The PM to Dunderdale: Take It or Leave It

Just as I was
beginning to think that, during my 27 year absence from politics, the Feds had become
tabby cats, lovingly lavishing a $6 billion guarantee upon a Newfoundland and
Labrador sponsored project, I was jolted back into reality.  Absolutely nothing about Ottawa has changed!

The hoopla, over the PM’s visit to Goose Bay, won’t last until Monday’s Question Period.

I waited
until the wheels of the PM’s plane had left the tarmac and Tweeted a few words over
Muskrat, to an old Tory and skilful Ottawa man, Tim Powers; then, I settled in
to examine the entrails of what Harper had dropped on Dunderdale.  Soon, I started to laugh; I laughed some
more, then I felt sad!  I was sad for
Dunderdale, for getting herself into such a fix, but sad, mostly for this

The Deal was
exactly what I was warned to expect.

Media types,
CBC’s Cochrane and NTV’s Mike Connors had been Tweeting all over themselves, Thursday
night, trying to confirm the rumour.  Was
the Press Conference going ahead or not? Dunderdale didn’t know, her staff
didn’t know; but, strangely, Ottawa knew. 

I know that if,
at 9:30 PM the night before the Event, the Premier is unaware that the Prime
Minister is joining her in Goose Bay, she is
either fibbing or she has been handed an ultimatum she abhors. It’s take it or
leave it time. She has been cornered. The deal is bad. 

Of course, she has done it to herself and she knows it!

This is in a
different league than being embarrassed by missing the “shale gas revolution”.  Having
to watch the PM confirm for her, and none too subtly, in front of the whole
Province and the whole Country, the importance of independent review (Nova Scotia’s),
must have hurt.

Cochrane noted, what the Premier’s body language suggested; she was truly
unaware that the Event was already planned.  Dunderdale, having failed to deliver a single
seat for Harper in the last General Election (a certain flying outfit in Goose Bay
is taking credit for Penashue’s seat), and having waited two years for a
multi-billion dollar guarantee to drop out of Ottawa, at the eleventh hour to
meet Nalcor’s sanction schedule, she is offered an unpalatable choice.  With the PM’s ultimatum in hand and with only
minutes before he is about to retire for the night, she makes another, in a
long list, of bad decisions.  She accepts.

Television emphasizes
a lot about a person and not just your weight. 
If I saw anything on the 6:00 o’clock news on Friday evening, I saw an
unhappy Kathy Dunderdale; she wasn’t into the Press Conference. The body
language that Cochrane spoke of, suggested a Premier, who felt shafted.

Now, you will
remember the original Term Sheet of the Federal Loan Guarantee. It held certain
requirements about data, a letter from a bond rating Agency, etc.  Questioned, the PM noted that the Feds had
looked at it and dropped the requirement. Did they look for, but could not get,
such a letter of endorsement?

There was one
critical condition that the Feds would not overlook — the transmission link to
Nova Scotia.  The Loan Guarantee was
conditional on Muskrat Falls having a ‘regional’ context.  The UARB, the equivalent of our PUB in NS, announced
earlier this year, that hearings would not be scheduled for the Muskrat Falls
Project until 2013!  

The Feds
insistence that, without a signed up Nova Scotia Link, there would be no Loan
Guarantee was a tough blow. Dunderdale and everyone else knew it.     

Following the
signing ceremony between Nalcor and Emera, last July, the Premier of Nova
Scotia, Darrell Dexter, was heard to say Nova Scotia was now “in the driver’s
seat” when it came to energy; he would  be able to play one source off against the
other, (including NL vs Hydro Quebec).

announcement, in Goose Bay, affirmed Premier Dexter’s view and what other
watchers knew. Not just the Nova Scotia ratepayer but, Emera too, are now “in
the driver’s seat”.  Let me spell it out.

If Dunderdale
sanctions Muskrat, now, she proceeds completely at Newfoundland and Labrador’s

a fully effective and operating federal loan guarantee, NL cannot borrow
billions for the project.

the Dunderdale Administration tries to use their depleted $2.0 to 1.7 billion
Slush fund and/or raid the current account for Muskrat, rather than wait for
the NS UARB and Emera , the rating agencies will be all over them.  The Feds will have a way out even if Emera
wants to come in.  WHERE is the letter
from the rating agency?  It is a question
that demands an answer. It is not a side issue. The agency is the first non-governmental
financial analysis of the Project.

NL proceeds, the Province will be into the Project by several billion dollars before NS
makes any decision.

Head of Emera, Chris Huskilson, informed the NS Legislature’s Committee on
Resources, that “he won’t accept paying 14, 15, or 16 cents a kilowatt hour for
Muskrat Falls hydroelectricity”. He added: “Well, that won’t make it. That kind
of number won’t make it.” If Muskrat power via Emera, at 14 cents per KWh, was
too high in 2011, it may be time to note that DG-3 numbers increased the MF
Project by 24%; it is safe to assume that the NS Link increased by a similar
amount. Likely, the NS ratepayer is looking at the higher figure of 16

Hydro Quebec!  My friends in Nova Scotia,
we have a deal for you.

