Guest Post by David Vardy

This is the sequel to my post of March 19, 2018 on the
financing of Muskrat Falls called The Impossible Dream Part I: Financing The
Labrador Transmission Link. In this post I measure the increased costs
associated with Muskrat Falls and discuss the impact on rates and the potential
for rate mitigation.

Rate Mitigation

A recent Telegram article (“Power Rate Options Still Unclear”,
Telegram, May 5, 2018) . refers to “$60 million to $70 million required to
decrease customer rates by one cent per kilowatt hour”. This suggests that, if
rates were increased from 12 cents to 17 cents, revenues would rise by $300
million to $420 million. This is highly unrealistic.

Photo Credit: NTV

The article attempted to quantify what would be required to
keep our electricity rates to between 17 and 18 cents. For the reasons I set
out below the amount required is far more than the $400 million annually the
article suggests, close to $800 million initially, and then increasing every
year. I conclude that rate mitigation is not possible, given our fiscal
situation and given that demand will go down when rates rise. Much more drastic
measures will be needed, including the write down of the Muskrat Falls debt and
of our equity investment in the project.

In order to save $147 million in fuel cost we have added $786
million in other costs, mostly capital costs. This is the tragedy of Muskrat
Falls. What does that say about the cost benefit analysis presented in 2012 to
the PUB? Is it better to pay our money to Wall Street investors than to the Oil
Barons? Remember how we were going to keep oil dollars within the province? The
fuel cost has been reduced but the increased capital costs are monumental!

The fuel savings depend upon the reliability of power from
Muskrat Falls. With this in mind I have assumed fuel savings of $147 million,
rather than the full $221 million used by Nalcor in its 2019 Test Year
presented to the PUB in its general rate application.

The PUB is currently considering rate options whereby rates
are adjusted upward in advance of Muskrat Falls. The focus is one billion
kilowatt hours of Recall power, an amount which is shrinking as additional data
centres emerge to absorb the remaining surplus power from the 300 MW provided
under the Churchill Falls contract. This power will displace Holyrood power and
build a deferral account to offset the high costs of Muskrat Falls. After
transmission costs are paid little money will remain for the deferral account.

Research published by Dr. James Feehan at Memorial indicates
that price elasticity of demand for power is likely to be high. This means that
rate increases will shrink demand. It also means that revenues from power sales
may also drop when rates increase. Instead of raising rates we might be well
advised, as Dr. Feehan proposes, to drop rates, as paradoxical as that may

If demand is highly elastic then an increase in rates will not
increase revenues. Instead revenues will fall. It is highly likely that if
rates increase to 17 cents per kilowatt hour those revenues will remain at
their present level, around $700 million, leaving the total increase of $786
million of incremental costs stranded, without offsetting revenues.

 “Rate mitigation” is
based on relatively inelastic demand, which does not square with the facts. The
concept of “rate mitigation” is a chimera because it assumes that ratepayers
can absorb additional costs. It also assumes that pots of money are lying
around unused and that such mitigation can be accomplished without impacting on
social programs.

If rate increases fail to generate additional revenue can we
look to export sales for salvation? PlanetNL has undertaken research on energy
markets and transmission costs. He concludes that net revenues will be small,
after inter-state and inter-provincial transmission costs are deducted. Nalcor
Energy Marketing achieved average sale price for CFLco recall power of 3.1
cents per kilowatt hour in 2017 in export markets, according to their annual
report.  After deducting all costs the
net profit was one cent per kilowatt hour. 

Rate comparisons with Nova Scotia are not valid because of our
much greater reliance on electricity for space heating. We can shed space
heating load quite easily when rates go up, adding greater elasticity to
consumer demand.

If the ratepayer cannot pay more can we expect the taxpayer to
be any better able to meet the increased burden at a time when our combined
operating and capital budget is close to $2 billion?
If not then where do we go? If we go on bended knee to Ottawa
what pound of flesh will they demand?
Revealing the Hidden Costs of Deferral Accounting

The cost calculations going into Muskrat Falls are a Witches
Brew, a concatenation defined by the Cambridge Dictionary as a mixture of
“unpleasant or dangerous” things. It is a hybrid of normal and “creative”

Crown corporations across Canada are seeking “creative” ways
to push costs into the future. In Ontario the Auditor General has taken issue
with the scheme to reduce power bills by 25%. (“Bad Books”, Globe and Mail 21
April 2018), Auditor General Bonnie Lysyk reported that the Fair Hydro Plan was
set up to defer expenses and to securitize unbilled revenues. She said that
government had embarked on “creative accounting” to keep the shortfall between
rate revenues and costs off the accounts of the province. Similar efforts have
been made in Manitoba and in British Columbia, where crown-owned utilities
attempt to secure short term gain for long term pain. Are the byzantine
arrangements by which Muskrat Falls is financed equally at variance with
established accounting standards?

David Vardy
In public utility accounting the term “revenue requirements”
includes all annual costs associated with a project or service. This includes
the cost of capital: interest payments, return on equity and depreciation. It
also includes fuel cost and the cost of operations and maintenance. In a highly
capital intensive project the operating costs tend to be low relative to the
capital cost. Fuel cost savings were touted as the big advantage of Muskrat
Falls. How do these fuel savings compare with the incremental capital cost? We
provide an answer to this question.
In this post we focus on the “generation assets” which Nalcor
has defined to include the generating facility at Muskrat Falls and the
transmission line from Muskrat Falls to Churchill Falls. As we saw in Part 1 of
this series the Labrador Island Link (LIL) is being financed through a
conventional cost of service (COS) methodology, which means that all costs are
charged to consumers in the year in which the costs are incurred. COS
methodology generally results in declining unit costs over time.

In order to avoid rate shock Nalcor decided to use a different
approach to the expensing of costs, one which defers the return on equity
investment into the future. This is done by spreading costs over the life of the
generation assets (50 years) by keeping unit costs level in real terms. I will
refer to this methodology as the “cost deferral approach” (CDA), in contrast
with COS. It depends upon increasing future power consumption because it defers
a large amount of costs. It has the effect of shifting costs to future
generations by expensing educing present costs by deferring the expensing of
present costs relating to the ROE on generation assets.

The purpose in adopting this approach was to avoid shock by
mitigating the immediate burden of higher costs. It was recognized that the
full output of Muskrat Falls would not be needed at the outset but it was
assumed that demand would grow. The basis for assuming growth in demand is
unclear, given the rather bleak demographic projections which were available at
the time of sanction. If costs were stated using COS methodology it is highly
unlikely this project would have seen the light of day. The cost deferral
approach served as a camouflage to hide the full impact of the project. When
capital costs more than doubled the magnitude of the deferral became more

Based on a hybrid of CDA and COS revenue requirements escalate
dramatically, even though real unit costs remain constant, somewhat
paradoxically. If consumption does not increase in future then costs will not
be recovered. With the prospect of doubling in rates it is unlikely that
consumption will rise sufficiently for repayment of debt and recovery of costs.
It is also highly unlikely that the province’s equity will be recovered or that
a return on equity will be paid by Nalcor.
The accounts for Muskrat Falls are a curious hybrid of
traditional and “creative” methodologies. When COS and cost deferral are
combined we end up with meaningless numbers. I have attempted to place the
revenue requirements on a cost of service basis, in an attempt to determine
exactly how much revenue needs to be generated to cover costs. The data upon
which I will draw are Nalcor data. Nalcor’s hybrid cost data show revenue requirements
escalating from $809 million in 2021, to over $1 billion in 2030 and to $2.6
billion in 2069! Only by shifting to full COS accounting can we understand the
impact of the project.
The heart of the issue is the treatment of provincial equity
investment in generation assets. Apart from the difficulty of comparing apples
and oranges the most compelling argument for restating all costs in the
framework of COS is that the cost of equity capital invested by the province is
inescapable. The interest must be paid even though Nalcor’s obligation to pay
may be deferred. The interest cost on $4 billion, without provision for risk
premium and without making provision for AFUDC, works out to about $160

The risk premium adds a similar amount. Any reckoning of the
annual cost to the citizens of the province must include, at a minimum, the
cost of the capital borrowed injected as “equity” in the project. No measure of
annual cost is complete without a recognition of the real cost of money
borrowed by the province. The weighted average interest rate of public fixed
rate debt issues (not including debt issues of or on behalf of government
business enterprises, agencies or boards) is approximately 4.6% but the
effective long term borrowing cost in recent years has been lower.

The cost of equity capital for financing of generation assets
is relatively higher than for the Labrador Island Link (LIL). The minimum ratio
of equity to total cost required for generation assets is 35%, compared with
25% for the LIL. Equity is more costly than debt, usually double or more.
Equity financing for generation assets is projected to be more than 41%, well
above the 35% minimum. This translates into unavoidable costs for a province
with a large gross debt and borrowing heavily each year, both for operating and
capital account.

Nalcor’s response to my access to information request
(PB-242-2018) provides Nalcor Energy’s projection of revenue requirements for
2021-2070 relating to each of the generation site, the transmission line from
Muskrat Falls to Churchill Falls (Labrador Transmission Assets, LTA) and the
LIL. These numbers add to $809 million in 2021. The methodology used in
converting all costs to a common COS base is shown in the Appendix. When I
transform the cost numbers using accepted COS methodology the following
conclusions emerge:

A.    Total investment
in the project becomes $13.7 billion, instead of $12.7 billion.

B.    The $809 million
in annual cost becomes $1,138 million.

C.    When the ROE is
adjusted by removing the equity risk premium the $1138 million drops to $933
million, up by $124 million from $809 million. What I have added is the real
cost of borrowed “equity” funds to the province, recognizing that bondholders
will not forfeit or delay interest payments when they are due.

D.    Muskrat Falls may
produce fuel savings and when adjusted for savings of $147 million the new
annual costs become $786 million.

E.    After deducting
fuel cost the remaining revenue requirements for the Island electrical system
will be $1.5 billion, up from $700 million currently.

The real costs of Muskrat Falls are higher than stated and
cannot be recovered through rates. Even if rates are increased to 17 cents per
kilowatt hour the unrecovered costs will remain at close to $800 million, much
higher than the $400 million which has been used in public discussion.
The real costs of the project are much higher than reported
through hybrid accounting methodology. They are $13.7 billion, $1 billion
higher than the reported $12.7 billion.

Having refused to stop the project because of the contractual
commitments and sunk costs will we instead be forced to shut it down because we
cannot afford to operate it? Remember there were those of us who said that sunk
costs were irrelevant and that only future costs mattered?
Perhaps part of the solution is lower, rather than higher,
power rates!! 
Why are these two issues of designing power rates and
developing options to recover costs not part of the mandate of the Muskrat
Falls Inquiry? Are they not the fundamental issues that should be at the heart
of the Inquiry?

David Vardy

 Technical Appendix

 Calculating the Hidden Costs of Deferral Accounting

Interest during construction (IDC) recognizes the time value
of money after money has been invested and before the asset is commissioned for
use. IDC represents the accumulation of interest on borrowed funds invested in
the project. Allowance for Funds used during construction (AFUDC) represents
interest on equity capital, as opposed to debt. Both IDC and AFUDC are
accumulated on the LIL, which is accounted for under COS methodology. IDC is
recognized for generation assets under the cost deferral approach (CDA) but
AFUDC is not recorded.

In my attempt to bring all costs within the COS framework I
have calculated how much should be added to reflect the time value of equity
financing for generation assets, commensurate with those accrued for
transmission assets. In moving from CDA to COS we need to take account of
AFUDC, which has the effect of adding close to $1 billion to project costs.
In my calculations I make the following adjustments to this
estimate of the annual cost of the project:

        1.        Increased province equity in generation
assets by $963 million, raising total the total investment in the project to
$13,683. To calculate the increased provincial equity we estimated AFUDC in
generation assets in two steps. In the first AFUDC for the LIL was scaled up
based on the ratio of generation costs to transmission costs using direct
costs, before financing costs are added. This added $754 million. In the second
step this estimate was scaled up to recognize the higher proportion of equity
in generation assets, raising the $754 million to $964 million.

        2.        The $964 million raised provincial
equity from $3,154 million to $4,118 million. Applying the ROE estimated by
Nalcor for transmission investments to this $4,118 million produced an estimate
of $343 million for the ROE on generation assets, raising the amount reported
by Nalcor ($14 million) by $329 million.

           3.     The additional $329 million in ROE raises
the total revenue requirement for 2021 from $809 million to $1,138 million.

           4.     This increase of $329 million in ROE for
generation assets is based on the allowed rate of return of 8.4% provided in
the power purchase agreements in combination with the rate of return allowed
for LIL. The ROE on the LIL is linked with that allowed for NP by the PUB,
currently 8.5%. If we assume the long term borrowing cost for the province is
4.2% then this leaves another 4.2-4.3% for the risk premium. There is no
question that Nalcor is imposing large risks on the province. However, the
direct immediate cost to the province of injecting $4.9 billion in equity is in
the order of 50% of the allowed ROE. I have therefore reduced the ROE to the
province by $205 million, which reduces revenue requirements to $933 million.
The weighted average interest rate of public fixed rate debt issues not
including debt issues of or on behalf of government business enterprises,
agencies or boards is approximately 4.6% but the long term borrowing rate has
been below this level in recent years.

        5.        The overall result of these
calculations is to raise the revenue requirement from the $809 million reported
by Nalcor to $933 million, an additional $124 million.

Finally I have made an adjustment to allow for fuel savings by taking
the number provided by NL Hydro to the PUB in the general rate application for
the 2019 Test Year, namely $221 million and reducing it by one third to reflect
reliability issues associated with Muskrat Falls. This amount of $147 million,
when deducted from $ million, results in a revised revenue requirement of $786
million. This more than doubles current revenue requirements to $1.5 billion,
which is similar in magnitude to our education cost and to the cost of
servicing the public debt.


