Guest Post
Written by David Vardy
Written by David Vardy
Introduction
When the
government of the day sanctioned Muskrat Falls in December 2012 they subjected
the province to enormous risks. They gambled the future of the province and
inflicted what is proving to be great damage on a public which was far too
trusting of their leaders. They bet the farm on increasing energy prices and we
have as a society begun to suffer the consequences.
government of the day sanctioned Muskrat Falls in December 2012 they subjected
the province to enormous risks. They gambled the future of the province and
inflicted what is proving to be great damage on a public which was far too
trusting of their leaders. They bet the farm on increasing energy prices and we
have as a society begun to suffer the consequences.
Since 2012 the fiscal
position of the province has eroded substantially, as indicated by the fact
that the interest cost on our debt now exceeds our expenditures on education.
Our per capita debt is higher than any other Canadian province and higher than
beleaguered Puerto Rico. Our deficit, as a proportion of GDP, is 13 times that
of the average Canadian province. We are
borrowing 35% of our total spending, a cash deficit of over $3 billion, at a
rate which cannot be sustained.
position of the province has eroded substantially, as indicated by the fact
that the interest cost on our debt now exceeds our expenditures on education.
Our per capita debt is higher than any other Canadian province and higher than
beleaguered Puerto Rico. Our deficit, as a proportion of GDP, is 13 times that
of the average Canadian province. We are
borrowing 35% of our total spending, a cash deficit of over $3 billion, at a
rate which cannot be sustained.
The specter
of our high debt load in 1933, which led to Commission of Government, is very
real, not just a remote possibility. Government has embarked on a draconian program
of tax increases, likely to be matched in the fall with equally severe cuts to
our expenditures. These measures are necessary because of the legacy of the
former administration, which sanctioned the foolhardy Muskrat Falls project.
The new Liberal administration must now take the measures necessary to minimize
the risk of the Muskrat Falls project if our fiscal independence is to be
preserved.
of our high debt load in 1933, which led to Commission of Government, is very
real, not just a remote possibility. Government has embarked on a draconian program
of tax increases, likely to be matched in the fall with equally severe cuts to
our expenditures. These measures are necessary because of the legacy of the
former administration, which sanctioned the foolhardy Muskrat Falls project.
The new Liberal administration must now take the measures necessary to minimize
the risk of the Muskrat Falls project if our fiscal independence is to be
preserved.
Nalcor CEO
Stan Marshall minced no words when he said that the Muskrat Falls project was
“not the right choice for the power needs of the province”. He said that “$6.7
billion has been spent or is contractually committed.” Marshall said that we
should have built generating capacity only according to our needs and not
speculated on the future by building too much capacity. The assumption of
continuously rising oil prices has been proven false by the advent of the shale
gas revolution. He also said the demand projections for electricity were much
too high. He concluded that “stopping the project is no longer a practical
option”.
The Case for
Suspending Site Work at Muskrat Falls
Suspending Site Work at Muskrat Falls
With the
utmost respect, I believe that Mr. Marshall should reconsider his position with
regard to continuation of the project. A case can be made for suspending work
at the generation site while continuing only with the transmission component.
My purpose here is to state the case as well as to argue that other options
also be explored.
utmost respect, I believe that Mr. Marshall should reconsider his position with
regard to continuation of the project. A case can be made for suspending work
at the generation site while continuing only with the transmission component.
My purpose here is to state the case as well as to argue that other options
also be explored.
In his
statement of June 24 Mr. Marshall disclosed that the generation component
represents 52% of total project cost, amounting to $4.8 billion, while $2.3
billion has been spent and $0.9 billion has been committed but not spent. The
projected balance remaining to be spent, not including financing costs, is $1.6
billion. For the transmission lines the amount spent is $2.4 billion and $1.3
billion has been committed but not spent, leaving $0.7 billion to be spent.
Therefore the decision to suspend the generation component must focus upon 52%
of the cost and not the full $11.4 billion cost projected by Nalcor in
Marshall’s update of June 24, 2016. The $6.7 billion of committed costs
included in that release includes both the generation and transmission
components and it includes a combination of sunk costs and potentially
negotiable costs.
statement of June 24 Mr. Marshall disclosed that the generation component
represents 52% of total project cost, amounting to $4.8 billion, while $2.3
billion has been spent and $0.9 billion has been committed but not spent. The
projected balance remaining to be spent, not including financing costs, is $1.6
billion. For the transmission lines the amount spent is $2.4 billion and $1.3
billion has been committed but not spent, leaving $0.7 billion to be spent.
Therefore the decision to suspend the generation component must focus upon 52%
of the cost and not the full $11.4 billion cost projected by Nalcor in
Marshall’s update of June 24, 2016. The $6.7 billion of committed costs
included in that release includes both the generation and transmission
components and it includes a combination of sunk costs and potentially
negotiable costs.
