Reagan once said the nine most terrifying words in the English language are:
“I’m from the government and I’m here to help”.   The Economist recently voiced the equivalent
‘Reaganesque’ threat, most relevant to enterprises like Nalcor: “I’m from a state-owned firm
and I want your capital”. 

The newspaper,
consistently insightful, noted state owned enterprise (SOE) share of global
market capitalism has shrunk from a peak of 22% in 2007 to 13% today. The
problem is not just Nalcor; it is international.  

Nalcor doesn’t always have to be our problem.

It offers
no public policy role that is not available through the private sector.  The SOE had the opportunity, not lacking
money, to change NL into a modern, technically advanced and cost competitive
electricity market. But, the talent was never in their genes.

There are
those, like a recent commentator on this Blog, who believes public investment in
SOES is fine as long as transparency and accountability are achieved through a “Statoil”
model; one inviting the scrutiny of the market. It is correct that ‘Statoil’
is far better than the opaque model Nalcor prefers. But, I submit we live in
a society in which plenty of capital risk is freely embraced and where there is
no dearth of private risk-takers.

have the right to collect revenues from royalties, taxes and other levies on
corporations, people and resources; they have an obligation to ensure the
revenues are prudently managed.  They ought
to stick to the business of governing.

rarely even balance the annual budget. Most eschew leadership in favour of
popularity. They want to run businesses, too?

Liberal Leader Dwight Ball counsel Premier Paul Davis? The answer is, no.  Ball is afraid of being on the wrong side of
public opinion, too. Neither possesses the bravery to remind people Smallwood’s
plan of “rapid industrialization” is just a euphemism for Williams’ “energy
warehouse”; except Danny’s plan will hurt even more.  

No one will
deride Nalcor’s mandate, or its recklessness, until the choice between social
programs and money for Muskrat becomes stark.  

Can we
dismantle Nalcor? I suggest it is the right public policy choice and propose
nine statements of intent for Government’s directive:

  1. Signal Nalcor’s “energy warehouse” mandate
    is at an end, except where current legal agreements require funding (we
    must be civilized and pay for our sins). Government should indicate it
    intends to return to the business of implementing public policy and to
    operating programs within the skill-set of public servants, to managing
    public money based upon choices and priorities guided by the discipline
    imposed by fiscal realities, always with a view to achieving balanced
    budgets. Nalcor’s spending power should be frozen, immediately. Nalcor, as
    a concept and as a corporate entity, should be terminated.
  1. Nalcor is anxious to commit new
    investments with Husky projects and Statoil; those activities should
    cease.   Expenditures on exploration programs should
    cease. Expenditures on seismic programs should cease.  Expenditures on Gull Island hydro should
    cease. Expenditures on image enhancement, and an array of other non-essential
    activities should end, immediately.
  1. Nalcor’s oil and gas division should prepare
    its portfolio of assets for sale. We have discussed such investments from
    the point of view of risk. The very idea that a government can negotiate
    for local benefits as its Crown Corporation sits alongside big oil, as an
    equity partner, is farce. Besides, if the economy is based largely on oil
    and the government is investing in oil, how is that called
  1. The Muskrat Falls project should be given new
    senior management and a new Board possessing proven skills and experience relating
    to large scale hydro construction.  David
    Vardy has suggested that a Blue Ribbon Panel undertake a complete review
    and re-evaluation of the project. I would echo that proposal.  In assessing viability of the Muskrat
    Falls project, the Panel should take into consideration the project’s construction
     management expertise, current
    expenditures, schedule, forecast costs, current legal and financial
    commitments, and advise whether any part (i.e. the power plant) or all of
    the project should be terminated.
The Panel’s Report should include public
disclosure of the legal obligations to which the province is held, including to
Emera and the Government of Canada.  If
the Panel recommends continuance of the project, it should establish a completion
schedule and final cost estimate. An independent account is necessary.

A decision to proceed solely with the Labrador
Island Link, abandoning the power house and related infrastructure, would
naturally relate to whether an acceptable long term power contract can be
negotiated with Hydro Quebec.
  1. The review should include the North Spur
    stability issue by a Panel of geoscientists, possessing expertise in the
    field of sensitive clays, including Quick Clay.
  1. Newfoundland Hydro should retain its
    current mandate and its regulated status before the PUB; government having
    dispossessed it of its corporate parent. The public is not ready to privatize
    NL Hydro. But, consistent with the views of the Liberty Report into DARKNL,
    Hydro senior management and its Board of Directors should be replaced.
  1. If the Muskrat Falls project proceeds; upon
    completion, operational management should be assumed by NL Hydro such that
    it becomes a regulated asset subject to review by the PUB.
  1. Any decision to continue Muskrat should
    include a mandate for the PUB to commence oversight of the project
  1. The Bull Arm construction site should be
    sold or, as at a minimum, managed by a public/private partnership; the private partner should be a firm
    of international standing.  The
    management of Bull Arm has been poor; even now the site is tied up until
    the very last person working on the Hebron project turns off the lights.
    No thought is given to overlapping contractors employed in different
    projects. No sensible private owner would entertain that approach to a major construction site.
decisions would bring an end to an end to Nalcor, a truly unwise, unnecessary and even reckless crown corporation; but we will still have to deal with the money it has wasted and huge public debt it has helped rack up. 

Ronald Reagan’s “nine most terrifying words
in the English language” are ones to which the public will become very familiar.
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. I hope and pray we can somehow stop the monster, created by Danny Williams, known as Nalcor. I suggest we rename Muskrat Falls. Danny Williams Falls seems only appropriate. For the next fifty years when people mention Danny Williams Falls we will all know where to place the blame. Danny Williams; so much ego so little sense.