Noticeably more people, including readers of this Blog, want
to see public discussion of a resolution to the financial mess created by
Muskrat. While their numbers are still small, their voices are discernible. It
seems that most people are still in denial as to the scope of the problem. Delusion
causes them to believe that government would never imperil the solvency of the province.
Yet, as one Muskrat watcher observed recently, the public will be in a “rage when they learn just the simple truths” of what the project will cost them in relation to the cost per KWh of thermal generation at Holyrood. Likely, that rage will be compounded when people learn the extent to which the Tories and the Liberals failed to share with them the whole truth of the debacle.
just one or two percent are needed – provided that they are focused and
relentless – to cause a shift in government’s thinking. The voices of even this
small minority are required right now. They need to have the Ball government make
one important addition to the decision that created the Muskrat Falls Inquiry.
impact. It is akin to waiting for the bank to say “no”. While the details are
complicated, the larger picture isn’t.
It has done this while it shovelled billions into an investment that, without
wise intervention, will – for 50 years – need to be subsidized by billions
so that people will be able to afford to heat their homes? No one. And rate
mitigation is a momentary Band-Aid.
multibillion dollar crisis. Part of the problem is that Muskrat is unique in
that professionals and generalists alike are equally challenged to understand
its sordid underpinnings. Many, including engineers and accountants confess –
without a hint of contrition – that they are not informed enough to appreciate the
legacy building and stupidity anyway? Most
people have no time for discussions about the principles of construction
estimation, demand forecasts, price elasticity, the Water Management Agreement
or an appraisal of whether there is such a thing as an “independent” engineer –
or any entity with an involvement that is not just self-serving.
– as if out of nowhere – even as they express the unwarranted sentiment that
Muskrat is solely a NL problem.
that the issue is resolved. They should be careful what they wish for.
the Feds off the hook as Muskrat related debt continues to grow.
reasons we worry about him.
Telegram reporter James McLeod quotes the Premier about NL’s financial woes and
whether the Feds are engaged in the issue. He told McLeod that Federal Finance
Minister “Morneau and the Prime Minister is aware of the situation, and
discussions are happening”. And Ball added: “There’s no need to have that
discussion (about bankruptcy) right now, because we’re having better
discussions at better tables”.
“better tables” are being visited and the nature of the discussions underway.
parties involved are and what has been put on those tables on our behalf.
leadership on the deficit or on budgetary issues generally. We have reason to ask: what is it that
affords people to think that this Government has the skill-set to navigate a
problem so large that it is defined by the starkest of choices: 50 years of
deep fiscal pain or insolvency?
unwise if they allow the solution to Muskrat to remain out of their hands. They
might remember that that the then Government’s hyperbole and untruth paved a
path to Muskrat Falls sanction. Ball has failed to show how his Administration
is any different.
huge. It will affect lives and jobs and public services. And it will threaten
new investment in the province. The problem should be dealt with now but any “fix”
must not only include the Feds; it must be negotiated by skilful people. Wee before
any conclusion is reached the public must be consulted.
Commission of Inquiry into Muskrat Falls for these solutions. The Commission
has simply been directed to consider “how to balance or apportion the financial
costs of an electrical generation project like Muskrat Falls as between power
consumers and all of the Provinces’ taxpayers”.
Nor is the timing of the Final
Report in alignment with our deteriorating financial condition – which will speed
up once commissioning occurs and the requirement of another $850 million annually
(and rising every year for the next 49 years) is required to service the
interest and the operating cost of the project.
not partisan hacks or the fake experts behind Nalcor – should be assembled and
given a mandate to analyse the state of the Province’s finances. The Panel
would recommend the most viable solutions available to deal with our impending
and a federal election are held in 2019 with an electorate denied the facts as
to a Province in peril. It would be even more parlous if the Government rolls
the dice on amateur hour – putting assets on some as yet unknown table –
robbing in the bargain the basis of any hope this province has for a brighter
to influence the Ball Administration and alter an incomplete or unwise outcome of
our financial circumstance have their work cut out.
“There’s no need to have that discussion (about bankruptcy) right now, because we’re having better discussions at better tables”.
The Gull Island Sight for future power projects along with some of the fiscal responsibility for Muskrat Falls and the Upper Churchill will be handed over to the Quebec Government via Hydro Quebec in return for a one time debt reduction of 6 to 8 billion. I other words, 2041 and our dreams of a "Have not we will be no more" is off the table and that is exactly what Quebec wants and will get.
Thank you Danny Williams for you great wisdom and insight into the energy markets and project development. Thank you for your legacy project which in the end is just another failed Mega Project like each premier in that past has completed. Time for some criminal investigation and not an inquiry.
I would agree with your depiction. Unfortunately, Danny is a better politician than mega project planner, so he will flip the narrative and say everything was going great when he left, and those in power who followed him are the one who screwed things up with the project, the current crop of Cons will latch onto that and use it come election season – and it will probably work.
And this is where we are now!!!
DT, I agree totally that he will do a song and dance however this was not a great project long before Danny. He has to own this for many reasons… he put the World-Class Ed and Gil in place. Also, as I stated a few Blogs ago, naysayers brought much attention to issues long plaguing this project way back when Danny was scheming for much needed power for his development and march to billionaire status. I'd like to think Danny would not be so careless/carefree with attention to detail and his money into Galway. He will always be the face of MuskratFAILS… whether he likes it or not.
Those 'simple truths' about how much Muskrat power will cost compared to Holyrood has been publicly available since around 2012. I wrote then that Muskrat power would be 8 times more (an average of $700 million a year compared to Holyrood's 10-year average of $92 million a year) — early Telegram articles/letters available at http://www.vision2041.com , and graphics at http://www.vision2041.com/holyrood.html .
Still awaiting the "rage" —- and where were the experts then?