A decision
to suspend the generation component will require that some contracts be
renegotiated, particularly the Astaldi contract, which is currently the subject
of intense and protracted negotiation. We therefore start with the proposition
that some of the contractually committed costs associated with generation are
open to renegotiation and that costs which have not been committed or incurred
can be avoided.
to suspend the generation component will require that some contracts be
renegotiated, particularly the Astaldi contract, which is currently the subject
of intense and protracted negotiation. We therefore start with the proposition
that some of the contractually committed costs associated with generation are
open to renegotiation and that costs which have not been committed or incurred
can be avoided.
Ernst and
Young reported in April 2015 that
Young reported in April 2015 that
The MFG
(Muskrat Falls Generation) civil works contract is the highest dollar value
contract. The contract involves construction of a number of areas: intake and
Powerhouse, Spillway and Transition Dams. The deliverables on this contract are
required to allow progress on other contracts, e.g. installation and
commissioning of the turbines and generators, installation of spillway and
intake gates and the balance of plant contract.
We
understand that Astaldi did not generate sufficient profit from this project in
2015, based on reports from the Astaldi CEO to his shareholders. What Astaldi
is now seeking is to recoup some of the lost profit and to extricate itself
from what has become a dilemma both for Astaldi and for Nalcor. Marshall said
that his negotiating strategy is that the outcome should be a win-win situation
and not a “zero-sum” game where one partner takes advantage of the other.
understand that Astaldi did not generate sufficient profit from this project in
2015, based on reports from the Astaldi CEO to his shareholders. What Astaldi
is now seeking is to recoup some of the lost profit and to extricate itself
from what has become a dilemma both for Astaldi and for Nalcor. Marshall said
that his negotiating strategy is that the outcome should be a win-win situation
and not a “zero-sum” game where one partner takes advantage of the other.
Nalcor could
make Astaldi “an offer they cannot refuse”, one which would offer them a share
of their expected profit while allowing them to walk away from the project. The
avenue for such an exit is to buy out the contract by offering a share of the
expected profit (but not all) along with cessation of further construction on
site. This approach could be used as well to abort other contracts for the
generation component.
make Astaldi “an offer they cannot refuse”, one which would offer them a share
of their expected profit while allowing them to walk away from the project. The
avenue for such an exit is to buy out the contract by offering a share of the
expected profit (but not all) along with cessation of further construction on
site. This approach could be used as well to abort other contracts for the
generation component.
Court
Challenge by Hydro Quebec
Challenge by Hydro Quebec
Hydro Quebec
has mounted a legal challenge to Nalcor’s ability to manage the water resources
of the Churchill Falls reservoir and thereby to develop Muskrat Falls. The
fundamental issue revolves around whether the renewal contract between CFL(Co)
and Hydro Quebec continues to allow Hydro Quebec access to all power and
energy, save for the 300 MW Recall power and the 225 MW Twin Falls block, after
September 2016.
has mounted a legal challenge to Nalcor’s ability to manage the water resources
of the Churchill Falls reservoir and thereby to develop Muskrat Falls. The
fundamental issue revolves around whether the renewal contract between CFL(Co)
and Hydro Quebec continues to allow Hydro Quebec access to all power and
energy, save for the 300 MW Recall power and the 225 MW Twin Falls block, after
September 2016.
Legal opinions differ and no final resolution is likely for
years until the matter is heard by the Supreme Court of Canada. In the meantime
the risk of spending money on the Muskrat Falls project is enormous. Stopping
the project now, while taking action to preserve the generation assets, would
reduce these risks.
years until the matter is heard by the Supreme Court of Canada. In the meantime
the risk of spending money on the Muskrat Falls project is enormous. Stopping
the project now, while taking action to preserve the generation assets, would
reduce these risks.
A decision
of the Quebec superior court is imminent. Whatever the decision may be it will
cast a cloud of uncertainty over the financing for this project. Nalcor must
have a plan to deal with any outcome in the courts, both the decision of the
Quebec court and the ultimate ruling upon appeal to the Supreme Court of
Canada. Suspension of the generation component may well be the best plan to
minimize the risk of adverse rulings.
of the Quebec superior court is imminent. Whatever the decision may be it will
cast a cloud of uncertainty over the financing for this project. Nalcor must
have a plan to deal with any outcome in the courts, both the decision of the
Quebec court and the ultimate ruling upon appeal to the Supreme Court of
Canada. Suspension of the generation component may well be the best plan to
minimize the risk of adverse rulings.
Homework
needed in advance of negotiations with Federal Government
needed in advance of negotiations with Federal Government
Mr. Marshall
referred to negotiations with the federal government to reduce the financial
burden on the province. A sympathetic Liberal government in Ottawa may be
responsive to the burgeoning costs of Muskrat Falls, which have increased from
$6.2 billion in 2010 to $11.4 billion today, an estimate that Marshall
qualified as being just an estimate and likely to rise further. If these
negotiations allow us, as a province, to borrow more money, we have to ask is
that the best solution? It will continue to add to our public debt and future
generations will still be obliged to pay. The project will continue to be a
“boondoggle” and far from the best solution to our energy needs.
referred to negotiations with the federal government to reduce the financial
burden on the province. A sympathetic Liberal government in Ottawa may be
responsive to the burgeoning costs of Muskrat Falls, which have increased from
$6.2 billion in 2010 to $11.4 billion today, an estimate that Marshall
qualified as being just an estimate and likely to rise further. If these
negotiations allow us, as a province, to borrow more money, we have to ask is
that the best solution? It will continue to add to our public debt and future
generations will still be obliged to pay. The project will continue to be a
“boondoggle” and far from the best solution to our energy needs.