If a Big Mac costs McDonalds $10 to produce and it is sold for $1.50, McDonalds will go out of business. They would not declare a profit!


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.


  1. Joe blow's or the average joe's understanding as compared to an economist through understanding taking everything into account, and probably working and re working the numbers, as no doubt Nalcor's fincincial wizards do. So after a read through and then trying to see it in my minds eye, in a way that it makes scense to the average Jane or Joe. I I make an anology to my credit card, which most Janes and joes uses, it may be something like this. I can borrow on my credit card, for the cost of service, COS, or the money I need now, so instead of paying it off in the short term I will pay it off in the long term, because I expect to be borrowing less on my card down the road, in other words I will defer the cost to a longer term, cost deferral approach, CDA. Why do I expect to borrow less on my card down the road, for the same reason that nalcor expects to sell more power to us down the road, but there is no indication of that, given our demographics, etc. Therefore I am full of BS, by having unrealistic expectations, based on pie in the sky, that I will need to borrow less on my card down the road. So just to confuse everyone, including myself I will use an hybrid of COS and CDA, which mr Vardy tells me is a Witches Brew, I.e. A mixture of unpleasant and dangerous things. Which could mean I could do jail time, or best go see my fincincial adviser and apply for personal bankruptcy. But that's where I headed, and that's my plan, but I was for warned by the less foolish, but I took no heed says nalcor Joe, because I taught someone else was paying. Like who, the taxpayer??

    • Joe, you see it clearly in less technical language, than one who uses the refined terms of economists, but you are both on the same wave length.
      Now elasticity of electricity term can be easily shown by a simple graph, which Vardy can probably include in future pieces on this, showing that as power rates go up, sales of electricity go down, when there are lower cost alternatives, especially for our space heating. A picture is worth a thousand words, and Nalcor avoids addressing the elasticity issue.
      Now as to the 800 million a year shortfall, can the rich pay for this?
      DW, who has 100 million tied up in Galway, has 100 million to spare. So lets say he donates this to the cause, seeing it was his Vision than handed us the boondoggle.
      SM, who is likely richer than DW, lets say worth 300 million, and suppose he also donates his wealth to the cause. This is not unreasonable as he could have stopped MF but said get her done. And he could have been forcefully outspoken against MF before sanction.
      So between DW and SM we could come up with 400 million to the cause, where we need 800 million every year. So if those two agree to become paupers, we can handle the economic burden of MF for 6 months.
      Then we can hope that more of the wealthy will agree to donate to the cause, like all the Board of Trade people, and the MHAs with their gold plated pensions.
      But, the problem is so bad that even this would not put a dent in the problem.
      Surely LeBlanc must address this and propose solutions. Maybe judges will agree to become paupers too?
      Winston Adams

    • Why are we still building the MF dam? We won’t be able to operate it, our power rates won’t cover the cost in 2020 say nothing about 2070. Our taxes are to high now and they would have to be raised to pay the interest on the (Federal Guarantied) loans. These are just a few of the Island problems. What about the methal mercury? The fear’s of the North spur giving way when they fill the reservoir?
      Hydro Quebec may be the answer to our problems. NL hydro should sign a contract to buy 500 mws of power for 25 years. This power would cost far less than MF power and could be resold to Nova Scotia for a profit rather than a huge loss. The 500 mws plus the recall power from the UC is equal to what MF is supposed to produce. I don’t know if this is feasible, but it might be worth thinking about.
      Gerry Goodman

    • Hi Gerry,

      Unfortunately, No, it is not possible. For two reasons.

      First is MF is almost done, so too late. Second is that before the MF project, there was no transmission lines from UC to the Rock to NS. As such, it was not possible to deliver that power to where it was needed.

      To build only the transmission line was not an option. Not enough power over these lines to pay for them. By adding the MF power plant, they were able to put enough lipstick on their pig to get the Go on the project. With only transmission line, it would not have been possible.

      So the picture is now an almost complete MF and a very complete financial fiasco. The best way out of this is to get the most value from the MF part to compensate for as much as possible from the second part. The one entity who can do that is HQ because to get any value from MF, you must have it in sync with UC and only HQ can do that. There is also the fact that as a world leader in hydro, HQ is the best to fix the technical and operations of MF.

      Nice to talk with you,

  2. Rate mitigation was clearly on the minds of the project proponents before sanction because the cost deferral approach was always part of the Nalcor plan from day 1. This is clear evidence they understood very well the risk of elasticity and energy consumption falling as a result of step change rate shock had they used the COS approach across the board. Now, the very situation they wanted to avoid appears to be exactly what they are going to do.

    Present day mutterings from Hydro and Government about a rate of 17 or 18 cents are sure to be a colossal policy failure. Hydro won't get the revenue it requires yet the majority of ratepayers – may we say society at large – will be harmed by the attempt. To avoid this harm requires very modest rate increases of little more than inflation. Government should recognize this and plan accordingly. Massive rate increase or not, there is still a huge taxpayer problem awaiting us. Why not choose the path that harms fewer people? 18 cent rates are not the answer.


    • Below is an excerpt from page 7. of my Feb., 2012 Written Submission to the PUB re its least-cost option review, wherein I argued for and requested that the PUB do the kind of COS comparative analysis that Mr. Vardy has done here:

      To consider and appropriately "evaluate" Nalcor's escalating supply price system planning assumption, Nalcor's assumption must be compared to a year-by-year breakdown of costs over the entire 57-year (or 50-year, as appropriate) assessment period calculated using the utility industry's "cost of service" standard — an approach or assumption other than (and different from) Nalcor's escalating supply price assumption.

      Only by providing an appropriately clear, accurate and thorough 57-year (or 50-year, as appropriate) year-over-year statement of costs using a cost of service methodology can the Board (and the public) `consider and evaluate' the full extent to which Nalcor's escalating supply price system planning assumption might, or might not, be as Nalcor claims, the best (the most "appropriate") assumption for the Muskrat Falls option and CPW cost comparison calculations.

      It is respectfully submitted therefore that:

      • The Board require Nalcor to apply a cost of service assumption/methodology to its analyses of both options and provide both the Board and the public a clear, accurate and thorough year-over-year breakdown of costs (including graphs) over the entire 57-year (or 50-year, as appropriate) Reference Question time period,

      • the Board and the public be provided an appropriate opportunity to review the cost of service data and analyses, to make presentations and/or to provide comments, and that the Board defer submitting a final report to government until receipt, consideration and evaluation of the application, impact and merit of this alternative cost of service system planning assumption is completed and compared against Nalcor's escalating supply price assumption… UNQUOTE

  3. The idea of reducing power rates seems sound.
    Consider , when we had a surplus of power after Bay d erpoir was developed, in the 1960s, we had the Long hr plant that uses as much electricity as St Johns, and if memory serves, they paid only 0.3 cents per kwh, although I may be way off on that figure, but very cheap rates, as otherwise the water would be spilled and produce no revenue.
    Presently , with surplus MF power, we offer NS power at 5 cents (actually island power costing us about 3 cents), while Nfld residents are to get MF power which required bumping up rates from 11 cents to 23 cents. If rates are 17 cents , there will be a short fall of hundreds of million of dollars a year, sales of power will decline, other governement services will be reduced, our local industry will not be competitive as to power costs, everything from supermarkets costs to street lighting will increase and we likely will see a population decline. The rich will spend longer period in Florida in winter, with their Nfld house at minimum temperature to save on their heatings costs here.
    So what if rates are rolled back to 10 cents or 9 cents?
    All of the disadvantages of high rates are reversed, and power consumption will not decline and its helps economic activity on the island. It will not solve the problem, it it appears a better long term solution that the mere mitigation of rates to 17 vs 23 cents.
    Further, we should not compare to NS. NS does not have the baseboard heating load that we have, so we are very vulernable to conversions from baseboard to heat pumps that can reduce heating by 60 to 70 percent. We also have a better climate than NS for the efficiency of Hps. Hps are expensive , but economic when rates are high. Low rates will discourage a rapid uptake to thee systems, or to oil , propane or wood pellet.
    Surely a comparison and analysis of higher rates vs lower rates is necessary.
    If low rates can be offered to industry to consume the excess power, or offered to NS, why can low rates not be offered to Nfld households, who bare the burden of this boondoggle? Surely we should have priority for low rates.
    Winston Adams

  4. Winston,

    In my previous posts, I talked about HQ taking both UC and LC to discharge Newfoundland from this boondoggle, an option that you said you understand, still would prefer to avoid. Because you worked on UC yourself, you would like to see it deliver cash benefits to your next generation.

    This article shows that this is now impossible no matter what. The yearly deficit of 1 billion a year or more represent 100% or more of the value CFLCo can get from UC even after the power contract expired or even today should the power contract not exist. As such, UC will never deliver any benefit to your next generation because even if it is about to stay in Newfoundland, this money will go in the drain of MF and pay for the boondoggle instead of bringly wealth to the people.

    Because it is now impossible for UC to deliver value to Newfoundland present or future generation, better to involve HQ as soon as possible to limit the damage and start recovering what can still be recovered.

    • Wot me worry? This sad politically sponsored mess is being resolved in other Board Rooms, just like the Pipeline mess. Who really gives a s— about sophisticated economics? Election time fast approaching; NL, QC, CDA, AB, the ON Dougie show, etc. First Past the Post always come through in the End. Canada at Work, the re-election teams are hard at work. Put the "stick about", create a bit of Trumpian chaos, cause a crisis, set out a "promise" of resolution, maybe a followup election, filled with promises. Excuse my sarcasm and scepticism this AM. Where are my meds hon?

    • Heracles, Joey Smallwood repeated as to CF " This is our power, mainly for the benefit of Nflders' The Innu has been coaxed to the shacks at Davis Inlet, least they drown from the flooding. 50 years later, Danny Williams promised them small benefits from the MF New Dawn Agreement, yet most all of coastal Labrador still operates off expensive dirty diesel fuel. The benefits have gone mostly to HQ, and as far away as Boston to heat homes and run industry. Luck, and expertise in large scale hydro favoured HQ in the long run, and I do not blame Quebec, and they risked much on CF, and deserved much if it was successful.
      Yes , it is hard to imagine that no benefit will come long term for future generations here. The economics suggest that.
      I disagree that it is certain, subject to a rise in the value of hydro power in the future, whether a decade or more. If climate change mitigation gets serious, low cost natural gas power will start to rise, and HQ vast hydro assets will be more valuable, including their share in CFs. So too would Nfld's share.
      But I agree that Nfld and HQ needs to cooperate, if not even become one single province, perhaps a bridge too far.
      DW "rolled the dice "on MF and lost. Past due that Nfld and Que work together for mutual benefit for the future.
      If the politicians can't get a term sheet soon, You and I will try when you come here for a visit in 2019, and float it to the public. Obviously you want best for Quebec, and I, and other on this blog, for Nfld and Labrador, and overall there is mutual benefit.
      Even Danny Williams announced today he is going to arbitration over his Galway problems , rather than the expensive drawn out legal route. If only he took this approach with Quebec instead of the never ending legal battles. Perhaps it is different when his own money is at stake rather that the taxpayer here.

    • If the politicans can't get a term sheet soon!!!! Yes Hercules tells us negotiations are ongoing, that is what is delaying the SCC announcement. Just wondering who is doing the negotiations, don't think it is government offocials from here, is it nalcor, including SM. Just wondering. Guess the Feds are involved too, or maybe not, how about emera, or NS. I think we should know, this is a democratic country isn't it. Of course we would not know the details that is for the negotiators. Even Trumpie and Kim tell when their negotiations will commence, June 12th. meeting, and Trumpie already has told us what he wants, denecularization of the Korean Peninsula. Guess our negotiations are more top secret than that. Only roummers and speculation that there are negotiations between, HQ and Nalcor. Or am I out to lunch again!!! Joe blow.

    • Joe, I suggest we are not very democratic, that as with Confederation, union with the USA was off the table, we got nearly starved to death during 15 years of Commission of Govn to set us up for voting for Confederation, which was probably best, as our merchant class, like the present power brokers, a lot of things happening behind the scenes likely to move us in some direction.
      Same thing now I guess, we are to be kept in the dark. Why should the average Joe be informed in advance?

    • Hi Winston,

      Joey Smallwood was right and he did the right thing to make this power a reality. Everything was right for that power to benefit Newfoundland. It was not possible to have it right from the beginning because the project was too big for Newfoundland, but things were planned for someone else to get the project done and revert it back to Newfoundland in time.

      Unfrortunately, many people after him denatured his work and blamed him for not having done better. They denatured his work to the point of destroying it.

      I do wish to best for Newfoundland, so lets define what is best for Newfoundland :
      –Keep its sovereignty ? I think so
      –Avoid bankruptcy ? I thnk so
      –Avoid power rate so high that they would prevent any business ? Again, I think so
      –Fix the technical aspect of MF for it to be safe and operational ? Again, I think so

      For that, HQ must be involved because it is the only entity that can do all of that.

      We can add to that list of best for Newfoundland to keep ownership of UC and one day benefits from it.

      That is possible by extending the power contract instead of transferring ownership completely to HQ. An extension of 20, 25 or 30 years may do it, but a more complete evaluation of how long is required.

      Of course, that is the best now that the MF fiasco is. The best would have been not to go for MF at all in the first place.

      Last but not least, it would be best for Newfoundland to stop blaming and stop the hate speech towards everyone. Should Newfoundland receives this help from HQ and the extension of the power contract as a sign of friendship, most will have been accomplish.