A handful of us saw through the lies (least cost, clean, an asset in perpetuity etc.)from the outset, we two among them, that saw that hubris, lies and fraud in both the engineering and sole sourced, untendered contracts were the sole justification for MF .
It was not a lack of information but a lack of gonads that led to the silence of the NL lambs. It still is!
The charade continues accepting the flawed TOR for the inquiry headed by a single political appointee. The timeline conveniently renders the outcome useless. The process is flawed and designed to exclude the ordinary citizen from participating.
Ahhh….. great to see you back Bruno.
Agree with your inquiry comment.
Welcome back Bruno! Please help us…
Welcome back Bruno. This Blog is the real Shadow Inquiry. Join with the Citizens' Coalition and your valued analysis and comments will help inform the great and unwashed!
The comment by Ball `we`re having better discussions at better tables`, caught my attention as well. 500 dollar a plate fund raisers for the Liberal Party seen well attended. And, if memory serves, did not Brian Tobin help organise a dinner for Ball a few years ago at 10,000 dollars a plate, or maybe I dreamed that.
Now, who but the rich and well connected people and corporations can afford such a dinner, which has more to do with cronyism, and favours to follow for those who definitely do not attend such dinners because they are hungry for food.
The comment by Am Tadd, (Tadd being the nickname of Am Drover of UpperIsland Cove, comes to mind.
About 30 years ago, Am had made a visit to Dr Aidan Drover, also from Island Cove. Aidan had been a classmate of mine at school. In the 1960s he did medicine, and I did engineering, while everyone else from our community of that year studied to be teachers.
Dr Drover, after an examination, informed Am that his problem was that he was overweight, and needed to lose 25 or 30 pounds.
Am, one of the more witty people from Island Cove, pondered this advise, and commented: ` Now Dr Drover, I lived through the Depression, and seen many a time when I had nothin on the table except me two elbows. And now I can afford to eat. And your there tellin me that I can`t do that.` Am`s words soon made the rounds in the community, causing many to smile.
Yes, indeed UG, what is on the tables, and who the parties,that Ball refers. Too many forget the days, and the tables that Am Tadd experienced, and why the tables were often bare. If we are not careful, history may repeat.
Okay, so let's cut to the chafe and consider UG's assertion or advice that: "A panel of financial experts ……should be assembled and given a mandate to analyze the state of the provinces finances". I agree with that. But how can it be accomplished, given our system of government. We as individuals cannot decide that, not even the 1 or 2 percent of the population that was mentioned, if they were all on side. Only the government could call for a public inquiry on muskrat, so guess it is only government that could assemble and give that mandate. Are you suggesting that it be added to the Leblanc inquiry?? Or a whole new inquiry? And then a fincincial firm like EY might be given the mandate. Is that what we want?. Or maybe no firm, just individuals. Would they be paid, how much? Who would decide their credentials, their expertise, their commitment, their non-bias?? It raises more questions that it answers. Of course, you have government expertise in how this can be achieved, I don't. But agree it was public pressure by a small group of concerned citizens that forced government to set up the current inquiry. Is this how you are suggesting it be accomplished? As I have mentioned before, this should be done by all political parties, to give us their plan before the next election, and not after, so we can make the right decision in electing the next government, rather than on promises alone. So, yes you could say I am rather skeptical in this happening, but just trying to be realistic, but I do agree with this approach, but how do you convince others and government, ask average Joe.
Out of curiosity, who would those people be? MUN's economists have been compromised by Locke, the business community is short of both talent and high level expertise, and the two most knowledgable non-partisan Newfoundlanders in utilities and finance, Brendan Paddick and Stan Marshall are both wrestling with NALCOR.
Not only is the "business" community short of talent, they're heavily dependent on government largesse ("grantrepreneurs"), and the vast majority of them were complicit in both the wastefulness of the Williams years, and in the Muskrat madness.
The more of these wannabe tycoons, especially in St. John's, who go bust, the better off we'll all be.
I suggest the province of NL approach the Norwegians and both the federal and Quebec governments to seek the assemblage of a board consisting of retired executives,civil servants, and similar experts skilled in the management of finances and energy development projects. The homegrown crowd just doesn't have the smarts or detached objectivity for such a task… indeed, they are as a bunch of little children in need of adult supervision… demonstrably incapable of properly managing their own affairs.
Some immediate suggestions:
1. Public Sector, any and all, wage rollbacks of 5%, 5% and 5% for the next three years.
2. Privatization any and all crown corps such as NLC, NL Hydro, etc.
3. Dismantle Nalcor.
4. Immediate negotiation with Hydro Quebec for extension to Churchill Falls contract with MF debt included in return for static rates. It's the only card we have left to play.
4. Sell any and all provincial assets not considered absolutely necessary.
5. Sell equity stakes in Hebron.
6. Open the province for private healthcare services.
7. Accelerate the centralization of health care facilities.
8. Eliminate subsidy to MUN. It will be forced to rationalize offerings and be competitive.
9. Reduce and/or eliminate financial support to the 25 budgetary supported agencies. The first was Marble Mountain.
10. Term limits (maybe two) on premier and MLA's. And yes they can still keep their pensions. Say good-bye to career politicians.
Just a few thoughts from this corner. Not so sure this would be a winning platform for any party. LOL. But the alternative, in my estimation, is much worse.
While agreeing with Strategic Actions to match the dire circumstances, Keith, the real problem is the lack of trust with the current governance model. Rather like the dilemma faced in 1933 would you not agree. The magnitude of the mess warrants a Commission type approach. Harold Innes did a very competent major piece of Work on the demise of the NL and Atlantic Cod Fishery after the 30's market collapse, somewhat devoid of political bias. Similar analysis preceding implementation of your very worth while list of actions is in order.