Before going
to Ottawa on bended knee we must do our homework. This requires a realistic
cost benefit analysis of stopping the generation component and continuing with
the transmission line. We may have to find alternative energy for Nova Scotia
to fulfill our commitments but the revised load growth numbers released by Mr.
Marshall on June 24 disclose a dramatic reduction in the projected demand for
electricity in this province.
to Ottawa on bended knee we must do our homework. This requires a realistic
cost benefit analysis of stopping the generation component and continuing with
the transmission line. We may have to find alternative energy for Nova Scotia
to fulfill our commitments but the revised load growth numbers released by Mr.
Marshall on June 24 disclose a dramatic reduction in the projected demand for
electricity in this province.
Aggressive demand side management can reduce the
use of electricity for space heating, including a combination of retrofitting
and use of heat pumps, which will more effectively respond to the peak load
demands of winter heating than the sledgehammer that is Muskrat Falls.
use of electricity for space heating, including a combination of retrofitting
and use of heat pumps, which will more effectively respond to the peak load
demands of winter heating than the sledgehammer that is Muskrat Falls.
Many of us
have also argued that the need for reliability necessitates an energy source on
the Avalon and that a well maintained thermal plant at Holyrood or some other
alternative source of power will be needed after interconnection. This needs to
be factored into the analysis. Only after the full analysis has been completed
should we approach Ottawa.
have also argued that the need for reliability necessitates an energy source on
the Avalon and that a well maintained thermal plant at Holyrood or some other
alternative source of power will be needed after interconnection. This needs to
be factored into the analysis. Only after the full analysis has been completed
should we approach Ottawa.
A compromise
solution between stopping or finishing the full project
solution between stopping or finishing the full project
It has been
said we cannot afford to finish Muskrat Falls nor can we afford to stop it.
What we need is something in between. The suspension of the generation
component, while continuing with the transmission lines, offers a better
solution. The transmission line will allow us to access the unused portion of
the 300 MW block of Recall power and to purchase additional power from
Churchill Falls.
said we cannot afford to finish Muskrat Falls nor can we afford to stop it.
What we need is something in between. The suspension of the generation
component, while continuing with the transmission lines, offers a better
solution. The transmission line will allow us to access the unused portion of
the 300 MW block of Recall power and to purchase additional power from
Churchill Falls.
JM has posted extensive technical and financial analysis on
this Blog regarding the project and he has argued that energy from Hydro Quebec
should be purchased for transmission to the Island, along with Recall
power. Hydro Quebec’s returns for
selling power in the US have fallen sharply with the shale gas revolution. We can offer to match or exceed their unit
revenue from US sales so that it will be in their profit-seeking best interest
to meet our needs and to do so at a much lower cost than that of building
Muskrat Falls.
this Blog regarding the project and he has argued that energy from Hydro Quebec
should be purchased for transmission to the Island, along with Recall
power. Hydro Quebec’s returns for
selling power in the US have fallen sharply with the shale gas revolution. We can offer to match or exceed their unit
revenue from US sales so that it will be in their profit-seeking best interest
to meet our needs and to do so at a much lower cost than that of building
Muskrat Falls.
Will we need
the power after 2041?
the power after 2041?
There are
those who will argue that, in the long run, inflation will erode the burden of
the debt and our grandchildren will bless us for building this long-lasting
renewable energy project. This line of reasoning ignores the simple reality
that Muskrat Falls will come on stream, at the earliest, in the second quarter
of 2020 and that, 21 short years later, in 2041, we will have access to low
cost power from Churchill Falls, another renewable energy source. We will then
have no need of power from Muskrat Falls so we cannot argue that it constitutes
the lowest cost power or that it will be a blessing to our grandchildren. Nor
can we argue that it will somehow strengthen our position with Quebec. We did
not need to prove that an alternative route through the Maritimes could be
built from a technical perspective. Other lines exist internationally and
perform extremely well.
those who will argue that, in the long run, inflation will erode the burden of
the debt and our grandchildren will bless us for building this long-lasting
renewable energy project. This line of reasoning ignores the simple reality
that Muskrat Falls will come on stream, at the earliest, in the second quarter
of 2020 and that, 21 short years later, in 2041, we will have access to low
cost power from Churchill Falls, another renewable energy source. We will then
have no need of power from Muskrat Falls so we cannot argue that it constitutes
the lowest cost power or that it will be a blessing to our grandchildren. Nor
can we argue that it will somehow strengthen our position with Quebec. We did
not need to prove that an alternative route through the Maritimes could be
built from a technical perspective. Other lines exist internationally and
perform extremely well.