Whether it
was witting or not, the PM delivered to Ms. Dunderdale, much less a Loan
Guarantee, than a clear and unmistakable message.  It is this: you, Ms. Dunderdale may choose to flaunt the democratic process, but I, will
respect the longer history of democratic practice, in the Province of Nova
Scotia and in the rest of Canada.  

But, that is
not all.  The PM’s message displayed the
skilful hand of Nova Scotia’s powerful Federal Minister, Peter McKay.  Always beware, the Puppeteer!

For over a
year, Ottawa, and especially McKay, has watched the Muskrat saga play out in
this Province and the Premier paint herself into a corner. With half a billion
dollars already into the Project and possibly many millions more committed,
Premier Dunderdale has hardly kept her cards close to her vest.  Smart and wily, the Nova Scotia Minister knew
when to make his move. He has unmistakably put Dexter in the “driver’s seat”.

A tough spot,
indeed.  For NL, for Dunderdale, not for Nova Scotia.

I am not
fond of a NL Premier going, cap in hand, to anyone.  We have seen this script before.  Given Premier Dunderdale’s decision to go to
Goose Bay, at all, is a confirmation that the bankruptcy Trustee will have long
arrived before this woman knows she is broke.

All eyes on
the Nova Scotia PUB.

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. Yes, the whole works of them walked right into that one.So much for the plan of getting the guarantee, and backing out of the Emera deal. Somehow, I don't think this was quite the guarantee Williams was looking for.. LOL

  2. We are being led down the garden path once again it seems, this time by a free market zealot and a corporation based in Nova Scotia (though they might as well be based in Hong Kong).

    The EMERA board that set this up contained many political ties to NL Conservatives that are running NALCOR.

    WE need to get out of this deal and watch things unfold before the free trade deals lock our resources into this corporate bankruptcy scheme.

  3. No question with this qualified loan guarantee that this Premier and Nalcor have boxed themselves into a corner and unwittingly have given Nova Scotia the upper hand in requiring Nova Scotian participation. Emera and Nova Scotia can now set new terms on this deal as they see fit and if anyboby thinks they are going to be anymore fair than Quebec they should think back to the negotiations for the Atlantic Accord in the mid 1980's. Nova Sciotia played the whore during this period and they will do it again.

  4. Without a doubt, the NS government is in the catbird seat and can now extort whatever price amendments they like from Dunderdale. Kathy has put all 8 billion off her eggs into a single basket and if she doesn't sign up Nova Scotia, she's going to have an ocean of egg on her face. Harper has found a wedge to wrestle political favors from Nova Scotia and her 24 federal seats. Newfoundland and Labrador's measly 7 seats are the bait to reap a bigger share from Atlantic Canada.
    No doubt our province's sole Conservative MP will now be fast-tracked to a quiet exit and a possible Senate seat down the road. As the old saying goes: "When the lion invites you to dinner, you are likely to be on the menu."

  5. Efficiency is the WISE use of electricity. Plenty of that cheap resource, and MHI recently tripled our wind component as reliable and cost effective. THE POWER IS ALL AROUND US. Free from mother nature, produced with present cost effective technology. Not much actually in our 'hands', as their logo says. Winston Adams

  6. Proof we have the stunnedest government in our history since Smallwood. Out of touch with reality and "tory" in name only.

    When the Dunderment™ referred to anyone as "right wing extremist" I saw proof we have a very NDP government in power. The total ignorance of the power of natural gas and the ignorance of other energy possibilities is one thing… but to IGNORE what energy is for is quite another!

    We do not need to be an energy source for others' economies, we need to use our energy and resources for our own economy but alas… we have a myopic bunch of self-congratulaTORY twits elected hell-bent on creating a legacy to live in whilst they draw their ungodly pensions after choosing not to run next election.

  7. I would argue in NL/Nalcor's favour.

    NS is desperate for green power, and the rate/tax payer is furious with Emera. A survey would probably reveal Emera as being the worst corporate citizen in the public's view. There is a lot of public pressure on NS to fix that now.

    NB tried to dance with QC and that turned into a disaster real quick. During that fiasco, many Bluenosers were saying do business with NL, not QC.

    The NS NDP are real desperate to show voters that it can bring a real economic boost to the area. It hasn't done it yet, and it needs something. Muskrat Falls can be that project. There are a lot of NLers living in NS, and NS needs to get rid of some coal power. I don't see NS deliberately trying to get NL the shaft.

    Last but not least NS sees NL as a partner in a solution to many of its woes. I will also say governments are disorganized, and any optics being read from body language I think are incorrect.

  8. I would also argue that Mr. Harper has the unique enjoyment of having a majority government, without needing Quebec to achieve that. He'll try to pick up more seats in Atlantic Canada (for safety) and Muskrat Falls can help deliver on that. Mr. Harper loves energy based revenue and Muskrat Falls certainly passes that test.