Please point out all the unsubsidized universities in Canada, thanks!
And what would term limits accomplish, other than creating a class of MHAs who have no reason to listen to anyone?
In other words, all of the 10 points you made above wouldn't need to be considered if it hadn't been for Muskrat Falls. This is the first point you should have made and that is to stop putting public money into mega projects that the private will not touch with a ten foot pole.
It is Muskrat Falls that has gotten us into this mess and we now have no other choice but to pay for it. There isn't anyway out of it. It is going to mean less money for over sized houses, oversized trucks, quads etc, expensive vacations around the world and food, clothing and rent-and this is the only part that scares me.
Anon 7:04…The Williams/Dunderdale Administrations, from my perspective, were less-than-impressive as stewards of the public purse. From 2006 to 2010 the Williams administration added some 10,000 people to the public payroll. This, combined with generous salary increases and increased benefits, helped fuel the housing market. Rather than a more balanced approach (i.e. paying down debt and modest increases) the decision was made, with the blessing of the people, because as Randy Simms said, "We all know high oil prices are here to stay". Former Finance Minister Tom Marshall even said his first instinct was to pay down the debt but then he had a conversation with Wade Locke that helped change his mind.
The decision to sanction Muskrat Falls falls squarely on the feet of the Dunderdale Administration. Yes she was hand-chosen by Mr. Williams to carry out the his legacy project and the cabinet, for the most part, were Williams acolytes but they made sure it proceeded and now few of them can be found. The people of NL were on board as were the Liberals and NDP. There were few voices of opposition and those that voiced concern were dismissed and in some cases ridiculed.
The math on this project is frightening:
$12,700,000,000 / 520,000 = $24,000. That's $24,000 of debt for every man, woman and child in NL. Think about that for a minute.
In response to your point I am just stating some ideas given what is. No doubt Muskrat was the "coup de grâce" on top of questionable fiscal policy. I would argue that some of the points identified would no-doubt need some fine tuning but NL really needs to reflect on what the dead hand of Government, at all levels, has done to the character of the people of NL.
I take no pleasure in any of this. I have a small business and a young family and as for the future I find it more-and-more difficult to look ahead with optimism. The time for real action is now. What we need now is leadership not "The Way Forward".
Unfortunately the Former Finance Minister's first instinct to pay down the debt was changed. This should be a civil servant of a responsible government should do — to reduce the debt burden of the tax payers and future generations. But it is not difficult to imagine that politicians, bureaucrats, and economic consultants prefer not to do this because they themselves immediately gain directly or indirectly from higher current government expenditures; and simply leave the fiscal mess and fiasco to the taxpayers and future generations. What a conflict between private self interest and public interest!
"Each passing day the Provincial Government is content to let the Feds off the hook as Muskrat related debt continues to grow."
What "hook" are the feds being let off of?
The feds ate on the political and ethical (if not legal) hook for its enabling role in this fiasco.
Without the federal loan guarantee this mess could have (and should have) been stopped.
I'm not sure how well the Canadian taxpayers will feel about being considered "on the hook" for this boondoggle.
Espacely when we know the culprit that fudged the books (Nalcor) also possesses other assets.
The scenario of extending the UC contract / HQ managing MF, combined with providing power to both NF and NS (at similar rates than in QC) presents much more win-win potential…
(Assuming that MF can produce power "safely", and that its revenues exceed its direct "operating" costs)
Robert…your point is well taken. I just reviewed, yet again, the budget estimates for April 2018 to March 2019. The very fact that debt servicing will be $1.4 Billion this year, or $1400 Million, when we are only expected to generate $6 Billion this year. That's 23% of what is available just to service existing debt. It is forecast to rise for the next four years at a minimum…somewhere near 33% by 2022. Health care, as it stands today, costs $3 Billion and Education another $1.4 Billion. Beyond that we are borrowing to keep the lights on to the tune of another $1.7 Billion which of course is added to our provincial debt. Stats Canada (2016 Census) indicates we will have another 147,000 people over the age of 65 within 15 years yet only 74,000 in the 15 and under age bracket. At what point do we really confront the economic tsunami that is coming our way? Keith
Define the "normal" governance with regards Budget preparation and review.
Following elections, (say Ontario), Dougie is doing an audit to wipe away the previous government's flim flam numbers. Did Ball similarly clean up the books, and inform the public following the election? What is the state of the books today? Didn't Tom Osborn do a recent creditable review? Is an independent audit, (Auditor General, Grant Thornton on Muskrat, etc.), about to tell us all that is needed before the next election and for the Inquiry? Is a Commission in fact being considered? What is the Crosbie plan of action in this regard? Alternatives? What are the MPs doing and saying in advance of 2019 Fed Election? Will the CEO and Board at NALCOR be replaced before or after elections? I get it that you are well placed with government information and that the "quiet before the storm" must be "O me nerves" time for civil servants. Regards.
Do you all go along with this rosy picture on the debt management the Finance minister is spinning?
Suggested expert panel members to solve the Muskrat created financial problem are Danny Williams, Cathy Dunderdale, Tom Marshall, Jerome Kennedy, Derrick Dalley, Paul Davis, Dwight Ball, Cathy Bennett, Tom Osbourne, Stan Marshall, Ed Martin and Gilbert Bennett. Did I miss any of the architects/enablers of this fiasco? Oh yes, what about Harper and Justin?
Maybe we can arrange for a few windfall beneficiaries that are really good at counting large sums of money to help out.
Of Nflders, the list could be called The Dirty Dozen. But Locke must be included, so that is a Baker`s Dozen. To keep it at 12 would we drop maybe either Tom Orsborne or Stan Marshall. Maybe Stan say in.
Add the two attack dogs from Mount Pearl. Steve Kent and Paul Lane.