What needed
to be proven was whether it could be built economically. The agreement with
Emera which resulted in the sale of one billion kwh of energy with no energy
charge to Nova Scotia, combined with the
sale of another 1.2-1.8 billion kwh at spot market prices, demonstrate
absolutely the converse proposition, namely that it is not economically
feasible or profitable. Furthermore, by overbuilding our capacity through such
an expensive project we have reduced our need for Churchill Falls power,
leaving us with an inability to take full advantage of the 5,428 MW from the
Upper Churchill. Rather than strengthening our position with Quebec we have
weakened it by building Muskrat Falls!
to be proven was whether it could be built economically. The agreement with
Emera which resulted in the sale of one billion kwh of energy with no energy
charge to Nova Scotia, combined with the
sale of another 1.2-1.8 billion kwh at spot market prices, demonstrate
absolutely the converse proposition, namely that it is not economically
feasible or profitable. Furthermore, by overbuilding our capacity through such
an expensive project we have reduced our need for Churchill Falls power,
leaving us with an inability to take full advantage of the 5,428 MW from the
Upper Churchill. Rather than strengthening our position with Quebec we have
weakened it by building Muskrat Falls!
Assessment
of Options
of Options
The
assessment of options would best be undertaken by an independent third party
who must be given full access to all contracts and other information. Ernst and
Young might be able to perform part of this task but they will require support
from a major engineering firm, other than the so-called “independent engineer,”
who has been silent for too long.
assessment of options would best be undertaken by an independent third party
who must be given full access to all contracts and other information. Ernst and
Young might be able to perform part of this task but they will require support
from a major engineering firm, other than the so-called “independent engineer,”
who has been silent for too long.
The
fundamental focus for assessing the options is future costs, not sunk costs.
Sunk costs are relevant for historical analysis but not for making decisions on
the future. We must focus on the future costs and revenues associated with
completion versus those of stopping all or part of the project.
fundamental focus for assessing the options is future costs, not sunk costs.
Sunk costs are relevant for historical analysis but not for making decisions on
the future. We must focus on the future costs and revenues associated with
completion versus those of stopping all or part of the project.
Ernst and
Young’s April 2016 report said that only 40% of construction work had been
completed, leaving a lot of room for further escalation, possibly to $15
billion or higher. The cost is likely to exceed $11.4 billion for a number of
reasons. One is the cost of reaching a settlement with, or replacing, Astaldi.
Another is the cost of remediating the North Spur and the methyl mercury
problem. The third is the need to remedy the quality control problems that have
occurred, leading to the collapse of concrete cribbing at the powerhouse and
the loose strand of wire on 170 km of transmission wire.
Young’s April 2016 report said that only 40% of construction work had been
completed, leaving a lot of room for further escalation, possibly to $15
billion or higher. The cost is likely to exceed $11.4 billion for a number of
reasons. One is the cost of reaching a settlement with, or replacing, Astaldi.
Another is the cost of remediating the North Spur and the methyl mercury
problem. The third is the need to remedy the quality control problems that have
occurred, leading to the collapse of concrete cribbing at the powerhouse and
the loose strand of wire on 170 km of transmission wire.
The Muskrat
Falls project was ostensibly designed to meet provincial needs but yet the
final agreement with Emera committed more than half of the energy output for
use in Nova Scotia. Mr. Marshall is now looking at other markets for firm power
since the latest load growth projection has produced a more realistic and
reduced estimate of local demand.
This revised model is similar to the
export-oriented approach to both Gull Island and Muskrat Falls adopted by the
administration of Brian Tobin. It has the potential to generate higher
revenues, as Marshall pointed out on June 24. Such an alternative business
approach to continuation should be included in the evaluation of options, with
export revenues used to offset the high costs of Muskrat Falls.
Falls project was ostensibly designed to meet provincial needs but yet the
final agreement with Emera committed more than half of the energy output for
use in Nova Scotia. Mr. Marshall is now looking at other markets for firm power
since the latest load growth projection has produced a more realistic and
reduced estimate of local demand.
This revised model is similar to the
export-oriented approach to both Gull Island and Muskrat Falls adopted by the
administration of Brian Tobin. It has the potential to generate higher
revenues, as Marshall pointed out on June 24. Such an alternative business
approach to continuation should be included in the evaluation of options, with
export revenues used to offset the high costs of Muskrat Falls.
The
suspension option removes the risk arising from the court action in Quebec,
which could make it impossible to generate anything close to the 824 MW power
capacity of Muskrat Falls and thereby turn the project into an even bigger
“boondoggle”. It would also avoid the risk associated with the collapse of the
North Spur through the liquefaction of quick clays underlying the Spur as well
as the threat from methyl mercury arising from failure to clear cut the
run-of-the-river Muskrat Falls reservoir. These risks associated with
generation at the site are all avoided with the “transmission-only” option. It
cannot be ignored that the North Spur and methyl mercury issues constitute huge
political problems for government as they are seen as risking peoples’ lives
and poisoning their food.
suspension option removes the risk arising from the court action in Quebec,
which could make it impossible to generate anything close to the 824 MW power
capacity of Muskrat Falls and thereby turn the project into an even bigger
“boondoggle”. It would also avoid the risk associated with the collapse of the
North Spur through the liquefaction of quick clays underlying the Spur as well
as the threat from methyl mercury arising from failure to clear cut the
run-of-the-river Muskrat Falls reservoir. These risks associated with
generation at the site are all avoided with the “transmission-only” option. It
cannot be ignored that the North Spur and methyl mercury issues constitute huge
political problems for government as they are seen as risking peoples’ lives
and poisoning their food.