      But for this one, it will not happen before UG himself publish a post that will be friendly to Qc. As long as leaders, elected or not, keep the hate speech as UG does, there is no hope for Newfoundland.

    • Heracles31 narrative declaring that "HQ must be involved" reminds me of the scene in Saving Private Ryan where Mellish is being stabbed to death by the Waffen SS soldier… as he's killing Mellish the German soldier says…

      "Gib' auf, du hast keine chance! Lass' es uns beenden! Es ist einfacher für dich, viel einfacher. Du wirst sehen, es ist gleich vorbei."

      This translates as:

      "Give up, you don't stand a chance! Let's end this here! It will be easier for you, much easier. You'll see it will be over quickly."

      The symbology is as relevant as it is stark… Mellish, the Province of NL. The Waffen SS soldier, the Province of Quebec.

    • Heracles, recent suggestion is a starting point, and better than first saying a complete transfer of CFs, I will respond further soon, but comparing Quebec to the German SS by anon, I do not think represents general Nflder point of view, far from it, and does not acknowledge who is responsible for this MF mess

    • Hi Anon 22:00,

      The scene you described here is one between two parties who both firmly believe in their own position and that the other is wrong. As such, both keep going their way while trying to convince the other to switch and join them.

      To resolve such a scenario, there are few options. Let both fight in the name of their conviction and we will see who will be the winner. This solution respects the freedom of both but most time, the end result is a tragedy for one if not both of them.

      The option I prefer is using rational thinking. It can be better and provide best results for both, but this option is useless when one partie is in denial. The one in denial rejects facts. Rational thinking being based on facts, it can not be done when in denial.

      Structural deficit in Newfoundland governement, MF being limited to 17% of its capacity by not being synced with UC, power rate above 23 cents being prohibitive, demography in Newfoundland going the wrong way, all of these are facts.

      When I asked Newfoundlanders for arguements for their point of view, I mostly received anti-Quebec speech instead of facts. Some like Winston are factual and rational and as such, it is great to talk and exchange with him. AJ had a hard time at a moment but then he chose to stop blaming and start looking for more constructive stuff. That again makes a much better discussion.

      UG, while acknowleding the situation is complex, keeps refusing to get rid of the anti-Quebec way. His last direct hit against Quebec date a little now, thanks, but the tendency to blame other and seek responsability outside Newfoundland is still very present.

      So your turn now : can you bring us some facts and rational about a different solution for this terrible fiasco that MF is ?

    • Winston, unfortunately it would appear that you've grossly misinterpreted my commentary, so allow me to clarify so as to hopefully enable you to re-interpret correctly…

      Heracle31's narrative on the entire NL/Quebec hydro-electricity issue merely reminded me of the dialogue between two soldiers in a scene from a war movie when one soldier did away with the other soldier.

      Nothing more, nothing less.

      Got it?

    • No worries Heracles31, I whole-heartedly agree with most of what you say. My father was a CFA, and he always said NLers were their own worst enemies… I realize now that truer words were never spoken.

      However, I suspect your interest in these discussions are not entirely motivated by simple altruism towards NL. My suspicions are that you're part of "fifth column" representing the interests of HQ and possibly the francophone component of the federal Liberal party, assigned to troll the UG blog and use polite and rational argument and persuasion to prepare NLers psychologically for the take over of Lab West and/or the next Commission of Government, and all that entails.

      Personally I really couldn't care less what happens to this wretched province because I don't intend to stick around this fiscal basket case and be taxed and levied into the poorhouse by incompetent politicians in my retirement, unable to afford the electricity required to launder clothing and maintain proper personal hygiene, and hanging out at the Avalon Mall to stay warm (assuming they'll be able to afford to keep the heat on in the joint).

      As for the notion of "pine-clad hills" pride of place and all that similar nationalistic rot, I would suggest that those who fail so miserably at governing themselves don't deserve a state of which to be proud. Indeed, they only deserve another Commission of Government.

    • Hi Ano: 22:35,

      Because you doubt me, there is nothing I can do or say that would prove you my good will. You are not the first one to doubt me on this blog, so I will just tell you the same thing I told to the others…

      The concept of a Win – Win situation is not only part of theory. Win – Win scenarios exist and they are almost always the best. Unfortunately, many do not think it is possible and the moment one is a winner, the other must be a looser.

      Yes, the scenarios I describe, solutions I propose and information I provide have their benefits also for Qc / HQ because they are Win – Win.

      MF was designed as a Win – Lost scenario in favor of Newfoundland, against Qc. It failed miserably and Newfoundland ended up a big looser. So now what ? Looking for more Win – Lost scenario for Newfoundland against Quebec ? For a Win – Lost for Quebec as a revenge against Newfoundland ? I prefer a Win – Win scenario for both.

      If you have any other Win – Win scenario in your mind, by all means please share it and I will be very happy to discuss about it.

      The best for you and Newfoundland,

  5. How do we know this piece by Vardy is not Fake News?
    Look at Vardy's photo, and apply the smile test. Now it would be of value if UG could post a photo side by side, of Vardy, Danny Williams and the little Rocket Man, Kim, all with their best smile.
    You will see that Williams displays all of his top teeth, Kim, all of his top and bottom teeth, while Vardy you see only half his top teeth. Vardy has a slight up turn to his smile, Danny has a down turn, and Kim , well he is just like a snarling dog, even when smiling. Now this is real science, I suggest.
    But notice Vardy carries on his work, for the benefit of the little man, the Average Joe, without pay. Danny has visions of millions of dollars in profits as he dreams at night. And Kim, well , he needs to be chained up, having killed so many of his own people, and sends rockets over Japan toward the USA.
    A picture equal a thousand words. A smile, maybe a million.
    Vardy does not promote Fake news. Can't you see it in his smile?

  6. The rate increases and mitigation scenarios won't be a problem for many people because they will be moving elsewhere adding even more costs to te ones left here.

    I am predicting bankruptcy within five years and we will become a ward of the state. Quebec will buy for about a billion all of NL Hydro's assets, including Muskrat Falls, Churchill Falls, all the water rights AND mineral in Labrador and Ottawa will administer the island portion with appointed civil servants. The demographics will not be recognizable in five years as small communities empty and close, there will be layoffs in the provincial government, MUN, municipal governments and the oil fields depreciating.

    • Is that the Canadian wolf I hear howling again, we have heard that howl before, so bu….er off. We brought a hell of a lot more into this confederation than that, and we are not about to give it up. Now put that in your pipe and smoke it…..says Joe blow…

    • Anom @ 15:42

      What did we bring into Confederation and pray tell what the hell that has to do with the provincial PC's and their mismanagement of our electrical generation system and offshore oil?

    • Well Waldo boy, the sooner guys like you get out the better, if you ever lived here, and good riddance….. And then we won't have to listen to complainers like you. It appears you like to scorne a wise and noble race of American Indians as their demise was brought about by Europeans, mainly our ancestry the French and English. I am not proud of it, but maybe you are. Yes the last of the Mohicans. Cheers, AJ.

    • Waldo, oh Waldo.. you still don't believe that I live here, but more to your last point.. I scorn nobody, except those that can't accept responsibility for their own actions.. the Canadian wolf didn't bankrupt here, we did.. as for the Mohicans they are not real.. they were a literary invention of James Fenimore Cooper..

    • Well Waldo boy, the great Newfoundland patriotic, if you do live here, by your own admission you will soon be getting the hell out. And I say again good riddance. And it's best you separate fact from fiction. Of course novels and movies are not all fact, but the facts depicts the battle for North America in the 1700's and one particular event. But check out these facts, the Mohicans, also spelled Mahicans, also look up Munsee Indians, these people still exist today in and near the reservation habitation Stockbridge in Wisconsin. They did not vanish as depicted in the movie. Some like to deny, deny history, even some deny the Holocaust, but it still exist as part of history. But the real discussion here is not about the Mohicans, but as I have said before, it's about masquerading, and trying to sow DISCORD among the people of NL. Yes, similar as Putin is doing to the Americans. I am not saying you are putin's puppet, but you are someone's puppet, maybe just your own, or maybe Ottawa's. It is the oldest and newest trick in the book, to SOW DISCORD in a people when things seem not to be going well. We experienced it in this province after the second war, just prior to joining Canada, the Brits were using it on us, Canada did it through Smallwood, the upper class here did it, even the Orangemen and the Catholic Church tried their hand at it. Of course today it can be done more easily, from great distances, using modern technology, wittingly or unwittingly through the people via the Internet, social media, and on blogs like this. Maybe that's why UG balked at it, as Hercules, an IT security specialist, has mentioned a few times. We invite you to comment, and express your opinion on the muskrat boondoggle and its perpetrators, as we are all doing, but when you attack and and try and SOW DISCORD among the innocent and vournable people you have crossed the line. So back off !!! I won't bother to call you out every time, I will just warn, especially the casual readers to this blog, that you exist and be wary of what you write. Yes usually wolves in sheep's clothing. Thanks AJ.

  7. Let's get back to the Shadow Inquiry. I ask again, How many Imbedded contractors are on site? What is schedule for contract closeout and commissioning? What is the remaining cost to complete, including commissioning and start up? Why is the opposition so lax in getting public information made public? Where is the pressure for Stan to divulge project info? What is the use of a mitigation intent without clarity on the size of the bill? etc. etc. Come on MFCCC, give us some news, before the VIPs go fishing on the Salmoneer and Hodgewater. Say wot me b'yes.

  8. So what NL Senator will stand and report on the "Good Politics and Bad Policy" about Muskrat? Who is on First now that the Good Lady Foot is splendidly ensconced in the Gov house? When is the Royal tea party? Have a nice Summer.

  9. This discussion on rate mitigation / costs deferral has been very well cornered, thanks to the great analysis of David Vardy and the others.

    Now, I still think it's beside the point thought.

    MF must be considered as sunk costs, period. We must disconnect electricity rates to the idea of recovering MF costs -> both aspects are irrelevant to each other.

    What will now be relevant is ***how to best market the available production*** (if MF is ever producing anything meaningful).

    If rates are too high, we'll end up with unsold production (due to the explained price elasticity) and the hydro portion will go to waste. Plus all the damage to the economy related to the high rates.

    Rates are to be low enough to ensure that most of the production is sold (and replace fuel consumption as much possible). We must determine an optimal rate that ensures maximum revenues, while not damaging the economy.

    We must recover MF costs outside of the electricity rate determination.

    Heracles31 solution is definitely one good way to achieve that, and then more. Indeed, HQ seems to be the most competent entity to manage both UC and MF, and as a bonus, can provide a stable and reliable feed to NL, at a reasonable cost. Another way would be to sell both UC and MF to the highest bidder.

    ==> Anyways you look at it, NL must do its homework and determine the fair market value of those facilities. Also, it must be capable of properly assess any other scenarios, including the one mentioned by Heracles31.


    • "We must recover MF costs outside of the electricity rate determination."

      If you think HQ is going to pay lock stock and barrel anything near the $12.5 Billion need to free us from this boondoggle then you are dreaming in technicolor.

      First HQ would demand full control of the UC and by that I mean ownership. Second, they would demand a sweetheart deal to develop the Gull Island site along the same lines as the UC. Third we would not be able to attract new industry (such as a new paper mill or an Aluminum plant say) without first going to the Quebec government for permission first. All of this is contingent on if HQ would want to assume such a mess and with the price of electricity declining it is doubtful that NL would come out ahead.
      Conclusion? There isn't any way to pay for this except through our own rates.

    • Hey, if M. Trudeau can get Apple to subsidize Aluminum production in QC towards Renewable Energy and lower carbon emissions, just think what he can do with gas guzzlers, polluting industries, non-income producing assets, (Muskrat), in NL. Somebody give him a quick call. Certainly the hard working MPS know how to get us some mitigation. Still thinking a deal is done on Muskrat, waiting for the best timing to get Liberals re-elected on promises to "fix" the debt problems.

    • Ex: Agree – Sunk costs cannot be recovered through customers.

      Anon: Government writeoffs are the only way to deal with sunk costs. Customers just can't come close to paying it.

      RGH: when the hell will the feds say boo? We gave them Yvonne Jones, the MP for Labrador with the loudest most unstoppable mouth around and she can't say a word on Muskrat. There is definitely a Liberal Party of Canada strategy going on behind closed doors. Like all such things we can count on it to benefit Quebec. Given our desperate finances, I suppose they may have no choice but to benefit NL, yet even that is not assured. The longer it goes, the more the deal is done and who is our representative: Dwight Ball and Siobhan Coady?? Oh my….

    • Anon@18:52 "There isn't any way to pay for this except through our own rates"

      Rates alone will never recoup MF costs, that's just impossible. There might be some additional revenues from MF, but obviously not enough.

      The remaining debt from MF will not be sustainable – even via increased taxation.

      Assets will have to be sold and/or the UC contract extended for a mber of years.

      NL must just ensure it obtains fair market for those assets (UC, MF, lower Labrador water rights?), and use the proceed to pay off a portion (all?) of MF debt.

      Any better ideas? Please bring them along.

    • Again, to Anon@18:52

      HQ is not demanding anything. We keep portraying negatively HQ around here. HQ might be part of the solution if NL agrees so. Otherwise, keep the litigation regime; lawyers will just get richer.

      NL has to determine what it wants to let go and have figured out its fair market value. Then sells those to the highest bidder (HQ, Ontario, Emera, Iran, Putin, whoever!).