Indeed, of the original Dirty dozen, leasve our Tom and Stan and add Kent and Lane.
If we don't unite the enraged citizens into a voting block to take back the electoral power, then we will have no worthwhile panel of "experts". We simply don't have the power to install one. Who else can be trusted? Think about that for a moment.
Financial experts are like legal experts in two vitally important ways;
1. It was financial expertise and legal expertise (Locke and Williams as just two examples), that put us squarely into the worst financial disaster this province has ever seen.
2. Their primary purpose is to provide information to decision makers, and not to fix anything.
Genuine and righteous Leadership and hard-core (do whatever NEEDS to be done for the citizens) Management is what's REQUIRED on any such panel. As Peter Drucker (world renown management expert) put it;
"Management is doing things right, leadership is doing the right things."
In our experience in this province we haven't had that mentality in the “big chair” since Clyde Wells. Any such panel requires as it's primary prerequisite, “smart decision making” and we need to make damn/dam certain, that this time around it's “for the good of the people”.
Ah yes, who could forget the chant of 'Clyde lied' and the failed attempt to sell the assets of NL Hydro to associates at NF Power for a song, as they say.
You beat me to what I have been thinking.
In large part it was the "experts" and so-called experts that got us into this predicament, and I was about to generally make that point (but you have more precisely/expertly(?) made the point (not sure though about the Clyde Wells part).
It is leadership (making the right decisions), and not just an expert panel, that is needed.
Maurice, I don't mean to suggest that Clyde Wells should be re-elected in 2019, but he did show leadership and management skills and he seemed to at least attempt to do the right things for the citizens… vs… simply pilfering crown land or initiating, or willfully complying with corrupt schemes to mortgage the lives of babies for personal profits, as virtually all of our Premiers and/or MHA's have done since.
Lots of blame to go around including the "dirty dozen" but blaming the feds for backing the project is like blaming the bank for giving me a mortgage when I can no longer pay on it. The province asked for the loan guarantee and the province is "us". The big "we" also belongs on the list of those to blame for this shitshow.
JDW not so sure I am understanding what you are trying to say here. A bank would not lend you the money for anything, especially a mortgage if you could not pay it back. I think the Feds are largely responsible… as I said here before. You wouldn't get a mortgage from a bank if you did not have clear title on land. Why then would they allow for such large loan guarantees if the Water Management Agreement was not settled? Makes no sense. Everything these days involves red tape. Isn't it suspicious that something as important as this was overlooked? Almost like it this was set up for failure.
Sorry but disagree, the bank would be just as wrong to approve the unpayable loan as the feds were to guarantee the unpayable loan.
JDW—-BUT the Feds did not do "due diligence" with the information that was withheld by NL Govt and Nalcor. Anyone worth their salt had to know that MF figures did not make sense and that 500K people were unable to repay the money. The math was gobblygook.
Without the loan gaurantee this stupidity would never have happened.
Danny's Disaster will forever keep us poor. His name will be in infamy in this province forever.
I'm looking forward to the explanations the DW and KD put forth under oath when the inquiry starts on this IDIOTIC ego trip of a pathetic little man.
Have you never heard of a co-signer, or guaranteor. The banks and lenders have and that's why they did it…The Federal Government of Canada, whether you like it or not. Tough…the enablers. So also add "we" as in Canadians. Remember the main benificers are Nova Scotians, and the last time I checked they were Canadians too. And as further proof go back and read what Mackey and Harper were saying at the time. The loan guarantee was dependant on Nova Scoatia being on board. The facts are the facts, no matter how you want to twist it says average Joe. That's the history of the loan guarantee….and I'm sticking with it. And that's the starting point for further negotiations.
Right. Good luck with that argument. Of course there should not have been a loan guarantee but there were high fives and glad handing from Water Street to the Parkway when it happened. The fault Dear Brutus…
"A bank would not lend you the money for anything… …if you could not pay it back"
Well, it definitely happens that banks lend money when they should not. But those banks still don't lose their recourses, due diligences or not.
If, in order to obtain this loan (or LG), the borrower lies and fudges the books, then we may add the notion of fraud.
If you now add the political aspects, I don't see how Canadian taxpayers/voters would accept to be considered "on the hook" for this boondoggle.
Imagine any future federal subsidies, LG etc that can be associated to have "enabled" (indirectly or not) the go ahead of a project that ultimately failed. The feds would then be on the hook for this project, without recourse? Even when the borrower/defaulter (or fraudster?) have other assets…
==> Well, the feds would just stop the grants, contribution and subsidies business (FWIW, I also review federal grants and contribution programs – there are no ways the Feds can be held accountable for the failure of a project it "enabled")
From an accountability standpoint, legal standpoint or a political standpoint, I don't see how this notion of MF "free" loan write-off can fly.
(In my work, accountability is the big thing. When it lacks/is absent, the whole pyramid crumbles / falls apart)
Another Earth Dam Engineering fail, with consequences;
Maybe Jim Gordon could comment on what is a "saddle dam", and similarities with the North Spur.
.."Unfortunately, Ball did not offer a glimpse as to whose “better tables” are being visited and the nature of the discussions underway".
How can the Feds transfer $ our way, without it being labelled a bailout? Certainly won't be equalisation. Could be royalties? Or other assets?
Rate mitigation? Being studied in secret by a government committee,as they try and ratchet up the rates. The ideal rate is when diminishing returns kick in. That can be a wild, or educated or informed decision, somewhere between 12 and 18 cents, and even James Feehan will not state a number. And the natives are getting restless to know where we are headed.
Here are some numbers form HQ rates
For domestic rates,
Up to 1080 kwh per month, the rate is 5.91 cents per kwh. add 12.19 for your meter charge. So 63.82 + 12.19, so 76.00 per month, and this for max of 12,960 kwh per year. If 5000kwh is needed for regular use, it allow a small amount of electric heat.