No stone
unturned
unturned
The stakes
are too high for us to continue blindly with this project.
are too high for us to continue blindly with this project.
It was foolhardy of
the previous administration to turn their back on the advice they received both
from the PUB and the joint federal provincial environmental panel. It would be
equally foolhardy for us today to take the position that the cost benefit
analysis of the option to stop is as unknowable as the cost of “building a
transmission line to the moon”. In the language of Donald Rumsfeld the issue is
one of knowable unknowns not “unknown unknowns”.
the previous administration to turn their back on the advice they received both
from the PUB and the joint federal provincial environmental panel. It would be
equally foolhardy for us today to take the position that the cost benefit
analysis of the option to stop is as unknowable as the cost of “building a
transmission line to the moon”. In the language of Donald Rumsfeld the issue is
one of knowable unknowns not “unknown unknowns”.
For the sake of our
grandchildren, who will be expected to bear the cost of a mountain of debt, we
must do the analysis and make a final decision on the basis of the best and
latest information available. We owe it to them to make every effort to avoid
the mistakes of the past, when decisions were made using false assumptions and
inadequate evidence.
grandchildren, who will be expected to bear the cost of a mountain of debt, we
must do the analysis and make a final decision on the basis of the best and
latest information available. We owe it to them to make every effort to avoid
the mistakes of the past, when decisions were made using false assumptions and
inadequate evidence.
An overview that shows a reasoned way forward.
It is time for government to recognize the delusional path that the previous government put this province on.
Government needs to show that it is open to a new vision — one that is evidence-based and that reflects core Liberal values. Maurice Adams, Paradise
These Liberals have real values???????? Its time for the federal government to seize control of our government and stop our elected officials from dragging us further into the gutter……
Evidence based vision:
Manitoba Hydro International noted that our power companies here do not do end use research, as most other power companies do. End use research can prove or disprove energy and peak demand savings from efficient appliances, LED lights or heat pumps, and allow more accurate forecast methods ( essential for whether we need new large generation projects). Four years later proper end use research is still NOT done.
As for heat pumps, it is without question that ground source heatpumps reduce heating energy and heating peak demand for a house by two thirds (66 percent reduction). But the systems are expensive.
Minisplit heatpumps save as much energy, but not as much on peak heating demand. The reason being that the ground has a fixed temperature of 43 F, even in winter, while the air source mini-splits are subject to colder temperatures in winter. So called cold temperature mini-splits nevertheless reduce peak heating demand at minus 15 C by 50 percent, not 66 percent. But 50 percent is a substantial reduction,and these units are less than half the cost of ground source units. 1000 of these were installed last year in Nfld (20,000 were installed in one year in Nova Scotia, in 2011, and many more since. 65 percent of Nflders make the decision by word of mouth recommendations, and just 5 percent claiming to have heard from their power company that they save energy.
Nfld Power`s own recent flawed study ( flawed by their own admission at the recent rate application) sows doubt that they save on peak demand, as an excuse to avoid offering incentives. Their failure to do proper end use (evidence based) research has already led to the over optimistic forecast to justify Muskrat Falls. And they continue to avoid proper research as recommended by MHI. Neither our Consumer Advocate, nor the PUB has ordered such research as recommended by MHI. It seems the past governments has made it clear that Demand Side Management should not be followed, and Tom Johnson and Andy Wells is content with this, unless government gives a directive to do what other progressive power companies do. Evidence based decisions does not seem to be a core Liberal value. Multi billion dollar uneconomic mega projects, based on false assumptions seems to be a core Liberal value, as it was for the Tory government.
Of course David Vardy is correct on his assessment…. but is anyone listening!
Winston Adams
Too costly to stop the work on the dam? 21c kWh is FAR too much for NL ratepayers and this is based on the estimate of $11 billion that could easily balloon to $15 billion, if not higher.
Liberals have had a tough go of it since being elected (mostly self inflicted) and are still full steam ahead with MF, PCs were the brainchild behind the project and the NDP are summer touring on libraries – don't expect much help from any of NLs MHAs in regards to remedying what has become the ultimate NL joke.
NL media can give their op-eds or ranting on air but without the proper sourced information or interviews of people in the electricity/contract/construction/legal sectors what they say lacks gravitas or credibility and is only to sell their media mediums.
Was the PUB allowed to look at the interconnected option including the Labrador Island Link by itself or only the 2 generation options MF and Holyrood? Limited terms of reference then the gov getting mad when PUB refused to endorse either option, PCs proceed to kick out the PUB all together (Like Grimes playing hockey).