      You just can't keep all those assets and expect somebody else to pay your bills…

    • To Ex_Miitary Engr
      We can forget about "writing off" any of our debts. Case in point is Puerto Rico where they are so heavy with debt that the US congress passed a law stating that all payments to the island's bonds be made before any spending on anything else. Iceland experienced a similar course of events after they declared bankruptcy and both are paying a large chunk of the GDP on debt repayments. Such is the power of the Wall Street Bankers and Bond holders and such. Neither the bond holders nor the the federal government is going to let us off the hook for this Boondoggle and I am thinking they shouldn't. It will serious cripple our borrowing capability and possibly prevent any and all spending we now have eliminated just to make payments on our debt.
      This is why we must let rate increases go up to 23 cents per kilowatt hour and force Nalcor and NL Hydro to make the necessary reductions within house to meet the new reality. It will be a bitter pill to swallow but that is the new reality we are faced with. It will discourage people from building over sized homes and conservation of electricity will become a mainstay. Those who use the most will also pay the most.

    • "It will discourage people from building oversized homes and conservation…" That describes very well demand elasticity, bringing in diminishing returns etc. To such an extend that (@23cents) we might waste some (unsold) hydro. And that won't definitely be enough to pay for MF.

      May as well double gaz prices then (via taxes); at least that would be more environmentally sound…

  10. This is an interesting quote from Marty Reed, (As per CBC article-CEO of Evok Innovations Vancouver-based cleantech fund created through a $100-million partnership with Cenovus and Suncor):

    "We just saw Saudi Arabia award a major solar contract at three cents a kilowatt hour. We just saw Mexico do the same thing … at five cents a kilowatt hour," he said.

    "You can't bring on a new coal plant or natural gas plant at that price. You sure can't build a new Site C hydro dam at that price."

    Translation? Only the turmoil in the Mid east and sanctions against Russia and Venezuela and recently Iran are keeping the price of oil up. Also big dam projects like MF's are to capital intensive and will not be needed since they will not be competitive with smaller scale wind and solar coupled ith storage systems.

    • Tobert:

      Imagine if in the 1990's we had a government with the guts to do the following except instead of Solar PV panels we installed Air to Air or Ground to Air heating systems? We would not have needed MF's:

      ""May 10 (Renewables Now) – The California Energy Commission (CEC) on Wednesday adopted new building standards that will require nearly all new homes in the state to have solar panels from 2020 onwards.""

  11. Why is it… that these types of thoughtfully intelligent, foresighted discussions are occurring on an unofficial private blog, rather than the subject of utmost import of debate in the provincial legislature?

    WTF is going on with political leadership in this wretched province so that an impending fiscal crisis is treated with such blasé indifference?

    Don't these bloody imbeciles realize as to the dire ramifications of the Muskrat debacle?

    Where the hell is the leadership on this issue??

    • Because the provincial government has its hands tied to the debt from Muskrat Falls as do all future governments. We have democracy in name only and all our focus from now onwards is making payments to our debt. Anything and all else has become secondary.

  12. Just think about this:
    There are 800 Mws at Muskrat Falls and we have recalled 300 Mw from the Upper Churchill that is scheduled to come to the island grid soon for a total of 1100 Mw. Of that 1100 Mw, 20% (or about 220Mw) will be lost from transmission and inefficiencies in the system with 300 Mw going to Nova Scotia. That leaves 580 Mw out of a total of 11 Mw that is all that is available to the entire province and it won't even replace the diesel plants on the coast of Labrador or the island. On top of that we will be paying 23 cent per kilowatt hour along with a sizable chunk of revenues from other sources to shore up this project. It is no wonder that Stan Marshall called it a boondoggle.

    • Hey Anon 06:47,

      One part of the problem is here: you don't have 800Mw from MF. Because HQ has been casted out of MF, MF can run only at 17% of its capacity, so MF can produce about 170 Mw, barely enough to provide Emera with their part of the deal.

      At the end, there are 0 Mw of power from MF for Newfoundland…

    • Heracles, while in dry years and reduced water flow, it may go as low as 17 %, usually it is more like 500MW, and peak production of 824 for very short duration as the MF reservoir is so small.
      You disagree? May often go lower than 500 is CFs production is low, so very dependent on HQ priority .

    • Hi Winston,

      According to what I founded, the 17% is not related to hydrology in any way. In summer time, the water flow is kept to a minimum for the reservoir to fill up before winter. Technically, it would be possible to cut the river completely, but that would be very bad for the ecosystem of the river and its surrounding. As such, to preserve the ecosystem, a minimum flow of water of about 17% of the maximum is kept running all the time. That is why the minimum is 17%.

      So from my understanding, No, that 17% is not related to hydrology and 500 Mw is way above what MF can produce in summer time.

      During winter time, MF may be able use its microscopique reservoir to regulate water flow at a higher level, but they have no control when such a period would start or end. As such, this power can not be integrated in any planning, be it a power purchase agreement or the capacity required for local needs.

      Imagine something breaks in UC or the transmission line during winter time. HQ would stop or reduce the power significantly until everything is fixed. Such an unexpected drop in water would prevent MF to produce as expected. Or if there is a warm period of a few days during the winter, again HQ could reduce the flow, impacting MF.

      As a last exemple, if HQ needs extra power but another of its reservoir is at a higher level, they will take power from that one instead of UC, again leaving MF without the water needed to produce more.

      So No, the only power that can reliably be planned for MF is 17%, unless HQ is involved to sync it with UC.

      Have a nice week-end,

    • That explains very well the rational for HQ to have full control over UC daily production.

      Furthermore, as per the 1969 contract, HQ is 100% on the hook ($) for any wasted hydro/spillage resulting from reservoir/production mismanagement.

      It would just not make any sense if it did not have 100% control over UC.


  13. The deep suspicion and lack of trust that NLers feel towards Quebec is mutual. NL has always concluded that the advantages of the UC deal were hopelessly lopsided in HQ’s favour. HQ claims that it assumed the entire risk of the project and that gains from the UC are roughly equivalent to the gains from other projects that could have been completed in Quebec during the same time period. Oh and of course an advantage whose value is NEVER considered is that in 2041, Nalcor will inherit one of the largest hydro-electric generating stations at absolutely no risk and no cost to NL. A rough guess of what that is worth today is probably something like $10-$15 billion. Not exactly chump change. Who is right? Well at this point, who cares.

    Suffice it to say that I doubt very much that HQ is actively seeking to embark on a new partnership with NL. First, HQ already has a significant surplus of energy and exports to the US are complicated by the increasing difficulty of getting environmental approval for electricity transmission through the US. Moreover, I suspect that the construction of surplus energy in Quebec such as the Romaine river project is specifically designed to reduce HQ’s dependance on UC power.

    I would like to thank Mr Vardy for his excellent analysis. However, I do find it annoying to see analysis of NL’s long-term capacity to assume the cost of MF while simply ignoring potential future revenues from UC. It is a bit like evaluating NL’s fiscal capacity by assuming oil revenues are zero. Most reasonable assumptions of future energy prices would lead one to believe that revenues from UC will more than compensate for the losses on MF as of 2041. However, whereas the future cost of MF is probably already known, future revenue from the UC are subject to significant risk. The only advantage for NL to off-load UC and MF to HQ would be to eliminate that signficant price risk and, not incidentally, the operational risks associated with MF. Regardless of whether NL chooses to hold em or fold em, 2041 is closer than you think. The risk of renewal is much higher for NL than HQ because of the relative size of the two partners. At some point in the future HQ and NL might want to talk about what happens in 2041. For the moment, NL is not in a very powerful negotiating position. Electricity is a buyers market for now. The question is will NL’s position improve by waiting?

    • Hi Bernard,

      The bond holders can not wait more than 20 years before getting their money back. Newfoundland can not hold his breath for that long.

      Yes, HQ has significant surplus. That's why I mentioned they have to receive both extra capacity and extra clients at the same time. So not only take UC and LC, but the mandate to power Newfoundland and Nova Scotia.

      I agree that the Romaine is to help reduce our dependency toward UC. But all the aluminium factory in Qc have their own contract in sync with the power contract, to 2041. To secure an extension of 2041 would allow to secure an extension to these contracts too and that is a major plus for Qc.

      About an analysis without the income from UC after 2041, there are may reasons :
      –As of now, the benefit for CFLCo is about 1 cent per KwH, so nothing impressive
      –The price for electricity has been going down for long now and is not expected to increase
      –The picture is depicted to illustrate only MF's position. Should you wish to get a complete picture by adding UC, you must add the rest like structural deficit in government's budget and that one alone is above the potential revenue from UC.

      Should you wish to add about 350 Millions in revenue from UC (1 cent is 5 time the 2 mills rate, so generate 5 time 68 Millions, so about 350), by all means do it. But do it while adding the structural deficit of more than twice that (above 700 millions) and your picture will only be worst.

    • Bernard, thank you for your interesting comments. I read with interest, "future revenues from the UC are subject to significant risk", and then you go on to comment on what those risk may be, which is not entirely clear. As it has been said previously, that MF is a stranded asset, part of the boondoggle, but it seems you may be inferring that UC could become a stranded, or partially stranded asset, that may be worth 10 or 15$ billion today. Should negotiations fail between HQ and NL in 2041 or before, then the transmission line may not be available for transporting of UC power to the US. It seems to me, and I am not an engineer, that to try and transport that amount of power via the ML would not be feasible, or economically possible. So the entire Churchill power river would mainly become a stranded asset in this great country of ours. I find that incomprehensible in this day and age. We are all viewing what is happening out west with the oil pipeline, but am sure that will be eventually resolved to the satisfaction of both provinces. Are we saying there would not be a similar resolution in the eastern provinces. As you say, at some point NL and HQ will have to negioate, and you say, and agree that we are in a very weak position to negioate right now, so it would be in our interest to wait until 2041 approaches. As for the other nay Sayers, about loosing souvernity before them, I take that with less than a grain of salt. Look at the territority NL brought to this confederation, look at the congenital shelf, or Grand Banks as we call it. Yes we are bigger than a city, even if the population is small at the present time, and the world is becoming small and smaller and over populated. I am sure you look at this question in it' totally and history and not through the narrow confines of a hydro project gone wrong. We did talk at one point of becoming part of the USA, maybe we can again, yes why not, and become a state on the other side of the convenient, like Alaska, and Americans would come here in droves… The "Newfoundland." Which would Canada prefer to be its neighbour on its eastern flanke. Or maybe Hercules, may prefer to comment on this latter part. Just my thoughts and opinion. Cheers, AJ.

    • Hi AJ,

      You are 100% right : Maritime link has not been designed for a load the size of UC. The only existing line strong enough for such a load is the existing one over Quebec.

      As for the risk of UC ending up a stranded asset, indeed, that is a risk.

      As of now, HQ have surplus power reprensenting more than UC's power. There is also a huge margin available to improve efficiency and reduce consumption all over Qc. As such, at the end of the power contract, it would be possible for HQ not to re-sign any contract and to go with our own power instead. The result would be that our own unsold surplus will turn in Newfoundland unsold surplus.

      I am pretty sure this outcome is not what HQ is looking for, but HQ must be ready for that. Because of all the trouble CFLCo did during the entire contract, HQ must be ready to walk away from UC if CFLCo's terms are unreasonable.

      Ontario prefered their nuclear power instead of our Hydro…
      NB also prefered to walk away from HQ.
      CFLCo, after signing a contract with HQ, also tried to walk away from its own word and contract.

      As of now, CFLCo sells its recall block for about 3 cents. More than 1 cent goes to transmission cost, a little less than 1 cent to production, leaving about 1 cent of benefit. That is the actual value of CFLCo's power outside of the power contract.

      Would CFLCo be ready to sign a new contract with HQ for a price that would be around 1.5 mill per KwH ? If not, then UC's power will be over-priced compared to the market and HQ will not go for it. And just like during the 1960s, HQ is the only consummer big enough to buy such a huge amount of power. Other customers are not looking for that much and being too far, transmission cost pushes the price for UC beyond the reasonable limits.

      So Yes, UC and the rest of the Churchill River can end up a stranded asset. MF already is and UC can turn into one if CFLCo keeps the anti-Quebec way of thing and refuses to sign a contract for what is the actual and realistic value of UC's power, ie, around 1.5 cents per KwH according to actual market.

      Nice to talk with you,

    • Thanks Hercules for your reply. It is s very narrow in scope to my comment. Would have to assume that that was the point Bernard was making unless he responds specifically to that point, the the entire Churchill river could become a partially strande asset by 2041. You have not really added anything new to my thinking, and maybe others on this blog, and indeed within the province. Because to repeat myself, when Smallwood was about to ask PM Pearson for assurance of a power corridor, Pearson asked Joey not to ask officially as he would have to refuse, as he could not assure it, and these were in the days of the FLQ, so was thinking things may have changed since then. As that was really the clincher for HQ having control over the power corridor to the US, it would have been a stranded project then, as HQ held the ace, the power corridor. And that is a point that is rarely discussed, especially by our friends in Quebec, and always berried in other discussions. So, guess not much has changed. I note as you mentioned Winston in an earlier comment, being reasonable to comment with, that he has now picked up on my argument, from some time ago, and I appreciate that, that the Feds hold up and be responsible for their contribution and promotion to muskrat, and he made a good arguement. He did not put as much emphasis on Harper, as I did but basically the same arguement. The Feds are whittingly or unwittingly into muskrat to the tune Of 8$ billion, so about time they own up to their responsibility. That would leave us responsible for the remaining 4 billion or so, and NS and emera for their couple of billion. As I said before this may be settled politically or by the courts, and we have to problem with that, we have been in court before, as you may quickly point out. Not sure what the rules are now for a province to leave the country, and know we would mainly prefer to remain in Canada, but when push comes to shove, and our backs are against the wall, we are no shrinking violets, and the vote would not be a tie, but an overwhelming to join Trumpies America. We are not a Porta Rico, with its only asset being sandy beaches, and an over populated island, and prone to hericanes every year. Our weather is more like Bostons, except summer is much later in arriving. The Arctic is the new frontiers, and imagine the US of A having easy access from either the east or the west. We are similar to Alaska, and Trumpie would personally fly here to welcome us with open arms. Now compare that to a failed hydro project, and the Churchill would not be strande for long. Must get Trumpie or his buddies to fish on the Labrador rivers, as many of them currently do, so as they sit by the pool they think this could be all ours. We got along great with the Americans when they built some half dozen bases here during the Great War. Now, what would Canada say to that. I say put that in your pipe and smoke it Justin, and everyone else. Cheers, Joe blow, average Joe, AJ.