If your are electric heat with a modest size house, the rate jumps to 9.12 cents per kwh past 1080 per month. In the winter if you hit 4200kwh, 3120 of those will be at the higher rate. So overall it is 363.00 per month, in the winter. Working backwords it gives an average winter rate of 8.6 cents per kwh.
Now with a small electric heated house, using overall 2000kwh in the winter, a winter bill would be 159.00. This equates to a rate of 8.0 cents per kwh in winter. If averaged over 12 months, the monthly rate may be about 120.00 say.
Now for the larger houses, the rate is 5.82 for the first 1200 kwh per month, then 8.85 for exceeding this. This works out to about the same cost as the modest size house if using the same power.
Now if you have a monster house, using a peak demand of 50 kw, then you get hit with a demand charge of 6.21 per kw, so 310.50 per month add on.
Even if you use only the same power as the large house, your bill would be about 363.00 per month plus 310.50 demand charge, so 663.00 in winter. This works out to 15.8 cents per kwh for the monster houses , that is the rich pay more, as they should,for using more of cost of the system during peak loads.
What is Dennis Browne saying as to our rate structures here.
And our meter charge , about 16.00 is about 30 percent more than in Quebec. Is that justified , or just another way to milk the ratepayer?
So Quebec rates in winter are 8.0, 8.6, and 15.8 depending on your power usage and peak demand of your house. Here we squeeze the little guy and the Average Joe.
The 5.91 cents rate up to 1080 kwh per months allows 12,960 kwhs per year in Quebec.
For Nfld, the average house is only about 1050 sq ft, and avg power consumption is about 15,000 kwh per year. This is only slightly above the 12,960 kwh for the Quebec 5.91 cent rate.
So for the bulk of Nfld houses, if using the Quebec rate structure, the average rates would be only slightly above the 5.91 cents, perhaps in the range of 6.5 cents.
So rates in Quebec for domestic use range from 5.91, to 8.0, to 8,6 and then up to 15.8 cents. Given the average size of Nfld houses, most would see about 6.5 cents if in Quebec.
Superb HQ retail rates info gathering Winston.
(FWIW, I just read that HQ average costs were assessed at about 3 cents/kwh)
On other news:
The 20 years export contract has just been submitted to the Massachusetts Department of Public Utilities. It specifies that it will pay 5.9 US cents/kwh (incl. 1.1 cents for transport) to HQ.
More details here:
Comparative rates for residential for 1000kwh per month, using Montreal as the lowest at a value of 100:
St John's 158
The above are provinces with huge hydro resources.
Moncton NB 183
Halifax NS 228
The above Maritime provinces lack huge hydro power
New york 420
San Francisco 439
I discussed our power rates with Lorne Henderson of Nfld Power in 2015, following PUB hearings and discussion on Conservation and Efficiency programs here in Nfld. I suggested that the costs of meeting our winter peak for electric heating (via Holyrood, with the plant and fuel costs), represented about 20 % of our costs, and if not needed our rates could be 8 cents instead of 10 cents, and so, not far off from Manitoba or Quebec rates. He agreed with that.
Had it been offset via efficiency, island hydro and wind our power rates would not have dropped to 8 cents , but might have gone up to 12 or 13 cents, but used less energy for houses, so yearly costs would have been equivalent to 10 cents. But such alternatives were not considered by Nalcor.
For comparative value as above, If with mitigation we get the average of Maritime rates, Nfld would be 205, if the same as NS, it would be 228, and if our rates double it would be 316.
Yet Ed Martin says with MF,in the long term we will have he lowest rates in the country.
As of last year actual rates in cents, including the meter charge for 1000kwh/month were
St john's 11.15
What kind of fuzzy math does Ed Martin use, and what time frame, to get us to having the lowest rates in the country, with shock rate increases around the corner? He is an accountant? From what university?
For a province promoted by Danny Williams as a power warehouse,
having huge hydro resources, we should compare our domestic rates with Quebec and Manitoba. Mitigation of rates to 17 or 18 cents, suggesting we are then similar to the Maritime provinces should give little comfort as to the the scope of what has happened. And mitigation just means more taxes and reduced services, robbing Peter to pay Paul. So the plan remains elusive.
It is a grave mismanagement of our hydro resource. Still, few have protested this injustice.
Nice numbers indeed Winston.
About the deal with Massachussetts, it makes me wonder what kind of analysis Nalcor and Emera did for their own offer and what price did they presented. The public document mentioned that it was flat rate for the entire 20 years, but no more than that.
Considering the transport cost for HQ will be lower (ground instead of subsea ; re-using part of existing transmission lines ; over a shorter distance), that HQ offered access to more energy, that it has existing commercial relations and that this project was not the first one selected by Massachussetts (it was Northern Pass, so this one is already less attractive than that other HQ's offer), I am pretty sure the Atlantic Link could not have reasonably expected a price for production any higher than HQ's of 4.8 cents. Even if they did and had a price tag for production of 125%, that would end up at 6 cents. Even in their dreams and lies they never contemplated a production price that low for MF.
Only power from UC would have been cheap enough to compete with that. But considering the two blocks (Twinco & Recall) are already sold at market prices, to divert them to Massachussetts would not have created a new revenu.
The only way the scheme can have been planned would be to keep selling the 2 blocks over HQ's transmission lines, to steal the 5 or 6 hundreds MW from UC to resell them also at market price and keep high price MF power for local use and as a cover for the rest.
Secrecy was required because of the illegal activity. MF was needed to cover and justify the transmission line. No other strategy would have created this cover, so no other candidate to review or compare with (wind, solar, battery, efficiency, …). Power rate of 20 cents would be close to the end result of mixing MF power with existing sources of power should the project have been on budget.