Kent and Sandy Collins 2 of the loudest PC members might be scoring easy political points with the Liberals plethora of gaffes/miscommunication, yet remain oddly silent on both economic and MF related profiles.
Well said AC. Ed Martin live on air said Quebec Hydro was considered and not a least cost option and then minutes later when Paddy said he would get and publish the details followed up by saying they never officially sat down with QH, but that dealings in the past had been difficult. Ed was trying to mislead… how many other times did he try and bend the truth I wonder? Make no wonder why everyone who had a hand in pushing MF down our throats are silent… they are realizing that they will all forever be tarred with the little man's ego project. The PCs are the worst too… Kent is a like a dog on a bone when he can stir shit… yet nothing here. Another one in it for all the wrong reasons. I've said it before, I'll pay an extra 2 cents per kwh to pay for a full blown outside investigation into this scheme. Even if charges can't be laid, I'd like to know how such competent individuals could display such incompetence. Surely everyone involved couldn't have made the same false assumptions? Especially with so many people calling them out. No, chances are, deception was always part of this plot… goes to show governments are the biggest organized crime outfits on the go.
Our problem with Muskrat mushrooms when Nalcor and Government blindly ignore not only the common sense but logical postings from the likes of Messrs. Sullivan, Vardy, Penney, Adams et al. Hardly helps too since Nalcor's CEO Stan Marshall surrounded himself with those useless and incompetent VPs.
If taxpayers were upset about the levy, imagine their reaction when they have to pay the equivalent amount as the levy every few months on their light bills. The government had to almost reverse the levy. Don't think for a minute Newfoundlanders are about to pay outrageous light bills.. not happenin'
Wind power advocates seem strangely silent in this province. We have more than enough wind for our own needs. I really don't know if serious study has been given to the costs of adding to existing, or creating new wind projects. I imagine much cheaper, quicker and better environmentally than MF.
Wind power advocates seem strangely silent in this province. We have more than enough wind for our own needs. I really don't know if serious study has been given to the costs of adding to existing, or creating new wind projects. I imagine much cheaper, quicker and better environmentally than MF.
What was most startling from the most recent update from Nalcor was not that the price had increased to 11 Billion. Rather it was the projections for future demand, which showed a decrease over the next 10 years. Of course this should have been expected due to changing technology, and increasing prices. In fact we do not need more than 25% of the energy from Muskrat Falls. But we do need the capacity on those cold winter nights, when the wind is howling. As for the question on cancelling MF? Well we can use the recall to meet the NS obligation, then with links to both NS and Labrador we can buy the power we need. If they have 3 Billion left to spend on Muskrat Falls, the economic analysis becomes the cost of the additional 3 Billion versus the cost to purchase power into the future.
I believe that analysis would show that it is better to continue at this point. However, the public who have endured deceipt, deception, and incomptence on Muskrat Falls do have the right to know this information.
It is too bad that Nalcor did not adopt the most sensible approach to this project, that was building the transmission line now, but waiting until the future to build either Muskrat Falls, or Gull Island.
The bitter pill in all this, is that our experiment with Muskrat may mean it is a very long time before Gull Island is built.
Ed Martin, Gilbert Bennett, Kennedy, Dunderdale, Marshall and Danny Williams will carry this debacle for the rest of their lives.
Ed Martin, Gilbert Bennett, Kennedy, Dunderdale, Marshall and Danny Williams are in hiding. They apparently care little about their legacy.
It is every NL resident and their children and grandchildren who will carry this debacle. Yet the "chumps" on the line for the excesses (or worse) are still kept in the dark about the contracts and engineering screwups. How can this be allowed to happen?
Stand up and demand transparency, before NL is insolvent and residents suffer unbearable costs to keep from freezing in the dark.
The availability of very, very low cost Upper Churchill power starting in 2041 demolishes any argument for Muskrat (possible) generation and for continuing to lock ratepayers into Muskrat's high cost power for 30-40 more years after that date. Maurice Adams
Don't forget Tom Hedderson, Terry French, Clyde Jackman, Darrin King, Kevin O'Brien, Paul Lane, Susan Sullivan, Joan Burke and all the other rightfully labeled Bobbleheads.
We never needed MF. @Anonymous12 July 2016 at 08:07 "But we do need the capacity on those cold winter nights, when the wind is howling."
This is a common misconception. Holyrood is often shut down in the summer and it only really needed for winter heating. Even then, we have never run out of power due to insufficient capacity. The outages/shortages we did have were due to equipment failures brought on by neglect and incompetence. The larger problem we have is that Holyrood is needed even with MF for reliability reasons and to supply reactive power for the Bay d'Espoir feed. Therefore we need to spend the money to refurbish the Holyrood plant anyway. I don't believe this cost (or spare parts either) has been factored in to the billions we are talking about.
When you consider our declining population (less than we had in 1971), industrial shutdowns (pulp mills no longer on the grid) and general improvements in lighting efficiency — the only reason demand didn't crash already is this: Baseboard Electric Heat.