    • Hi again AJ,

      This power corridor over Quebec is but one of the illusion Newfoundland created and insists on to justify its anti-Quebec / anti-Feds / scapegoat seeking attitude.

      1-As of now, this power corrider over Quebec does exist, so no need to search for another one.

      There is a power line strong enough, from UC down to every point where HQ is connected. This line is also accessible to CFLCo at nothing more than the reasonable wheeling fees for such a line.

      That line is not powerful enough for both UC and MF. In the same way it was in the 1960s, the cost of such a very long 735Kv line can be justified only over the maximum amount of power. MF does not provide enough power to justify building such a line. Only the combo of Gull Island + MF can provide enough power to justify the cost of such a new line. But again, this can be justified ONLY if the power is indeed bought by someone. As of now, there is no buyers for the 3000 Mw that GI and MF represent.

      The risk for UC to end up a stranded asset is not because of a missing power corridor. It is because there are no buyer but HQ and even HQ will have no interest in buying that power if the price tag is anything higher than maybe 1.5 cent per KwH (up to them to evaluate the appropriate price, but know that it will be low for many reasons).

      2-Back in time, before HQ built this line, such a line would not have been of any benefit to Brinco / CFLCo / Newfoundland because at the other end of the line, there was no buyer.

      HQ and Con-Ed were the only to realistic buyers for that much power. Con-Ed refused to pay the minimalistic price of 4 mills for a fraction of the power during a fraction of the time required to payback the debt on UC project.

      A very good way to see that refusal is to compare it to the loan guarantee you now complain you received and would like the Feds to assume because they enabled you.

      In the 1960, should the Feds pushed anything to force the creation of a power corridor over Quebec under your responsability, you would not have been able to find any client to sell your power for a solid 5 years. Without a power contract, no one would have bought your bonds and so you would not have build the project. Whatever you would have put in the project up to that moment would have been lost. To force a power corridor over Quebec would have been a complete non-sense at technical, business and political level. The same way MF was non-sense at technical and business. As for political level, you insisted so much to get it that they finally chose to give it to you.

      So No, the Feds were not responsible for the way UC and its power contract ended up, not even because they refused to force a power corridor over Qc. In the same way, I consider they are not responsible for the MF fiasco because for them to be responsible, they would have to be the authority above Newfoundland, which basically means taking your sovereignty.

      Someone else will be responsible only the moment you transfer your sovereignty to that one else. As of now, I think Newfoundland still has its sovereignty and that should not change unless Newfoundland himself asked for that sovereignty to be taken from him.

      Nice to talk with you,

    • Hoops, sorry Hercules… Missed your reply here. Sorry but I disagree with the illusion you mentioned in terms of a power corridor. And no I don't think we never expected to have a power corridor through another province, agree that would not be right, and would make no scense, but it did show the lack of cooperation between the two provinces at the time. Yes by all means HQ should own and have control of the power corridor, in cooperation with NL, the same as HQ and NL would have joint ownership over the hydro project. You own the territory on which the corridor runs, we own the territory on which the project sits. And these are two basic facts that should never ever be questioned and readily accepted by both parties. The fincincial arrangements, the markets, the sharing of profits, etc. Should be all negioated in all fairness to both parties, so there are no losers, just winners on both sides in a joint project, and total cooperation between both as friendly provinces, and nearest neighbours. I cannot discuss in a knowledgable and informd manner, the finances of the day for the UC project, except it was in the range of a billion $'s in 1970. Know we have been through this before in converting to today's dollars etc. But HQ has no more right to be in control of waters in another province, than we should have over power lines through your province. Water rights should be jointly and in cooperation with the other partner, with no controlling interest, if there has to a tie breaker, then the territory on which it sets should have that controlling vote, no different, that the owner of the power corridor has the controlling vote. I know, there has been many negioateins over the years, and court challenges etc. But that should never have been necessary, two equal partners in a joint project, and a friendly atmosphere, that is the basis of any agreement. I know you won't agree with that, and go out in all other directions, and say how good HQ has been to us and how bad we are. And nice chatting with you. Cheers, AJ.

    • AJ: "Water rights should be jointly and in cooperation with the other partner…"

      Just for more clarity here, NL had sold the whole Churchill river water rights to BRINCO (mostly British private interests), for what, up to 200 years?
      So not much of joint water rights here…

    • Hi Anon 17:21,

      Technically, you got the starting point right. But Newfoundland bought back Brinco in the 1970s so got back this part. The thing is, during the moment Brinco had this right and transferred it to CFLCo, they signed the Power Contract with HQ.

      Because HQ was about to buy basically all the output from the power plant on a take or pay basis, they required to be able to schedule delivery so they receive the power when they need it. Because HQ is scheduling the production, they are the one in control of the reservoir.

      As such, today, the one in control of the reservoir is effectively HQ and that is not from the 200 years lease to Brinco, but from the Power Contract.

      Being from the Power Contract, it also means it will end in 2041.

      Now, about cooperation, Newfoundland tried to screw HQ with MF. HQ being out of the deal, they are out of the water management. Newfoundland tried to force back the control of the reservoir in court but failed so far.

      Because MF by itself does not make sense, I doubt HQ would have enter into any kind of deal about it. What would have make sense and HQ tried many times in the past is the development of both Gull Island and MF. Together, they represent enough power to justify a new power line. There was a time in the 1990s where such a deal would have been great for everyone. Unfortunately, Newfoundland refused everything.

      Today, not only MF does not make any more sense, even the duo Gull Island + MF is of a much lower value. The reason is that there are surplus power everywhere, prices are low and going even lower. To add a total of 3000 Mw in this situation, associated with its new transmission lines, makes no sense.

      So that is the situation for the water management…

    • Late catching up on AJ and Heracles. I think maybe eventually you two may smoke the peace pipe, maybe with some local produced weed that now seems to be the trend.
      I have arrived at my cottage at Bishop`s Cove, my wife not here now since NOV, recently having cancer removed from her colon, also 17 lymph nodes removed, 6 which were cancerous, and like the Rockie movie, getting fit, training to take on liver tumor surgery in 2 weeks time. Having stage 4 cancer, now 70 percent through, she is in rather remarkable condition, physically and mentally for the next step. Several setbacks this past months, but as she says, she is like a rubber ball, she pops back.
      And my attic mounted heat pump is purring away, how heating for about 50 cents per day. Never a problem, and totally protected from weather. I have missed the ocean view.
      You both make good points. Of course as AJ says , we were traditionally closer to the USA culturally, than Canada, many having relatives in Boston, and Nflders erecting the steel for the skyscrapers in the 1930s,like also the Mokawk. And we are little different from rural QUebec, except for the language barrier.
      And Danny Williams screwed HQ in NB with his interference there.It is possible that the whole CF river could be a stranded asset, or a more valuable asset in the future, that is a risk either way. With Trumpie,who likes gas generation, hydro power will remain low value, so I say bar him from Labrador rivers, and as he never tells the truth, How can you trust him.
      We have not been friendly to Quebec to help develop Labrador, so it remains like third world status on the coast.
      But I still think that the Feds have responsibility here as to the fiasco. Do you offer your friend or neighbour the rope to hang himself as Heracles says, because Nfld asked for the rope.
      I don`t think so. Quebec did not offer the rope. The Feds did. So who was our friend, and who was not.
      Sure we should have have learned our lesson, as Heracles says, but we did not. So it is primarily the poor of Nfld that is to suffer for this fiasco, as under Commission of Govn. Back then, half our debt was to pay for our regiment in WW1. Blood and guts was not enough for the British, we, a poor province, had to pay for the regiments costs as well. Damn the British, I say. And every time the Royals come here, it is at our expense. This tiny population has been sucked dry by the British for 500 years, and at our hour of need,they offered 6 cents a day. Locals dug wet tree roots from the bog to dry for firewood. We were offloaded unto Canada, as we were the fortress position to keep us within the Empire, least America take us in. We are always pawns in the game.
      Prince Charles now to head up the Commonwealth, and as was noted , the wealth is not shared commonly. Water rights, rightly owned by the Labrador and Quebec Innu for thousands of years, handed to private interests in Britain for 200 years….such is the injustice and so called fair play of the British.
      Let Prince Charles come to Labrador, and explain this type of fair play, and smoke the peace pipe.
      And scratch the name of that river, Churchill, from the maps, I suggest. We have suffered enough from colonialism.
      Maybe it is the ocean view that invigorated me to be so frank.

  14. Heracles, I think the Feds should be held accountable for a large portion of the MF debt, as they enabled the project without due care as to technical, environmental or it being should to be financially sound. Do you agree? Quebec had no part in this boondoggle, but cannot say the same for the feds.
    Winston Adams

    • Hi Winston,

      I disagree on that point because for decades, Newfoundland did nothing but complaining about how they are not supported, how they are diminished, how they are neglected and blablabla. When one is as desperate as Newfoundland to harm himself, you are down to two choices : you take him is freedom to act to protect him, or you let him hurt himself until he as enough.

      Feds told you the very hard conditions and very high risks required for that loan and instead of understanding the problem, Newfoundland said Sure and go for it!

      It is impossible to help the one who does not want to be helped. Before the MF fiasco was too big to be ignored, Newfoundland was not ready to be helped. That reality is from Newfoundland and not from the Feds.

      What you are saying here is that the Feds should have deprived you from your sovereignty because it was too obvious you were doing wrong.

      Not to have done it at that time is not a problem, a fault or an error : either you keep your sovereignty today and deal with your local fiasco, of if to lose you your sovereignty is the right answer, doing today instead of yesterday is not a big difference and in both case, you end up discharger from the fiasco.

      So do you wish to keep your sovereignty ? Than the Feds did nothing wrong by letting you doing it.
      Do you think you should loose your sovereignty ? It is still time for that and you will be freed from the fiasco at the same time.

      For the Feds to absorb your mess while letting you in command is total irresponsibility and simply not possible…

      Always nice to talk with you,

    • You are right that Nfld complained for decades. But why did the Feds give the loan guarantee, knowing of the high risks that it could be a boondoggle. I suggest primarily to aid NS as to their dirty coal problem.
      Now if I beg and plead to the bank for a 1 million mortgage to build a mansion, and the bank says I lack the income to support such a house, but can only mortage for 200,000, then the bank turns me down, as they should. Further if they go so far to see I intend to build on a bog, with no solid foundation, there are technical risks besides the financial ones.
      Now if I have friends in high places, that gives the bank a written guarantee that I will meet the payments for my mansion, the bank says , fine, as no risk to them.
      Is it not similar as to how the Feds are part enablers?

    • For what it is worth WInston – I agree that the feds certainly hold some blame for this boondoggle. To proceed against the recommendations of their own environmental assessment and to allow Danny Williams to proceed despite the objections of the PUB is simply unacceptable. Moreover, the feds knew, or should have known, that the operation of MF would require NL to usurp unilaterally HQ’s water rights on the UC. Also, even the original estimated cost is equal to about 24% of NL GDP – that is a massive risk to finance for a Province which is already heavily exposed to energy prices. When you guarantee debt for a failed project by an entity unable to comfortably accept the economic risk then I think it is fair to say that you bear some responsibility to the NL rate payer. Ultimately NL has its share of blame but the feds were wildly reckless and totally irresponsible.

    • I must admit to being confused as to whom to blame for the MF boondoggle. If I read the Overcast, Goldman-Sachs and international financiers are responsible; no mention of the Rothschild's yet but I'm sure that's coming. Here at UG, the Federal Government is the feckless party; a big faceless bureaucracy that transcends ideology providing a LG from both Harper and then Trudeau. The former an "enemy" and the letter a friend. The reason that the former provided the LG was to further the agenda of Peter MacKay, Emera, Nova Scotia and the ratepayers of NS, and of course to give the finger to Daniel. The latter because he wishes to continue HQ's dominion over NL. Now on the comments for this post, HQ has also been compared to Nazis, presumably because they invaded and "stolded" UC from NL by paying for it all.
      But, but, wasn't all this started by a nasty little man, who shouted "traitor" at anybody who stood in the way of his legacy project, who pulled down the national flag, who drove the federal PCs out of the province with an ABC campaign. And wasn't he and his replacement elected with great majorities. How would he have reacted if LG was held back?
      So to set me straight, HQ (and their Quebec masters), Emera, NS, the Federal Government, Goldman-Sachs all caused this mess and we have no skin in the game as we're imbeciles?

    • The way I see it like applying for a mortgage (when you are personally on the hook, in addition to the property lien).

      If you fudge the numbers, undervalue construction costs, put grandma as collateral, well anything to get that freaking loan; you deserve some responsibility – if not jail time for fraud…

      The bank definitely might have been irresponsible/incompetent here, but that doesn't warrant any sort of loan forgiveness. (same logic for credit cards debt)

      The banks will go after you personally if it can't get repaid via the property & grandma.

      Sorry grandma, I forgot to tell you 😉

      Ex-Military Engr (not using my mobile)

    • Bernard, WInston,

      As for me, the answer comes from a specific question : Does Newfoundland has sovereignty or not ?