If that was the true plan for MF, there is no way to realize it or re-use it to find a solution.
As for what Ball refers to as better discussions at better tables, the only thing that I extract from this is that he is talking about solutions in which Newfoundland would keep its sovereignty. For that to be, Newfoundland must be talking about ways to trade its debt in a plan similar to what Keith described. As for the rest, who knows when they will inform the people. The bad thing is that the longer they take to inform people, the more people will go with their own solutions. For many and the most economically powerful ones, it means leaving, leaving behind them a situation that will be just worst.
Who said Hydro dams don't collapse?
So what is ball negotiating at better tables, as mentioned here, is it all in secrecy, like Putin and pp Trumpie, the charmer. At least with Putin, everyone knew who he was negotiating with. We don't even know that, or even if there are any negotiations going on. So more secretive than Trumpie. More secretive then a dictator. Seems like we have heard this song and dance before and it turned out to be a boondoggle. So Ball et al come clean with the people and tell us about your better tables, and what you are up to in secrecy. Meanwhile, the pub is so busy negotiating newer and higher rates for us as ball whistles his tune past the grave yard biding his time past the next election as he did in the last election. And chess and his best smugly roams the corridors with his Duce of spades, hoping ball comes up with sweet f…..k all. Democracy at its best thinks Joe blow. You are a wizard Winston on power rates, way to go.
A little more on power rates:
The comparative figures seems to be kwh rates without a meter charge, so when a meter charge is added, they should agree with the actual rates including meter charge.
So for Montreal, a rate of 5.9 cents when adding the approx 12.00 for the meter, comes to about 7.07 cents.
If we use the 158 relative figure for St Johns, it gives a rate of 9.3 cents, but when adding the meter charge it gives about 11.15 cents.
Also the rates were prior to the recent July 1 increase, so Nfld is now higher than I have indicated.
Also the cost of the meter is a much larger percentage for small houses. It is about 17% of the bill for 100.00 a month, but only 3.4 % of the bill for a large house using 500.00 per month. As the vast majority of house are small, and of lower income, they pay 5 times more for the meter as a percentage of the bill.
In Quebec, a house having a demand of over 50 kw gets hit with over 300.00 per month extra for that demand. Here, Danny Williams, and others, can use 100 kw if needed for their monster house, and pays not a cent for demand charges.
Here small business pays a demand charge if they exceed just 10Kw. Here, such a demand charge should apply to all houses exceeding 10kw, or maybe 15 kw, making the large houses pay a fairer share of the power grid costs.
As mentioned , in Quebec they hit you if you exceed 50 kw. 50 kw is a big load, and likely reflects Quebec surplus of power, but still is more than 300 dollar a month add on to the power used by the house.
Here, most houses have 200 amp service, and could easily be 150 amp if efficient heating was uses.
Here many house now use so much baseboard or electric duct heat, they double up and use 400 amp service.
A regular 200 amp service can use 48 kw,or about 38 kw if derated by 20 percent, so somewhat similar to the Quebec 50kw where you pay the 300 dollar demand charge.
A 400 amp service can use 96 kws, or 77kw if derated 20 percent.
So what do our power companies here charge for such a large 400 amp service? A regular meter charge is about 17.00, and for 400 amp they charge you an extra 5 dollars.
So, for 50 kw in Quebec you get dinged over 300 dollars per month. Here for 96 kw service you get dinged 5 dollars.
What class of people benefit from such rates? Who is paying for who?
Seems more than just Muskrat Madness.
How big is Dennis Browne's house, and should he be paying a demand charge? Is the poor and middle class providing him and others a subsidy on his heat by such rate structures?
I see a great potential for a spreadsheet here…
The time has long passed for an expert panel examination. What is needed is a panel to put forward changes to a political system here i NL that is controlled by big labour and big business conspiring to build uneconomical Mega Projects we don't need and will be paying for the next fifty years. And Please!!! Don't come and tell me how we need proportional representation or more information. What we need is a way to elect more rational politicians who will tell the public what they can't have as much as what they don't need. It is this policy that is missing from the political process.
Hi Anon 06:27,
Indeed, time is late. As to tell the public what they can't have and what they don't need, that is exactly what the Frog and Ox is about. Frog can not be as big as the Ox and does not need to be. It is fine and best as a Frog.
People in Newfoundland want to stay in small rural environments, that is possible. They would rather have access to all the services, this is also possible. But to have both, all the services in each and every rural location, that they can not have.
More, because of the very hard conditions piling up in Newfoundland as of now, just to provide all the services in few dense areas may end up difficult. The thing is, doing that is anything but popular. As such, I highly doubt a leader can be elected on this basis. Even after being elected, when a democratic leader try to do just that, he is hit by a gigantic opposition and popular movements.
So yes, Newfoundlanders need such a leader, but they must be looking for one, ask him to do exactly that, elect him and support him while he will be doing it.
The servicing of rural communities is pennies compared to the waste of human and financial resources on the Muskrat Falls Project. It is like comparing an ant to an elephant.
Just what services are you exactly talking about and btw this is the very type of misinformation that needs to be clarified.
All of the service you speak of are located on the NE Avalon like the monstrous civil service, Nalcor, all the hospitals, the failure called MUN and now the entire construction workforce that has to be fed with more and more Mega Projects to keep it going. (A disaster in the making was announced today for another GBS system) If you depopulated rural NL you would still have the Health Care issues just like Ontario does, the poor education system stemming from MUN and CNA that is still training people for careers that will never exist in NL and the ridiculous oversized civil service who just whom do they serve? Except for a few roads and the odd wharf, there are no services in Rural NL. Muskrat Falls and the philosophy surrounding it was our down fall and will be our demise.