Given that many of the names you mentioned who, no doubt, had much to do with foisting the bankrupting Muskrat Falls Project on the voting citizens of our province and the fact they had everything to do with the remuneration they, themselves, would receive worth many, many Millions of dollars, if not a Billion in salaries and contracts, as a result, I doubt very much that they, or their offspring, will suffer any from the whip they have created to impoverish the average Newfoundlander and Labradorian through having to pay exorbitant monthly electrical bills for their electricity? SHAME ON THEM!! And by the way, laws should be implemented in our province to prevent such skullduggery from ever again being concocted on the citizens of our province. Also those who took the Liberty and Control over the citizens natural resources for their own benefit should have to face the full force of the Law.
Anonymous' Comment of 12 July 2016 at 10:05 reply should have fell under Bruno Marcocchio's Comment of 12 July 2016 @ 9:06.
A very timely and well thought out column. Energy, particularly renewable energy, is too important a commodity to be left in the hands of provincial politicians, and their corporate buddies. The concept of a publicly owned power grid, regionally managed for the benefit and security for "common good"(ratepayers), rather than profit, seems as remote as ever.
The emotional and dangerous actions of NL elites, to get even with Quebec is juvenile, wasteful, and costly.
Think continental, (three Amigos), when developing renewable power to displace fossil fuel plants across North America. Construct the best possible smart power grid, practice conservation and fossil fuel displacement, as David advises, Generation can be purpose-built later.
A question: What happens to the cost of Muskrat Falls if interest rates go up?
A warning: Those who are counting on power from Churchill Falls in 2041 should consider how some federal governments have treated Newfoundland. Don't be too sure that a future government won't find some way to scuttle Newfoundland's interests in favour of Quebec. After all, there are more seats in Quebec than here.
That is exactly one strong reason why we should not be putting the province's fiscal strength at risk leading up to 2041 because we have burdened ourselves with Muskrat debt (and with Muskrat that will apply for 30-40 years past 2041). Maurice Adams
Uncle Gnarley has had 161,000 hits since April 12 ( just came across a scrap of paper where i had jotted down the Apr 12 number.
And comments appear sooner that on the Telegram writers, even on weekends. This past Saturday, by 11 am , no one had noted any of the Telegram pieces as a one or five star rating, which is so easy to do, and whether many were reading them.
Congratulation Des, keep up the good work.
The question should not need to be asked, but as to conflict of interest issues:
Does Tom Johnson, his wife, Andy Wells and all the PUB commissioners and wives,…..does any of them own shares in Fortis. It should be a requirement that they do not….. is there such a requirement. Is there a reader who can answer that.
The postings from last week had comments asking (saying) Fortis has blame for this MF mess.
I guess, first principles when considering new generation sources is the question of what amount of power is needed for the reasonable time frame ahead, or whether demand management, efficiency and conservation would be an important component. Issues of the economy, new house starts and energy needed for those goes into the assessment. All this is considered for the power, energy and demand,forecast.
Nfld Power, A Fortis company, would have most of the input into this for domestic and commercial forecasting. Nfld Hydro would assess the industrial demand forecast for the island. Government seems to have the upper hand as to any demand management measures, perhaps with input from the power companies and the Consumer Advocate.
From this point of view, Nfld Power`s forecast would seem to be 75 percent or more of the contribution for forecasting. Now we see the forecast to be overly aggressive, and based on false assumptions. Certainly neither power company used best methods for forecasting as pointed out by Manitoba Hydro. Now Nfld Power has revised their forecast substantially down.
The forecast and its accuracy is the main driver as to what generation (or Demand Management) options are required.
So how can Nfld Power, a Fortis company, then run by Stan Marshall, not be substantially responsible for the current mess. I guess it aided Danny Williams to take the big gamble and roll the dice.
Winston Adams
Boys, you are wasting valuable resources and time, trying to lay blame for damages done.
Get on the solutions theme. David Vardy's assessment need support.
Robert, you are right that as to solution theme. Dave Vardy says `aggressive demand side management can reduce the use of electricity for space heating, including a combination of retrofitting and use of heat pumps, which will more effectively respond to the peak load demands of winter heating than the sledgehammer that is Muskrat Falls`
I have long advocated through this blog and the PUB on this theme, and recently run tests to quantify the potential.
As to the space heating demand, here is what we found for a 4000 sq ft R2000 house:
Using baseboard heaters with programmable setback thermostats,as recommended by Nfld Power, the heating demand was 17.5 kw.
Without setback, the steady state load was 5.0 kw with baseboard heaters.
With mini-split heat pumps the load was 2.0 kw.
These were recorded at minus 8 C, about the average cold temperature for St Johns for January.
If this is repeated for minus 15 C , we can expect:
The baseboard load, using setback, to remain at 17.5kw
The baseboard load without setback to be 5.75 kw
The minisplit heatpump, without setback, load to be 3.0 kw
Lessons learned: The peak load for space heating for a single house is about 6 times that when using baseboard set back mode, versus mini-split heatpump, without setback.
The load for baseboard heaters is about 3 times more than if no setback was used at all with baseboard heaters. This is due to more heating capacity installed than necessary, but is typical by electrical contractors.