      The fact that MF was 24% of Newfoundland's GDP was known by them and they asked for the guarantees despite this. And despite all other arguments presented as evidence that the project was inappropriate.

      So when one is as bad as this about hurting himself, you are left with two choices : take his freedom to protect him, or let him hurt himself until he has enough of it. The Feds took the first options few times in the past and Newfoundland only complained about it, never learning. As such, they ended up with nothing but the second option : let Newfoundland hurt itself bad enough to learn the lesson.

      Lesson was not learned from so many other projects, it was evidence that Newfoundland did not had enough of it yet. So let them have as much as they want…

      The intelligent guy is the one who can learn from other people's mistakes.
      The idiot is the one learning only from his own mistakes.
      Maybe people from Newfoundland will know a word that would identify the ones who is worst than the idiot and does not learn even from his own mistakes ?

      Very sad the situation had to turn that bad for the people of Newfoundland but after decades of asking for it, well, they got it.

    • Omg Hercules…have to get my one cent worth in here….you never fail to amaze me….lol….yes that is laughing out loud… Splitting my sides …sorry…but you made my day…cheers… AJ.

    • Hey AJ,

      To be honest, it was not before I was well over 30 years old that I learned the link between the N word and people from Newfoundland. I am French speaking and that N word is used as is in French, with the same meaning. Because the French name of Newfoundland is Terre-Neuve, the link is not obvious at all.

      When I learned about it, I stopped using that N word right away.

      But here, to ask for other people to be responsible for the same mistake Newfoundland repeated over and over again, I could not help myself but to ask the question if that N word is deserved or not.

      If the people does not deserve that N word and the corresponding definition, then people must prove themselve responsible. Asking for the permission to do the same error over and over again while other people have to absorb the consequence is pleading that people do correspond to that N word and as such, should not be held responsible.

      As for me, I do not think Newfoundlanders should be called anything else than Newfoundlanders. They deserve the respect but with that comes the responsability of that maturity and capability.

      Have a nice week-end,

    • Lol Hercules, the N word does not mean a lot to me, some from here used that word and proud of it. I sorta like it if used in a friendly way. If my friends from Quebec calls me a Newfie, then that's great, but if used in a degerograty fashion , then I resent it. As I mentioned I was in the military and Quebeckers were among my best friends, and I have used some words in a friendly manner with them, and they accepted it and joked, and you know what the words are, but I would never use them, except among friends and knowing I meant no harm, or degrading of the persons. But sure, I respect Quebeckers that are proud and stand up for themselves, without ridicule, and expect no less in return. Thanks for the chat. Cheers, AJ.

    • Oh yes Hercules, forgot, now that you used the French name, Terre Neuve, I always figured that's what the official name of the province should be, it flows off the tongue easier and is an appropriate name. Maybe even if the spelling were a little different, would probably be more acceptable everywhere. We have a park, only we spell it Terra Nova, think quite an appropriate name for the province. Just my thinking, and would not even mind the French spelling. The world is becoming a much smaller place, and after all we do have a lot of things, history in common, etc. Maybe more so that some recent immigrants, not that I have anything bad to say about them, and welcome them with open arms too. Just all Canadians. Maybe Québécois first, or Newfoundlanders first or Chinese first..etc. Cheers, thanks, A J.

    • Anon 12May at 10:21
      suggest you go way to Anon 10May 22:00 you will find:
      "The symbology is as relevant as it is stark… Mellish, the Province of NL. The Waffen SS soldier, the Province of Quebec."

      I always thought that Waffen SS were Nazis, no?

  15. All-

    Some suggested answers I have to offer to some recurring questions, and comments on related matters:

    1-Whose fault is MF? Answer: the Newfoundland electorate's. Period.

    A thought-experiment relating to a Province I know better than Newfoundland and Labrador: If Hydro-Quebec had proposed a project which, collaterally, caused (inter alia) electricity prices in Quebec to double for all ratepayers, its entire leadership and any politician associated with the idea would be…basically, A) Denounced, B) Tar-and-feathered, C) Lynched, D) Beheaded, E) Executed by electric chair, F) Ridiculed, G) Fed to wild animals in a public arena. Or possibly all of the above (not necessarily in that order). And it would take place faster than you could say "Bad move". Think of the Quebec student strike of 2012 on steroids.

    The contrast with NL, where MF was initially a popular project (meaning: politicians could do little other than support it), is telling.

    2-Speaking of which: this blog seems to be the main public forum for discussion on MF and related topics. What bothers me is this: where are the young participants from Newfoundland and Labrador? My impression is that most of the "regulars" who are leaving comments are closer to retirement (if they aren't retired already) than to their (University) graduation. Yet it is the recent graduates in NL, those who are hoping to start a career and/or family, who should be most active in discussing this issue, as they are the ones who will be paying for it (literally). Young people with the qualifications to become engineers, mathematicians, economists and related fields would surely have much to offer to the discussion. Echoing Enrico Fermi, I must ask: where are they?

    3-Related to 1 and 2: I myself had suggested that to the younger generation (especially) born in NL the province is a place one flees from, and not one which one treasures and whose political life one therefore participates in.

    Hmm. A decrease in civic/political engagement on their part, due both to lack of interest and to the belief that most of their life shan't be spent in NL, as well as a preference for short-term job-creation schemes (no matter how harmful these schemes may be over the long term), would be an expected consequence of such a mental outlook. My theory may or may not be true, but it cannot be denied that it fits the facts.

    4-Oh, and since a lot of scorn is being heaped on politicians in general and on Newfoundland politicians especially: allow me to draw to your attention the words of a Newfoundland premier, Walter S. Monroe, who in the late twenties said of Labrador that "“this country (Newfoundland) will never be able to develop it.”

    Ninety years later, and it must be admitted: the man had foresight.

    Of course, back then Newfoundlanders had a much more positive view of their own identity, saw their island as their home, as the place their children and grandchildren and great-grandchildren would live and love and grow on. Thus they elected politicians who likewise looked at Newfoundland's long-term future.

    Well, if my theory is true. But again, it is odd how so many pieces of the puzzle fit if it is true, isn't it?

    • It has not been mentioned here in some time but must not be forgotten that Nalcor's lead consultant was SNC-Lavalin. SNC was advising Nalcor at the same time as they were found to have engaged in kickbacks and shenanigans at home and abroad. The possibility of such malfeasance may well be put to the test at the Inquiry. Could SNC have cooked up the facts to suit Nalcor and GNL's wishes? There may well be solid evidence revealed at the Inquiry to support this. Did this Quebec company at any time consider the long term ramifications for failure and the resulting opportunity for Quebec and HQ? The Inquiry probably won't reach that far and it will be left to speculation.

      The point to remember is that corporate Canada, the Feds and other Provinces all earned benefits from the project's sanction. Off the top of my head, the benefits reports showed significant billions flowing into Quebec and Ontario. There were players outside NL who pushed for sanction and ensured they got a piece of this megaproject. Those from outside the province should not be afraid to shine a light a little closer to home.

  16. Etienne
    On item 1 you are mostly right.However, you did admit the Feds have some responsibility.
    Why did the electorate not object. It was presented as the least cost, and that the other alternative would see power rates rise more. It was backed by Nalcor`s many consultants. But this argument only goes so far. When concerns were raised, few took notice, virtually no one showed up to the PUB. No businesses protested.
    Around 1905 , Morine , a MHA who originally came from PEI, I think, stated that Nflders were too green to burn. Meanwhile he, a lawyer, and a Nfld MHA, was on the take, thousands of dollars from Reid who owned and operated our railway and coastal boats. The term Newfie, to imply someone who is backward, lazy or stupid, was coined by the American servicemen here during WW2. Yet as workersoutside Nfld, Nflders ahve a good work ethic. Given the size and impact of MF, one must question the observations of those in the past, and present, who , like you, wonder how Nflders could let this happen, and still show little concern, especially the younger generations, and students of MUN.

    Item 2, yes , I turned 70, was a graduate of MUN and NS Tech, and worked on CFs and the island power grid. Most here are retired or close to it.
    Item 3, Todays Telegram piece by Brain Jones says Nflders have been bullied for 500 years, from the fishing admirals, merchants, to the present politicians. Can this explain the indifference. Maybe in part.
    Also , we were about 150 years behind the USA in terms of education institutions. We were the first British colony and perhaps treated the worst. I have no love or affection for the British or their Empire and their legacy. I have family land deeds from 1884 that shows my grandfather, the purchaser, and also about 6 family names, as the seller, not one could write their names, all with an X mark. Perhaps the many small isolated villages, beholden to the merchants and politicins, may explain in part the past, but seems not to explain the present so much.
    Develop or perish was often a theme. Joey Smallwood failed in perhaps 80 percent of his attempts for industry here, but as Heracles says , CFs was successful and a good project.
    4 Monroe had foresight, maybe some, but … the late 20s the writing was on the wall to the build up of of debt in Nfld that led to Commission of Govn, so not much foresight there. Some who had foresight to develope Labrador were twarted by St john`s merchants. Often rights were giver to British people for 100 years without a requirement to do anything, so they could hold it for speculation.
    Just last year a British company , that from my research showed had only 12,000.00 cash balance were given right to timber for all of the Northern Peninsuala……and I shake my head in disbelief that this come happen.

    So, again , my admiration for the people of Quebec who would not put up with such foolishness, to be fleesed by such scallywags as happens here.
    Winston Adams

  17. Hey boyz; Seems like the powers have shut down the leaks from people who have been feeding us Shadow Inquiry data. Planet, Engr, insiders, Martin, tell us if the directives received from well connected lawyers have laid out the chill. These boys are playing dirty. Not surprised. What is the state of Muskrat project metrics. Public disclosure must precede the Inquiry, otherwise the Inquiry itself is fraud, a scam, a coverup, obfuscation, fake news, etc. Opposition MLAs step up please. That means you NDP supporters. Where is Harris?
    Good luck Winston, during your hard voyage, stormy seas will pass your stern, my b'ye.

  18. Yup….so here's the bottom line, guys and gals, and especially Mr. Justin, before 2041 the STARS AND STRIPES will fly over Labrador City and Churchill Falls and every place in between to St. JOhn's. You have had your chance and you treat us like embiciles. Harper gave us the loan guarantee with a vengeance, and a smug smile, to f….. the bastards, well we ain't taking it lying down. Well there are a few short years to fix it, and if no effort is made to right a wrong, you will have the Yankees not only on your southern border, and western boarder with Alaska, but also on your Eastern boarder, from Cape Chiddley in the north to Cape Race in the south. That is Some 10 degrees of latitude, so 600 miles as the crow or American Eagle flies. And the Americans have the Arctic, submarines prying the under water deeps as we speak. Canada may get one ice breaker up there for a whole two months a year. Canada is totally surrounded by the Yankees, maybe that's a good thing or maybe it's not, but NL will be a part of that great circle. Yup, America can pick their choice of where they want major facilities, maybe a seaport in voisey Bay Area, and HV-GB for its airfield , which they built 70 years or so ago. How pretty would that look totally surrounded by the Stars and Stripes, now try and negioate a free trade agreement there, or sell hydro power into the US of A, they will have their own power developed totally on the entire Churchill River. Yup the maratime hydro route will reign supreme. These are my projections within the next 2 decades. So wake up uncle Ottawa if you value the true north strong and free. Or would you let it all go for one measly failed hydro project. Do the right thing now before it is too late. The seeds for us to go, are been sowen, and the Canadian wolf will reap the seeds that they have sowen. Hear, Hear Ottawa there. Hear, Hear Canadians there….Cheers Americans here…joe blow, average Joe, AJ.

    • Wow Waldo, you are really lost now, in outer space methinks. The US won't even aid Puerto Rico, which they own now, why would they take on our leaky bankrupt state?? And don't go on about airspace and offshore oil and all the things that you think you own; you don't. But the bigger problem, is that you and NL'ers like you, think the sun shines out of your arse, you think the glorious isle is covered in pixy dust, and that there's gold under every rainbow from Cape Ray to Cape Race.. As many other commentators have pointed out, the NL govt and the NL people owe this debt, they created it, they blew their horns about being an energy warehouse for the world, they snubbed any collaboration, they were going to be masters of their own destiny. Now when that destiny is a sinkhole, they want somebody else to pay for it. And in the finest kind of NL tradition, they now hunt for suspects, they cough up conspiracies, they moan about how they've been screwed since '49 (and even further back when they get their xenophobia on full throttle). So now because you can't pay for your mistakes, or have the intellectual honesty to accept your boondoggle, you threaten to go home (or to the US) with your marbles. Waldo, old boy, you've lost your marbles.

    • AJ you seem to be an average Joe but you are clearly very intelligent – NL certainly has a right to self determination but this is not really on topic it seems to me. Previously you mentioned the power corridor through Quebec – In the 60’s Quebec was unwilling to grant thousands of kilometres of its land for the construction of transmission lines but there was also the issue that there was no firm client at the other end.

      More recently, you do realize that Quebec offered to build a power corridor for MF but Danny Williams felt the price was too high and opted for the Maritime Link.

      Williams may be right. I have no idea. However, HQ faces almost insurmountable hurdles bringing power to the major centres of the US. So far NH and Maine have both refused proposals to build transmission capacity through their states. Nobody wants to see high voltage transmission lines blight the landscape.

      Finally, it is certainly difficult to justify the cost of constructing thousands of kilometres of transmission lines given the current glut of electricity in the North East. The Maritime link is technically possible but UC produces around 10 times the current capacity of the ML. Quebec may be the only client for UC power after 2041 and no doubt they will drive a hard bargain: wouldn’t you? Isn’t that how capitalism works?

      Anyway, appreciate your point of view and hope you have a good w/e.