Hi Anon:21:23 (Did you forgot to sign AJ ? )
I was thinking about examples I saw in different articles, like one where the government tried to save few millions by having people on call for clearing the roads instead of having them on a permanent state of alert. A lot of resistance and objection came, claiming that it would make road less safe.
You mentioned healthcare as an example. Once I saw an article on Nationalpost telling about a small rural community for which a dedicated clinic was kept open. As much as I am sure the road cleaning example would have been an easy cut, as much I admit that this clinic is in a grey zone for me. Is it justified or not, considering the actual financial situation and the state of other services around that community ? I do not know.
Another thing I learned about is how the unions blocked all attempts to downsize the public services. Again, this is not with a position like this that the situation can be managed.
From here, I can not tell you exactly WHAT is to be cut, but for sure, there are things that MUST be cut. Of these, it will be regrettable to have to cut so deep, but now at the edge of bankruptcy, there are not many other options.
For sure MF was the worst thing to do, but now it must be dealt with. Considering how big it is, it would be hard even for Qc. Considering Newfoundland is about 15 time smaller than Qc, dealing with MF will be thousand time more painful, if it is possible, for you.
And about the ant vs the elephant…. Do you know how you can eat an elephant ? One small bite at a time… Do not try to eat it all at once…
The vast vast vast majority of government money spent in NL is being spent on the NE Avalon and not elsewhere. Danny Williams increase in the numbers of civil servants and Tom Marshall's disastourest term as premier where he signed on to a contract that only exists in the dreams of labour leaders contributed to the state of affairs we are in now and for the most part was another attempt at propping up the economy of the St. Johns region to increase housing sales in Galway much like Muskrat Falls construction. If you want the savings you so desired, start with those two points and reverse them before any other cutbacks.
Hercules, please don't confuse me or accuse me or associate me with the rubbish and garbage written in Annon: 21:23. First of all I don't speak with a forked toungue, I always sign with my handles, and you know what they are. The guy who wrote that knows as much about NL and offshore oil as my ass knows about snipe shooting. First of all to say that the announcement made yesterday by Equinor is for a GBS in the Flemish pass, is beyond ridiculous, he has no idea of the water depths there, or anything else about off shore oil exploration, production or transportation. I spent almost half a life time on the Grand Banks, the Flemish Pass and the Flemish Cap. So I would not write such rubbish about a GBS in the Flemish Pass. And will leave that at that. As for MUN and CNA, these educational institutions are the equivalent of any other in Canada. I am not saying they are the best, but certainly above the Canadian average. I think MUN has one of the best medical schools in the country. As for CNA they have a slate of courses that is equivalent to any other institute in the country and provide training not only for the local market but the international market place as well. Half their grads work overseas, and around the world. So I am not among those on this blog that write with a handle or name one minute and reply to their own comment the next, any comment I write will be under Joe blow, average Joe, or AJ. So please don't confuse me with others!!!
..the second last line should read, "….and reply to their own comment, as Anonymous, the next minute".
Hey AJ, entertaining to see your reaction when associated with a post you did not write…
Sans rancunes encore une fois 😉
I hold no grudges either, I just call'em as I see them. And no doubt I hit the nail squarely on the head again. Cheers, average Joe.
"I always sign with my handles, and you know what they are" sure…
??? "no doubt I hit the nail squarely on the head again" ???
On what, sighting Elvis Presley alive on the North Spur? You should have told him the place is currently not very safe… 😉
Anom @ 8:23:
If you knew anything about the offshore you would have mentioned the PIP grants (upwards of $3.5 Billion-80% of exploration paid for by federal government-until Mulroney came to power in 80's and canceled the program-after which the exploration was non-existent for a period of almost 10 years), the bailout ($1.8 Billion) by the feds for the Hibernia GBS system when oil was at $18.0 per barrel-a price we may see once again (or lower) if OPEC is ever dismantled and the free markets set the price. You would have also mentioned that the Hebron GBS won't give any royalties to this province for upwards of 10 years or more-maybe never if the markets for oil tank out and the fact that the largest field has already drained past its half way mark or maybe you would have mentioned the fact that Stat Oil when the discovery was made in the Flemish pass already hinted at a GBS system because in return for construction jobs we forgo royalties from fields until the capital costs are repaid-something that is repaid at a much earlier time when floating systems are used. But I guess none of these points are worth mentioning. Just like the cost of Muskrat Falls wasn’t worth mentioning because King Danny was creating those high paid construction jobs and contracts for the NE Avalon. There is also the little ignored fact that we will borrow another $680 million for our stake in this new project at a time when we are near bankruptcy which tells me that this was done to sweeten the pie in a project that may not be that economically sound.
are you advocating a reduction in services for rural NL? Along with that would come a parallel reduction in taxes for rural residents since what you are proposing is paramount to "Taxation without representation." If my memory is correct there was a war fought over that issue.
A reduction of services that aren't across the board for all people is like asking one group to pay for a hydro dam that doesn't benefit them. That is unless you want to run EVERYTHING as a user pay system. Highway tolls, hospital insurance and private money, full tuition for education, somehow we would have to pay for policing outside of a taxation system and other essential services would be on a user fee basis.
Hi Anon 19:53
The reality in Newfoundland is that everyone must pay in exchange of nothing, or as you said, being taxed without representation. MF must be paid for and by itself, MF's value is a big ZERO $. MF does not worth a single dollar, despite it will cost well over 12 billions
According to schedule A of the Federal Loan Guarantees, available at
Newfoundland MUST raises rates and taxes to whatever is enough to collect enough money to pay back the loans. If you look at the document, you see that there is no limit to the rate or taxes, no matter basic economy 101 knows that above a certain level, revenues drop. Newfoundland accepted these terms, so must do with them now.
So Newfoundland can not avoid (unless there is a bailout or a bankruptcy) the principle of Taxing without Representation. The question now is what representation is to be stopped or reduced while maintaining (or even increasing) taxes.