The load is approximately twice as much demand if just sufficient baseboard heaters were installed, without setback, as compared to heat pumps loads.
You must realise that reduced peak loads is not the only result. There is a reduction of about 65 percent is energy use for heating for the heatpumps.
Of course this data supports Vardy`s statement.
Perhaps I should publish these actual charts and test printouts on Uncle Gnarley, as it is not of much interest to those who wants to keep energy demand and energy use high, as is necessary for the sledgehammer Muskrat Falls.
Present installed quantity in Nfld of these mini split units is 5000, just 2 percent of total detached houses. I am told that at Garnish, where some 5 to 6 hundred people live, there have been about 14 new house this past couple of years. Half of these installed minisplits systems. I suggest Nfld Power can expect larger reductions is demand and energy use going forward than they now forecast.
Winston Adams, Logy Bay
I agree…… time for results not blame …
Rather than a typical electrical engineering analysis, how about this instead:
There is no logical way to deal with sociopaths. Even the finest socially responsible arguments in the world are useless since they care only for their personal interests. To the sociopaths in power, our writings are nothing but noise. If they gave a rats *ss about their image, they might try to drown out this noise with propaganda. But they don't. A small group of people are profiting off Muskrat Falls and they have no intention of allowing their political puppets to stop it until our credit facilities are exhausted.
Bloggers have replaced the journalist so sites like this are important and most younger people now get their news from Facebook. Mainstream media is losing credibility — just look at the comments in the Globe and Mail where the majority of readers regularly accuse it of blatant propaganda and bias and where you can learn more about the issues in the comments section than you do from the main article. Of course, CBC and VOCM had pretty well eliminated this problem by disabling most comments.
The only solution to this (and other) mess is to convert our common sense messages into easy to understand tweets, Facebook pages, catchy graphics art, hard hitting satirical cartoons and flash mobs. Organized, as well as leaderless "Anonymous style" resistance is required. The general public is still too complacent and comfortable. This needs to change.
We all know where the blame lies….on the head of the demi god who left when he had his "legacy project " foisted on the people of the province by a willing and compliant Cabinet with no ability to think for themselves. It didn't help that the province's media spent way too much time fence-sitting, with the exception of Russell Wangersky and a few independent bloggers.
Truth is, people were afraid to stand up to the dictators who brooked no opposition and people stupidly fell for their lies about the "lowest cost" and the need for more power.
Mr. Vardy proposes a reasonable compromise but it still needs a comprehensive and fair review by a PUB that has the integrity and independence to speak for the people.
Premier Ball, you are the one person who can make this slightly more palatable. What holds you back? Mr. Marshall is one person….this review needs the collective wisdom of many.
Cyril is partially correct in saying who is to blame for this "boondoggle"–he should also have included the Dunderdale administration. They were the ones who sanctioned it and had they had the common sense which was entrusted to them, they could and should have stopped it but it sure looks like egos were a big part of the decision making process.
There was a news article on Global National News on July 14 about the "exorbitantly high" power rates being charged by Ontario Hydro to its citizens and it went on to state what those "exorbitant"rates are. They have three different rates– City at $22.56 basic rate plus 1.6 cents/KWH
Urban at $30.86 basic rate plus 2/98 cents/KWH
Rural at $43.32 basic rate plus 4.27 cents/KWH
The Island part of NL currently has a basic rate of $15.70 and 10.573 cwents/KWH and the latest projection is a minimum of 21 cents/KWH
Did anybody in the Dunderdale administration even look at our current power rates compared to other jurisdictions knowing full well the rates would have to rise even with their flawed projected estimate costs.
Very little is being said about how the citizens of NL, who are struggling to pay their current power bills, are going to be able to pay when MF comes online. It's like"saying nothing will cause it not to happen".
What will happen is there will have to be an enormous subsidy put in place for those who can prove they are unable to pay and taxes will again have to be raised to pay for the subsidy.
Mr.Williams and Ms.Dunderdale have nothing to be proud of here. They should HANG THEIR HEADS IN SHAME for having inflicted this scourge on Newfoundlanders and Labradorians.
The Upper Churchill contract pales in comparision to what we are about to see with Muskrat Falls.
There should be legislation put in place to hold those accountable for any future debacles. No governing body should have the absolute authority to put the future of its citizens at risk without "full disclosure" leading up to anything of the magnitude we are facing here.
What in Gods name were these people thinking!!!!
I may not have made it clear but, yes, I fault the whole PC government that came after Williams. However, they were all there when the "legacy" was announced. It is clear that their loyalties were to Williams and not to the people of the province.
They were blinded by their loyalty or whatever it was that made them too obtuse to see the obvious problems. That they tried to stymie a fair review process is criminal in my eyes and they need to be held accountable for refusing to allow the PUB and other processes to do their work without hindrance.
They perpetuated a lie long after it was clear that this project was never going to work.
Those responsible for bringing hardship to the majority of Newfoundland & Labrador should be tried in a court of law! Its criminal how the elitist assholes of NL set this up and are making millionss of dollars off Muskrat Falls ! Full disclosure and open books of Nalcor needs to happen!