    • Hi,

      In this reference, DW complains about the price tag for a new line over Quebec. The thing is, HQ always knew that such a power line can not be paid back with only the low quantity of power MF can produce. It can be justified only when it is used for the maximum amount of power, meaning both MF and Gull Island must be built. Still, Nalcor asked, so HQ answered.

      Even when pleading its own cases, CFLCo acknowledged that UC could be justified only by developping the full potential of the site. The costs were so high for both the plant and the transmission line that it can turn profitable only by developping the maximum capacity. The principle is the same here.

      DW also complains the HQ refuses to be part in a project if it is not done the way they think is the best. Again here, there would be no point for HQ to go in a project they consider is not managed properly. Also, being a world leader in hydro electricity, it would be much smarter to listen to HQ's input when they advise against an idea or in favor of another. Of course, this is possible only if one stops the anti-Quebec attitude and hate speech to acknowledge that Qc – HQ has never been looking for anything else than Win – Win scenarios.

    • I wasn’t suggesting DW is in any way fair – simply pointing out that the problem is no longer Quebec’s refusal to build a transmission line. The lack of a reliable end client other than HQ and the increasing difficulty of getting environmental approval for unsightly transmission lines to the large markets in the US remain critical problems. Hell, as you well know, HQ has trouble getting environmental approval for its own grid even in Quebec.

    • Thank you Bernard and Hercules for you usual informed and reasonable comments, I appreciate. But my real message is to the people of LabWest. I know very little about lab west as I have never had the opportunity to visit or work there, I just know there are a lot of industrious and hard working people there. If I may sound a word of caution, be careful of masquerades, and trolls on your local media. Watch out for suspious people around town, or on the picket line, or as we use to call them plain old shit disturbers. I know you are in good Union hands but pay attention and don't get caught up in the rabble rousing, that normally occurs at stressful times like this. Just my thoughts, and if I am out to lunch again…just tell me…I have a skin like a crocodile. Cheers, have a nice day, Joe blow, AJ.

    • To anon 19:01

      Nobody talks about UC actually becoming a stranded asset (ie denied access to markets – that would be utter non-sense and will never happen).

      Discussion covers current electricity markets, and at what price CFLCo will want to sell its hydro past 2041. It can sell to HQ, or directly to the US/Ontario/NB (and pay the pre-set wheeling fees using the HQ grid)

      HQ being overwhelmed with surpluses, it will definitely not pay over market prices. And even so, HQ would require new markets to absorb its surpluses – otherwise this hydro would get wasted (which is already happening).


      Ex-Military Engr

  19. Whether the Feds have some responsibility here,as I suggested, if one compares to getting a mortgage, as discussed above, and Feds should have turned down the guarantee:
    Some say no, as Nalcor fudged the numbers etc and may have committed fraud, so Nfld fully responsible. This reply ignores that the bank had no requirement to technically or financial evaluate the the project, as it was guaranteed by the FEDs to the banks, and the Feds had this responsibility.
    Another Hearacle , saỳs the question is whether Nfld had sovereignty
    Seems this reply avoids the question of the Feds responsibility.
    Another says yes the Feds have some responsibility, and pointed out why.
    So seems no agreement overall on that question, 2 out of 3 commentators here from Quebec think the Feds have no responsibility, but those 2 stated reasons seem vague to me.
    Meanwhile , Nalcor reports figures I believe 9.2 billion spent so far, and Vardy cites real cost to be 13.7 billion, and if other issues arise, and likely will , final price of 15 billion likely. So yet to spend another possible 5.8 billion: and so the wheel goes round and round, and the public little concerned. Small and mediaum size contractors here saying work coming to a standstill, as to other construction opportunities.
    Nalcor made a little more profit, peanuts really, and from increased power rates and a bump in oil revenue.
    And while Stan promoted the mitigation value of importing power from NS, and did so for a few days, with almost no benefit per average customer, they refuse to make public the cost of that power from NS, likely dirty coal fired. So the lack of transparancy continues by Stan, as it was only 99 percent a PR event, and so will not release the numbers.
    Winston Adams


    • Winston, I agree the Feds must bear responsibility as they should never have caused the sanctioning of MF by giving the loan guarantee. Without the loan gaurantee it would never have gotten off the ground. It appears they accepted the "fudged numbers" provided by Nalcor and the Provincial Govt, (whether unknowingly or by Harpers desire to get back at DW) as gospel. Either way they allowed this to go ahead. I'd say Harper is "tickled pink" at our demise.
      With Nalcor and the Provincial Govt still holding back crucial information which we are entitled to is bordering on being criminal. Talk about lambs being led to the slaughter!!

    • Interesting concept…

      So for any Federal future loan guarantees (or whatever $ aid requests by provinces), Feds are better be aware what they are getting into – including losing any recourses if things go south. (Even if caused by fudged numbers, and subsequent incompetent / fraudulent(?) project management).

      Hey, I got a good grandiose projet for you. We got to host the next summer Olympics – in Montreal!

      And that won't be possible unless the Feds provide us an $8B loan guarantee…

      Anyone opposing this are "un-canadian" trolls!!! (Worst terms were actually used a few years ago)

    • You all should check out the Terms, under which NFLD joined Confederation in 49. Canada has done well by NL, and most provinces, and peoples in the land, would not object to helping the "Happy province", even during and forever in the sharing of resources and even financing of resource development. Build on the common good. Now get back to the need at hand. Practice better home rule and resource management. Muskrat is just that; Bad Project Management, Bad Energy/Resource Policy, Bad Governance. I'm confident and certain that MUN has graduated competent managers and Engineers, to do a better job. You can always buy some outside help, but you need to have better oversight when hiring consultants from afar.

    • Hi Robert,

      A good part of the problem is here : Democracy is not about capability, quality or competences. It is about popularity. The elected ones are not the best, the most qualified or the most experimented. They are the more popular.

      Those who created that fiasco, with their anti-Quebec speech, were the most popular.

      Even that is not enough to put an end to that anti-Quebec speech and people from Newfoundland keep blaming the Feds and everyone they can.

      That anti-Quebec mentality is rooted way too deep to just go away in an instant. It is up to leaders, non-elected leaders first, elected leader after, to shift that mentality and replace it with a positive one and motivated by Win – Win instead of Win – Lost.

      Most of the time, the things to do are not popular at all. So the one ready to do them are not elected / the ones elected will not do it.

    • I don't see where Heracles or Ex military has given a good rationale for why the Feds don't hold some responsibility.
      Heracles say we blame the Feds and everyone else. I do not blame Quebec or everyone else. Most blame go with NFld, but I do blame the Feds as enablers, I think that is clear, to me, to most , but not to Heracles or Ex Military.
      Nalcor said this project was needed and cost effective even if no exports to NS, as a stand alone, and might go it alone without the Feds help. If that happened, then yes, totally Nfld at fault….but the Feds came on board, when so much was obvious it would be a boondoggle.
      So come on, Heracles And Ex military, Nfld was fooling to do this, and the Feds too, and Quebec wise enough to stand aside.
      But you need to explain better why the Feds should get off scot free. Is there some bias in your position?
      For me, am I anti-Quebec? I dabble in stocks some, some investments in Canadian companies including Quebec companies, some profitable some not, but do ok, and personally rate Quebec high. Sure there are those that were mislead by DW, and a tough lesson, and some not yet learned the lesson, and that needs to change, but not by impoverishment of those ignorant and misled by divisive language of a few hate mongers.
      Winston Adams

    • Right on Winston, don't let Hercules or Ex Military change the subject until they answer that one directly. Don't let them beat around the bush, and spin it, to their advantage. Get then to answer the question directly. Bernard agrees with you, that the Feds have a responsibility. Why not Herucles, and Ex military????

    • Actually, BBD has followed their part of the deal.

      FWIW, For past BBD programs (CRJ, Globals, Q400 and Challengers), BBD has reimbursed MORE than it received in Fed repayable loans (via preset $ amount from sold plane).

      So far, so good…

    • Ex Military, I own some Bombardier stock.I bought in too high, and was losing about 60 percent, but stuck with them because They had great success in the past, were innovators, especially as to energy efficiency in design (as in mini-split heat pump efficiency), so, impressed with their latest air craft design, yet competing against world class air craft manufacturers.
      Them they made changes that was good to management and directors. The stock has climbed this past year, and I am now down about 20 percent, so good thing I did not bail out, and saw the value in their capability. I will hang in with this Quebec world class mfg, that made more than Skidoos, and recently outsmarted Trumpie with their alliance wit Air bus.
      No doubt the Feds see technical and other values in Bombardier to back them. But where were the world class capability in Nalcor? No justification to enable Nalcor on good grounds. So you make my point, that like "if the gloved don't fit , you must aquit". Don't invest or back a boat that can't float, you wound agree? DW said he would invest in MF if he could, but who believes that? He doesn't even want to give 3 acres of his 2300 acres of Galway to store snow in winter from streets of his own project! DW invest in MF,lol. Now is a good time, when it is near worthless, as Fortis and Emera knows.

    • Hi WInston,

      As I wrote in a few post already, this question goes down to Newfoundland sovereignty, because this is the direct consequence of your sovereignty and what you ask for is to ensure an overlord will always be on watch, will supervise you and will tell you what you can and what you can not do.

      In fact, in the past, that very situation happened a few times where external authorities prevented you from doing wrong and Newfoundland only complained about it.

      When one is to bad about huring himself, you are down with two choices : take his freedom or let him hurt himself until he as enough. In the past, Feds and others prevented you from hurting yourself and you were not happy at all about it. One day or another, it was inevitable that you would manage to hurt yourself that bad.

      That day is now.

      Still, it is not too late for that very choice, the choice of being sovereign or not. If you want to keep your sovereignty, than keep working out how to get out if this fiasco while in control of your destiny.

      If you would rather loose your sovereignty, it is not too late and by doing so now, you will be freed from that loan and the entire fiasco.

    • So you go to your Dad (or Mom) and say gee I'd like to buy that house (or car, or horse. or university degree). Your parents love you, and even though you've been a jerk, cursing them when they don't give you what you want, throwing prone-on-the-carpet temper tantrums, and you have demonstrated that you have no concept of fiscal realities, they co-sign that loan for you. You, being the immature person that you are, blow the loan and have nothing to show for it except more debt. Your parents are co-liable for the debt and your Dad (and/or Mom) has to work past retirement to pay for your debt, while you go off some new tangent that likewise has no economic reality, like maybe chopping down trees to make wood chips, or catching caplin to the determent of the seafood chain, or catching the last goddamn salmon in your rivers cause it's you "God-given right".
      Now in the case of the Federal LG, NL yelled and screamed that they wanted to build this dam because it would make them feel big and important, and would also allow them to kick their big brother QC in the knee. The Feds said to the banks, yeah they are a bit immature to take on this dam, but they've told us that they can do it and we really don't want to be snooping around their bedroom. So banks here's the deal, says Ottawa, we'll let them use our credit rating, but the debts all theirs.

      So UG, Winston, Wayne, Waldo/AJ, etc. where does the FL agreement state that Ottawa owes us anything? They didn't give us the credit card, they just said NL is good for the debt, as NL requested. If the debt goes on the federal credit card what are you willing to sell off to repay?

    • Heracles, some of your opinions are solid, some are silly, I suggest.
      You say in the past external authorities prevented us from doing wrong and hurting ourself. I have pointed out before that a century ago, Nfld Prime minister Bond negociated a free trade fishing agreement with the USA. Canada objected,and mother England sided with Canada against Nfld. Doubt if Quebec sided with Nfld? Were they preventing Nfld from hurting itself then? And the foreign fleet desimated our cod and capelin, and did Canada seriously object to protect our fishery, least we get hurt? Just a couple of examples that being small in population , our sovereignity means little, and from 1949 to 2016 we never had a single judge on the Supreme Court, so what clout did we ever have? Not excuses for this boondoggle, but desperate people may do desperate things, and no friend hands him a rope to hang himself, as you suggest. We are a small cog in a big wheel, with too few patriots as was Bond, who in 1894 put his money to back a loan to save our government here.We have too many politicians who take for personal gain, rather than for the public good. Our history is a complex one, and you simplify it as if we are on a suicide mission, so let the Feds give us the rope. Do you think maybe you are a bit mean spirited here, maybe due to not understanding our history sufficiently?

    • Hi again Winston,

      Nobody is living in a paradise down here… Quebec and everyone else had their own lot of trouble over the course of history. As I mentioned in another post, the only thing that is as important as knowing your history is not to live in it and honestly, I am pretty sure Newfoundland -IS- living in its past.

      For how long did the French citizens in Quebec have been oppressed by the English minority ? I do not have a precise timeline about this, but be sure it was for a very long while. This past is over and we are now in the present, looking for the future. Despite this past, it has always be very important for me to learn English and still today, I keep learning and practicing it.

      Feds told you all about the risks associated with the guarantees and still Newfoundland chose to go with it. Nobody pushed you. HQ told you the actual price tag and you rejected them just because it did not fit your mind. So did SNC in their report that was discarded.

      About presence in the Supreme Court. Quebec has 3 seats guaranteed because our legal system is based on civil law instead of common law. So the court must have some expertise about this different system and in these courts, you must always have an uneven number. A single one would not offer any opportunity for different opinions. Two is even, so three is the minimum and that is why we have them. What is different in Newfoundland legal system for it to require a special presence ? Tell me how many judges were from Saskatchewan , Manitoba or Prince Edward Island ? As of now, none of the judges are from these provinces, or from NB or NS.

      Newfoundland is not only living in its past, it seems to suffer from the dwarf syndrom, the one depicted in the kid story I already wrote about, the Frog and the Ox. At the end, the Frog is the only one puffing itself beyond limits. Everyone else told the Frog to stop but there was nothing to do.