    I confess though, that the optics of what happened are peculiar.

  9. ANONYMOUS, Nova Scotia doesn't need to give us the shaft. We have provided them with the shaft ourselves, by giving them free power for 35 years. Danny only got them involved so he could push for some federal help by way of a loan guarantee. The problem there is that you lose control and someone else sets the conditions…just as the PM is doing right now. He has Dunderdale over a barrel, as Mr. Sullivan points out.

    Furthermore, this project will cost us about $8 billion for 500-600 MW of power on average, of which we will be giving close to 30% away to NS at peak periods. It is a very small return for a huge, huge gamble. That we continue to elect politicians who sell us down the river every time is beyond comprehension! How stunned are we?

  10. Cyril, how can you say they are getting free power for 35 years? Are you forgetting who is building (and paying for) the subsea transmission line? Secondly NL will no longer be landlocked. NL complained for generations about being landlocked, and this project will end that. Be thankful that Emera is putting up the equity to have this built. Also don't forget (I think I got my facts correct here), after 35 years, NL owns that cable.

    This is a multibillion dollar, massive project, not putting a light over the porch door. Not a bad deal if you look at the bigger picture.

    NS has no alternative either.

  11. It was hard to swallow the tactics of a PM who has nothing more than contempt, brought on by the NLPCP's ABC campaign, for Nl and it's population. However, I must thank him for his take it or leave it federal loan guarantee that he has lowered on the lap of our valiant Premier Dunderdale. It may save us billions!

    It is fair to say that her surprise to the announcement of the announcement is the indicator that she was not prepared, and in fact was downright gob smacked, by the revelation the PM was all of a sudden ordering her to the wilds of Labrador. What went through her mind at the point when David Cochrane, related the news, creating what will come to be the most embarrassing moment of her political career? Even worse than Grand Fallsl Mill! I am sure that the swearing goat, from the home town of her engagement minister would not do justice to the litany of superlatives, that came to her mind to describe the man who she tried so hard to show her love to. It was at that point exactly, she knew that Harper had given her the shaft, and now she had a big problem!

    It would be naive to think she was unaware of the last minute negotiation of the LG that she as they say, was out of the loop! She was well in the loop and aware of the deadline the project faced, and more importantly entrenched in battle we come to find, presently being waged with Ottawa. On the line, were the favorable terms needed to bring the Muskrat Falls project to the banks.

    Well, unfortunately for the proponents of the project, it was at the little scrum, high off a wonderful afternoon of meaningful debate on the big deal, Katy Dunderdale, and her PC party found out that the jig was up! That their old fashioned $10+ billion dollar baby was now about to never see the light of day! Was it a feeling of failure? She would know that the sudden announcement was not favorable. Or did she get a sudden rush of, thanks be to God, knowing full well that terms, of the about to be announced loan guarantee, would now not pass the rigors of the bond lending Wall Street, or perhaps Chinese banks? Could it be argued that it might be relief from the legacy imposed nightmare of Muskrat Falls? That she might have a hole to slip through? That is a big question!

    The condition of Nova Scotia having to be part of the deal before any loan guarantee must dictate, to the very least, the delay of Muskrat Falls. Until NS hears the recommendations of their PUB review, how can NL, in light of the fact the government did not do, and rejects any call for regulated review, spend one more dollar, unnecessarily, on a deal that might not exist! Emera and NS have almost two years left to make their decision, and will have the benefit of the recommendations of their PUB review, that will be completed in about a year from now!

    Our PC government will know very quickly if any banks are onboard for a, NL to go it alone deal, which is more than highly unlikely. They, like those of us here in the province, did not sign up for anything as outlandish as that. Thankfully, unlike the rate payers of NL, they have the ultimate power, to at the very least, put the brakes on this out of kilter project, by allowing a 10 plus billion dollar deal, for the first time in it's planning, to undergo a meaningful regulated review.

    Now is the time be firm Newfoundland Labrador

    Let's be clear to our PC government.! Taking billions in cash, the equity that has been set aside for Muskrat Falls, and stating the project alone is political suicide!

    Good luck with it!

  12. Another wild card is the pending election in Nova Scotia next year.
    Dexter's NDP government is falling fast in popularity, and Muskrat falls is playing a role in that.

    So the question becomes, if Dexter is voted out, and the new government relaxes the renewable energy target set by Dexter, will Emera still be as keen to be a partner? Probably not, and I wouldn't be surprised if Hydro Quebec all of a sudden presented an offer to Emera which they could not refuse.

    • I picture Joe Smallwood talking to his croonies as their heavenly cloud passes over Muskrat Falls and saying ,boys it's not hundreds,thousands,millions but billionswe couldn't have even grasped the magnitude of this scam.

  13. Today's date: Sept.10, 2015 Just read this article. All I have to say to Uncle Gnarley is ….. "Stick to your other business interests and leave the affairs of the Provine to those who were elected to carry out and make the tough decisions." This one proved to be OK.