If you are
selling your house, and you want to be left with your shirt in the bargain, don’t
ask the senior people at Nalcor to negotiate on your behalf.  Here’s why.

In a
‘normal’ negotiation, if you give something, you expect to receive something in
return. The Energy Access Agreement (EAA) between Nalcor and Emera, on the
matter of ‘surplus power’, have the rewards going one way.  They aren’t small either.

The original
agreement on the Maritime Link, negotiated many months ago, was rejected by the
UARB. Why?  Simply put, the Agency said it
failed to meet the test of “lowest cost option” for Nova Scotia.  The UARB stated the Agreement was deficient by
roughly $1 billion and that deficiency could be satisfied only with a further commitment
of virtually all NL’s ‘surplus’ power.

From the
perspective of Nalcor, or even of Emera, the original Agreement must have been thought
fair; otherwise, no agreement would have been concluded. No suggestion was ever
uttered, by anyone including by Emera, that it was coerced. 

The ‘EAA’ has huge implications, for NL, especially
given the amount of power involved. The size of the new deal ought to have caused
an announcement of some proportion.  If NL
received even the tiniest reward (beyond Mass Hub pricing) it would likely have
been noted by a Government grasping for victories. 

With the
acquiescence of the media the announcement of the ‘EAA’ was a non-event in this Province.  If the NL public drew any conclusion, and
that is unlikely, it would have determined that ‘surplus’ power was just that:
“surplus”.  We know that anything surplus
must have little value, don’t we. 

While that conclusion
would be wrong given the size,
the 24 year term of Nalcor’s supplemental power commitment and the liabilities
to this Province if we fail to deliver, it is even more ludicrous that NL is
forced to take a price set by the an auction system designed for the New
England States.  ‘Mass Hub’ is a cut
throat market into which Quebec and Ontario dump their excess power.
The fact
that NL is not connected to that market attracted public indifference as did
Nalcor’s legally enforceable commitments. That the Premier referred to it,
recently, as a “lucrative” market suggests how far out of touch with reality
she really is. This is the same market where, in last week’s spot market, electricity was selling for just over 2 cents per KWh.

Perhaps, the
media had already assumed Nalcor’s capitulation. Possibly they had no idea what
the Agreement contained. 

permitted Ed Martin a minute to sound off, without challenge.  The CBC gave the issue no mention; other
media gave the announcement scant attention and no analysis.

Debbie and Jonathan
might as well have announced at the opening of the six o’clock news: ‘no time
for boring issues today, folks.

News editors
need to think about not just what items may be popular but of those that are

On the
subject of issues and the public interest, could someone confirm whether the
Consumer Advocate has a pulse?  

wonder Premier Dunderdale and Ed Martin feel emboldened to say little and
release less.  Little wonder the NL
public is relegated to gleaning information, not from our own PUB, but from the fillings of interveners and
others at the Nova Scotia offices of the UARB.

What about
the original deal?  Was no one in the
‘blue building’ on Columbus Drive able to advise Emera or the UARB: “a deal is
a deal”?  Was no one in Confederation Building able to
ring up Ed Martin and ask if we could be left with some dignity?

Had Nalcor
cornered itself with Dunderdale’s premature pre-Christmas sanction? 

There are
several theories making the rounds on that question.  Obviously, the injury to the NL taxpayer,
inherent in the ‘EAA’, was Nalcor inflicted.  As to the motivation, I tend to find inexperience,
hubris and self-interest stronger forces than any conspiracy theories.  

For now, consider
yourself warned that the ‘EAA’ is
the first casualty of premature sanction; but only the first.

It would be
easy to say that the UARB are skilful
negotiators, that they outsmarted either Emera or the defeated NDP government
of Nova Scotia.  Some things are just

But, when a
company sets itself up for failure, as did Nalcor, no one should be surprised when
it fails. It is just unfortunate that Government’s incompetence and a
disinterested media, protects them from the public lash.

Just a few
days ago, on November 7, 2013 MPA
Morrison Park Advisors Inc.,
a Consultancy employed by the UARB to advise it
on the EAA submitted its Report.  This is its conclusion:

The provisions related to the cumulative
amount of energy over the life of the Agreement provide further protection to Nova
Scotia ratepayers, giving substance to the representations about the benefits
of the Maritime Link originally argued before the Board. Further, it is our
view that the Agreement does not
impose additional costs
on Nova Scotia ratepayers that were not already
evident in the Maritime Link transaction,
nor does it otherwise detract
from the proposed Maritime Link project originally proposed to the NSUARB.
(Emphasis added)

The deal
won’t cost Nova an additional cent of capital investment, no concern of cost
overruns and no additional risk.

Within a
couple of weeks the NS UARB will continue to assess NL’s generosity and whether
it is will suffice to
the Maritime Link.

Over here, few
people have any idea of the extent to which Nalcor has extended our obligations.  They have hardly a clue as to how deeply Ed
Martin and Kathy Dunderdale have dipped in to our collective pocketbooks!

I bet Nova
Scotia does.


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?