      Newfoundland puffed itself beyond its limit and it bursted… What can we do about it now ? We can not go in the past. We can not pretend it was anyone else and just pay for you. That would open the door to all kind of mis-management and negligence as Ex-mil illustrated with his project of summer olympic in Montreal. That ended up as a gigantic white elephant but at the end, we paid for it ourselves. Time to Newfoundland to pay for its own elephant now.

      To help someone, you must not shield him from the consequences of his own mistakes. If shielded from them, he will not learn and will repeat it again. There are no difference between Peckford Pickle Palace and Muskrat Falls. That is the evidence that with MF, Newfoundland just repeated the same mistakes because lessons were not learned.

      Hope this time, you have been hit hard enough to learn it while not too hard for not surviving it.

    • Sorry guys, was away a couple of hours (drove from Montréal to Gatineau).

      At the time of the first LG, even Quebec was somewhat fooled. We figured that if MF was to go ahead, it would get constructed as intended and would end up dumping "subsized " power in the already depressed US market. That LG also explicitly favored the Anglo-Saxon route. We complained, and were told to f…o..

      We just saw the LG as an unfair subsidy that would further decrease MF hydro costs.

      The excessive projet risks was not brought up / perceived by anyone then, not publicly anyways.

      I suspect the Feds smelled the risks (at least part of them) later on, as the LG contract took sometime to get finalized.

      Clauses were added (at the first or the second LG?) that in case of default, $ would be collected via increasing rates. (Were there any other default clauses?)

      What's the point of having a contract (expressly to include default clauses) if you're not to apply it? Because you failed to properly assess the risk of failure? That doesn't make any senses.

      At one point in my DND life, I was involved in acquiring properties. We included dozens of clauses to protect our asses. Sometime due diligence was rather minimal (rushed to close the file), but all those clauses were still bullet proof, no matter what.

    • Ex- Military, you say "the excessive projects risks was not brought up/perceived by anyone, not publicly anyways"
      Surely you would not lie to UG readers, and must be an error on your part, as many publicaly stated the risks, some cited many risks , some a few. I mainly on the impact of future reduced energy use use to heat pump technology, 3 pieces printed in the Telegram paper, prior to sanction, whether that qualifies for being public? Also presentations on the same to the PUB, is that public.
      Some others, especially Vardy, raised many more risks in public.
      Perhaps your long drive dulled your recollection, or your were not so engaged back then in MFs? As a fellow engineer, I give you the benefit of doubt as to why you would make such a statement that is false, and ask you to explain.
      Winston Adams

    • Actually Winston, back then I definitely did not follow the technical merits of this particular project, nor was aware of the magnitude of the risks.

      I only followed this project from a distance, via mainstream media's.

      So yes, "I'm guilty" ;-).
      I did not look into, nor was aware of those excessive project risks at the time.

      If you read my comments here (only started reading / participating in UG about what, 18 months ago?), you'll see that my contributions were centered on the 1969 UC contract, its logics and its win – win aspects. (As I had read a few court decisions backgrounder).

      I only learned here (thanks to Heracled) that HQ was fully aware of the boondoggle in preparation…

    • I thought that may be the case, and I and others value your input here, and that you know some here were vocal about the high risks early on and were, and still largely ignored.
      So, the Feds too had to be aware of these risks. Not only Nalcor but the Feds ignored the naysayers here, who understood the technical and financial and other risks. A few naysayers here, publicaly stated, wrote and made presentations about the risks and knew, as did HQ, that MFs was a big gamble that would be a failure.

    • Thanks Winston. And I reiterate our great appreciation of your contributions. You are always caring, balanced and very knowledgeable -> including in heat pump technology 😉

      I wished everyone had your character.


      I agree that I'm kind a pain in the A relating this LG.

      My current (Fed) field of work (for about 20 years now) is about management accountability, control effectiveness, operation efficiency and yes, above all, risks management. Also, about 15% of my work is alongside (or for) the Auditor General of Canada office. I do the exact same work as the OAG, but for a specific Fed Department.

      Around here, we have no patience for irresponsibility, accountability avoidance, gross incompetence and fraud.

      So that concept of MF debt forgiveness really gets to me as total non-sense. I guess I got a bias due to my work, and I might gain in obtaining more forgiveness /caring characteristics.

      Ex-Military Engr
      (using another PC)

    • Hi Ex-Mil

      With your QC base, what do you make of what was going down, about the time of the Mtl Hospital scandal and Muskrat were moved forward?

      The 2004-2011 tenure of Arthur Porter, a politically active Montreal physician, as the hospital's CEO attracted extensive media scrutiny which intensified when it was revealed that he had received $22.5 million in consulting fees from SNC-Lavalin. After receiving these payments, Porter awarded the firm with a $1.3 billion contract related to the construction of the hospital. These dealings were found to be in violation of the Quebec Health Act, and along with the emergence of other questionable business activities undertaken by Porter, led to calls for his resignation. Nevertheless, the hospital's board of directors came out in support of Porter, who, in light of mounting media and public pressure, voluntarily resigned on December 5, 2011.[14][15]

      Further investigation of the case by Quebec anti-corruption investigators resulted in allegations to the involvement of SNC-Lavilin and health centre employees in fraud and forgery. The investigators then issued a warrant for Porter's arrest on February 27, 2013, on charges of fraud, conspiracy, breach of trust, taking secret commissions and money laundering. Porter had since left Canada, and was apprehended by INTERPOL agents with his wife in Panama, where he remained imprisoned awaiting extradition to Canada.[14][15]

      Porter died just before midnight on June 30, 2015, at a cancer hospital in Panama. His death was announced on July 1, 2015.

    • This was the same Porter, who was appointed for a time as CIS oversight by a brilliant PM of the day, who also guaranteed the MF. Certain VIPs of SNC-Lavalin at the time, were practicing project management for the Ghadafi family. Was Porter also involved with Muskrat, and will some of this come out in the Inquiry?

    • Actually, I really appreciated that the Quebec anti-corruption cops did their jobs, and pursued Porter (among others) up to the very end. (Follow the money they said…)

      From my own professional community (private or gvt, spanning all across Canada), I can tell you that fraudulent activities like those are definitely not restricted to Quebec.

      So far, a couple of jurisdictions had the guts to tackle big time the problem. I wish there would be more. (Believe me, I'm doing my part)

      Ex-Military Engr

    • Good on yuh Ex-Mil.

      Independent audits of Contracts, would catch a lot of skullduggery and crooks. Project Management, Construction Management, EPC, Design Build, PPP, Government Contracts sure bring out the worst kind of corruption.

      The recent contract awarded by Gov'mt to IBM, without Public Tender is a case in point. The Shipyard contract is another. No doubt you have had similar experiences, having found out the fake and false claims by suppliers/contractors, and had due diligence silenced.

    • I definitely don't work at PWGSC, but I can tell you this National Shipbuilding Program is something, to say the least. (From old buddies, still in uniform, procurement side…)

      Keep following this Vice-Admiral Mark Norman file, we might learn some interesting stories.

      Ex-Military Engr

    • Public Works prior to Mulroney, was the Standard of Excellence in the Design and Construction industry. During the next 6-8 year period, the organization was "privatized", civil servants, mostly experienced Architects, Engineers, Project and Construction Managers were retired or sent packing. Gone were the CCDC standards of fairness in contract administration. Lobbyists were free to practice their chicanery, and "on time on budget" lost its luster.

  20. The price of oil is rising and i'm worried the Ball Regime will use the extra funds to buy the next election instead of paying down debt, decreasing the rediculous $2milion/day borrowing or pay done some boondoggle principle. All very wise but probably not help with votes. Remember, they only need to bribe 51% of the voters.

    • Winston: In answer to me above you wrote that

      "We were the first British colony and perhaps treated the worst"

      Are you serious? Compared to the fate of the indigenous peoples of North America and Australia, of the Afrikaners, the Acadians, the non-white inhabitants of the British West Indies, the Irish, the Highland Scots, and scores of others, Newfoundland was well-treated indeed. Life was indeed harsh…but was it any worse than the average English farmer or fisherman's?

      The Beothuk might gently remind you that Newfoundland was not exactly a passive victim…if they had not been thoroughly exterminated by your ancestors, that is.

      I think Heracles is too generous with you: you do not live in the past. You live in a purely fictional past, one which supplies you and (I fear) too many of your fellow Newfoundlanders with a ready-made narrative which allows you to explain away all of Newfoundland's problems: Newfoundland is and always has been a poor helpless victim, to a unique and unheard-of degree, so let's sit back and do nothing except cry together in self-pity, because what can we do?

      I used to think that the rampant anti-Quebec hysteria in Newfoundland was nothing more than a cheap ploy by your Townie elite to keep ordinary Newfoundlanders' attention distracted while they went on sucking the province dry (the various court challenges to the Churchill Falls contract, for instance, are a nice example of money transferred from the average Newfoundland taxpayer to various legal firms, to give an obvious example: indeed in some ways one could argue they served as a template for more large-scale wealth transfer schemes across social classes, such as MF for instance), but Heracles' comment above, to the effect that Quebec's history under British overlordship hasn't exactly been a bed of roses either, makes me wonder: could (perhaps only some of) the Anti-Quebec sentiment in Newfoundland be due to Quebec casting a shadow upon Newfoundland's fictional narrative? After all, this narrative takes it as axiomatic that Newfoundland, on account of its past, is powerless to change its future. Yet Quebec, whose francophone inhabitants were, a century ago, as poor and as little-educated as Newfoundlanders, has managed to turn into a far richer and better-educated province today. This might suggest to Newfoundlanders that perhaps you are not quite so helpless, that perhaps resistance is not quite so futile as your Townie Elite would have you believe, that if you followed Quebec's example you might -NO. Unthinkable. UNTHINKABLE. Quebec is corrupt, Quebec is evil, Quebec is an unspeakable Frenchie Other (INSERT HORROR MOVIE MUSIC THEME HERE) which is NOTHING LIKE sweet innocent victimized morally pure little us.

      Whew! That was close!

  21. Winston: In answer to Heracles above you wrote:

    "I have pointed out before that a century ago, Nfld Prime minister Bond negociated a free trade fishing agreement with the USA. Canada objected,and mother England sided with Canada against Nfld."

    Yes, and during this time period neither Quebec nor Iceland could sign any treaty with a foreign country. Strange that both societies are more educated and prosperous than NL is today.

    And the foreign fleet desimated our cod and capelin, and did Canada seriously object to protect our fishery, least we get hurt?"

    To repeat a point I have repeatedly made here, Iceland, a separate country with less than half of Newfoundland's population, somehow succeeded in protecting its fisheries.

    "and from 1949 to 2016 we never had a single judge on the Supreme Court, so what clout did we ever have?"

    A judge's job is to interpret the law, NOT favor their home province. Meaning: The presence of a Supreme Court judge from Newfoundland would not have changed the outcome of any of the judicial challenges NL lost.

    As for political clout more generally…err, you do know that Newfoundland, and Atlantic Canada more generally, is quite OVER-represented in the Senate, right? (with 30 seats, Atlantic Canada has more Senate seats than Quebec, which like Ontario has 24, despite Quebec having well over three times Atlantic Canada's population). Nothing new under the sun: since 1949, NL has *always* had a share of Senate seats quite in excess of its share of Canada's population.

    I have already mentioned the relevance of Iceland to Newfoundland, but I think I need to add a key point: Quebec, Iceland and Newfoundland were all social and economic backwaters in the mid-twentieth century. Quebec and Iceland have somehow managed to progress far more than Newfoundland has. Yet what do Quebec and Iceland otherwise have in common? Very little.

    Meaning: if both of those societies managed to climb their way out of ignorance and poverty, and Newfoundland has not, it is likelier (Occam's razor) that the reason lies in something specific to Newfoundland.

    The suggestion I made earlier here at Uncle Gnarley's -that Newfoundland identity is perceived in a very negative light by Newfoundlanders themselves- may or may not be the correct answer. I have many fine and wonderful qualities (and am willing to discuss these if anyone wishes to), but I am not infallible.

    But I am convinced that such an explanation, *with Newfoundland as its focus*, is required if the contrast between the post-1950 history of Iceland and Quebec, on the one hand, and the post-1950 history of Newfoundland, on the other, is to be explained.

    Most proposed explanations I have seen here -regarding political corruption, voter apathy, lack of available information -strike me as descriptions of symptoms of a problem, rather than attempts at zeroing in upon and identifying the actual problem which generates all these symptoms.

    • Etienne,
      My comment about being the worse treated colony had barely left my keyboard when I realized it was not correct. I was sure someone would correct me, and I welcome your correction.
      I have read of British atrocities against African countries and others, and treatment of Nfld pales in comparison. I was thinking more so in terms of Nfld being of English and Irish stock and still treated badly. Indeed many British benefited and became rich from the slave trade, but we learn mostly of the USA mistreatment.
      And the Beothic also, by our ancestors, I am well aware , and a shameful part of our history, and sometimes wonder if our bad luck is a Beothic curse.
      I too seek a better explanation of why we have not progressed more , as you point out. The pirate Peter Easton easily coaxed Nflders to his trade, as preferable to the British navy, so maybe we have a problem that is inherent?
      I read of your Quiet Revolution in the 1960s, so maybe ours will come eventually.
      You suggest that if we followed Quebec's example……Indeed , I have suggested as much, and more so, that we should be one province, and we learn from your struggles.
      That I have said this before and not get substantial negative comments from Nflders, suggests that anti -Quebed feelings here are not near as much as you think.
      That much of our problem is St John's elite based, I think so, as rural Nfld put us into Confederation, not St Johns.
      Winston Adams