less than that, will
be subsidized by the NL taxpayer.
The
following “conditions” are also stipulated in Emera’s Press Release as being
part of the deal. They are not
covered in the Sanctioning Agreement. Therefore, they are covered in a secret
side agreement which they will, no doubt, try to protect under Section 13A of
the Sanction Agreement. Section 13A
is included, by the way, to mop up anything they missed in Bill 29. These are three
more important conditions and Emera brags about them, in its Press Release. Because they are not part of the Sanctioning
Agreement, this is proof that there are
secret Nalcor/Emera Agreements out there…somewhere. These three Conditions of Sanction are:
following “conditions” are also stipulated in Emera’s Press Release as being
part of the deal. They are not
covered in the Sanctioning Agreement. Therefore, they are covered in a secret
side agreement which they will, no doubt, try to protect under Section 13A of
the Sanction Agreement. Section 13A
is included, by the way, to mop up anything they missed in Bill 29. These are three
more important conditions and Emera brags about them, in its Press Release. Because they are not part of the Sanctioning
Agreement, this is proof that there are
secret Nalcor/Emera Agreements out there…somewhere. These three Conditions of Sanction are:
•Settlement
mechanism for payment on the 80/20 true up
mechanism for payment on the 80/20 true up
•Agreement on
the conditions under which Emera’s investment in the Labrador Island
Transmission Link is assured
the conditions under which Emera’s investment in the Labrador Island
Transmission Link is assured
•Agreement on
cost sharing of the Federal guarantee payment
cost sharing of the Federal guarantee payment
What is the 80/20 true up?
What additional concessions does Emera want in order to feel
safe about its investment in the Labrador Island Link? Undoubtedly, Emera’s shareholders are concerned
about their investment if the Federal Loan Guarantee evaporates. But, how much
more does NL have to give away in order to get Emera to join the party?
safe about its investment in the Labrador Island Link? Undoubtedly, Emera’s shareholders are concerned
about their investment if the Federal Loan Guarantee evaporates. But, how much
more does NL have to give away in order to get Emera to join the party?
Emera also put the cost sharing of the “break” fee, contained
in the FLG, back on the table. How much more will that little trick cost us? Emera will
dance with Dunderdale, but only on its terms and at our expense. There’s more…
4(c ) Nalcor Equity Investment – If Nalcor is required to make
an equity investment it shall be done by purchasing Shares in Emera “or some
other entity controlled by Emera”.
an equity investment it shall be done by purchasing Shares in Emera “or some
other entity controlled by Emera”.
What is Nalcor doing buying shares in Emera?
We are going to subsidize the rate payers of Nova
Scotia. Now, we are going to buy shares
in Emera too. Where is this going?
Scotia. Now, we are going to buy shares
in Emera too. Where is this going?
Part 7. Undertakings, contains three sub sections. It is
worth reading because all it says is that Emera agrees, essentially, to talk to
people. Emera agrees to talk with the
credit rating agencies. It agrees to “initiate
discussions” with the Federal Government about the FLG. It agrees to use “commercially reasonable
efforts to complete a System Impact Studies…”. This is fluff, better suited to
an account’s and engineer’s calendar, to get done on time, rather than the
stuff of a final agreement for “sanctioning”.
worth reading because all it says is that Emera agrees, essentially, to talk to
people. Emera agrees to talk with the
credit rating agencies. It agrees to “initiate
discussions” with the Federal Government about the FLG. It agrees to use “commercially reasonable
efforts to complete a System Impact Studies…”. This is fluff, better suited to
an account’s and engineer’s calendar, to get done on time, rather than the
stuff of a final agreement for “sanctioning”.
Then there is Part 3(h) in which the two CEOs of Emera and
Nalcor give themselves dispute resolution powers…not their Boards; Ed Martin
need not defer to the Government.
Nalcor give themselves dispute resolution powers…not their Boards; Ed Martin
need not defer to the Government.
OH My, Oh My!
While Emera, for a very high price, permitted Dunderdale to
have her ‘Show and Tell’ in the foyer of Confederation Building last night and
even begged His Honor, the Lieutenant Government, to come along to lend it some
shred of credibility, few, having read the so-called Sanction Agreement,
will be impressed with Emera’s commitment to the MF Project or with the negotiating
skills of Nalcor.
have her ‘Show and Tell’ in the foyer of Confederation Building last night and
even begged His Honor, the Lieutenant Government, to come along to lend it some
shred of credibility, few, having read the so-called Sanction Agreement,
will be impressed with Emera’s commitment to the MF Project or with the negotiating
skills of Nalcor.
Emera’s shareholders may feel better but the people of this
Province should be livid.
Now, we are left to ask, is this contrived pseuo-sanction
going to be a sufficient fig leaf to allow Mr. Harper to hold his nose and say,
yes, this is ‘regional’ even though he knows Emera is really not yet in?
going to be a sufficient fig leaf to allow Mr. Harper to hold his nose and say,
yes, this is ‘regional’ even though he knows Emera is really not yet in?
How much more will Nalcor give away to get Emera to spend its
own money?
Even more, we need to ask, what is
driving this process? What is the hurry
that Nalcor and the Provincial Government will do or give anything to get the
cash freed up, to award those MF contracts?
driving this process? What is the hurry
that Nalcor and the Provincial Government will do or give anything to get the
cash freed up, to award those MF contracts?
POSTSCRIPT:
After I finished writing, last night,
I went to bed and dreamed. I usually don’t
remember dreams. I did this one. I was at
a restaurant where I discovered there were cockroaches in my stew. Next time I see him, I must ask Uncle
Gnarley, if it had any significance for the Muskrat Falls Project.
I went to bed and dreamed. I usually don’t
remember dreams. I did this one. I was at
a restaurant where I discovered there were cockroaches in my stew. Next time I see him, I must ask Uncle
Gnarley, if it had any significance for the Muskrat Falls Project.
Good analysis. And our governmnet digs deeper and deeper.. Winston Adams
Emera Part 7 'System Impact Studies"—- I beleive most technical studies done to date relate to the MF electrical tie to the Nfld grid, and analysis of electrical tie on Nova Scotia system may get done later? Winston Adams