I understand you would like to avoid that reality, but only bankrupcty or a bailout can avoid that. If Newfoundland is to remain soverign, Taxing without Representation is exactly what MF is.
A very sad situation indeed….
Flemish Pass is almost 5000 feet (one mile) deep. Some GBS that would be! I was out there in 1979 drilling the world's then deepest water well ever drilled. It was dry. The Pass was wicked currents; crappy weather (it was summer as well); and ever so deep it boggles the mind.
Really deep water exploration drilling is happening all over the world but I am uncertain about production at those depths, and I know there is no deep water wells producing in the climactic and marine conditions of the Flemish Pass.
As for royalties, it is outside the national jurisdiction so the best we get would be jobs, and with the specialized gear needed it is unlikely we would get any of the big ticket construction items.
So far we are in for 90 million of borrowed money it seems; I am sure there will be more before the first cut of produced oil profit comes over the doorstep sometime after 2025. Meantime we pay interest on the 90 million, anyone know how much that is for the next 7 years?
This is probably a reply to another of my comment, posted lower.
Thanks for the info. Personnaly, I highly doubt this project and I fear it is Newfoundland going again after the biggest thing when the smallest ones are stil not completed. I asked the question for the ones who were interested by it think about some key aspect before going straight at yet-another-Ox.
Ok, thanks. I just read the damned FLG, and while I know little about large scale financing I am clever enough to realize the signators have put us in a pretty pickle.
I especially like section 4 where we will be assimilated, resistance is futile, and how there is no wriggle room but am also interested in the sections that deal with default. Maybe we should just default the whole shebang and see where we are afterwards. Can sudden death be any worse than slowly bleeding to death for fifty years.
If I understand correctly the operating and maintenance costs will escalate year by year, is that extra to the repayment schedules, I guess so.
The FLG is for 6.something billion, has that been upgraded in another agreement, from where is the rest of the 14.billion coming?
And what would it be like once it is paid off, do we become Have Not Will Be No More again? Will the sun shine and the tides return? Paths paved with primroses? Will electricity suddenly rates go down to pre MF amounts?
The boondoggle stinks for sure.
The FLG details the extent of the madness but it was dated 2012 November. So maybe it is time to flesh out the reality six years later; how many borrowers and lenders are we talking about now and who are they? What are the interest rates? Are payments started and how much or do payments only start after the thing is up and running and electricity is flowing?
I see a key term involves paying water rights? To whom? How much? Smallwood emphasized in his speech at the CF location, "It is our water. It is our falls". I guess he was wrong or he sold our birthright for a mess of pottage without us knowing at the time.
I may be naive, but that Mrs. Dunderdale, she took the lifetime naivete award when she signed her name to the FLG through direction or incompetence I'd wager on either or both. Nice signature all the same.
Indeed, operating costs are expected to increase yearly and they are not part of the 12.7 billions. They are also expected to be so high that they will not be covered by revenue, so will add to the 12.7 billions.
The 12.7 figure is about 6 billions FLG, 4 billions equity from Newfoundland and 2.7 billions expected interest. You have a nice overview of that in the article about "Will Muskrat Falls float after a bailout" posted some time ago on UG. The article review the number after striking one amount after the other, ending with only the operating costs that are enough and force the project in a permanent deficit.
As for what about once paid, again that article shows you the picture. Basically, the article presents the situation should MF exists without any debt. Even once every debt is removed, the expected rate of below 20 cents is not enough to keep the business runing. So No, once the debt is paid, rate will not drop or return to what they were before MF.
Smallwood was right and took the proper steps for his project to materialize. The project was too big for him and Newfoundland, so he founded Brinco for that. Unfortunately, the project was also too big for Brinco, so they had to transfer all the risks to HQ. At the end, Newfoundland would have received a fully built and operational power plant, at no risk and no cost, coupled with the transmission infrastructure required to sell the plant's product.
Brinco invested about 60 millions and in the power plant alone, HQ put about twice (115).
HQ also put about 10 times more to build the transmission lines (over 500 millions then).
HQ also took all the risks.
For HQ to collect twice as much as Brinco / CFLCo would reflect just the equity invested in the plant without considering the entire project nor the risks.
For HQ to collect about 10 times as much as Brinco / CFLCo would reflect only the project costs without considerations for the risks.
For HQ to collect about 20 times as much as Brinco / CFLCo reflects the entire reality.
Still, during the 1980s, when Newfoundland was running both the Reversion Act and the recall for 800 MW, they said that they would never accept anything less than a 50-50 split.
As long as people consider the UC as a failure for Newfoundland, they will have a hard time doing proper business because UC –was– done properly.
Another example is what Ex-mil referred to when DW pressured NB to reject HQ's offer. Yes HQ gave him price tags too high for him to plan his Muskrat Madness, but these prices were not amplified or designed to block / abuse him or Newfoundland. They were just the righ business numbers. DW refused to see that as proper business, just like the UC, and so kept running after bad business because he could not realize what good business is.
So, if I understand UG correctly, he is suggesting that the ball govt. add one more item to the Leblanc inquiry: to assemble a pannel of experts to assess the provinces fincincial status, and develop a strategy forward, out of this financial mess. If I am reading him wrong, I am sure he or others will correct me. Someone offered up a list, a few days ago as canadates for that role, some called them the dirty dozen. So if I may be permitted to start a brand new list, yes, I can take the abuse, for suggesting a list, I have a thick skin, and no credentials or reputation to loose or gain, or fincincial empire to protect, as the add on tv use to say about the scrap yard. Of course, I must admit I am not in the know of what expertise may exist or required for such a task, but here goes, and respectfully submitted: D. Vardy, J.Gordon, J. Learning, C. Crosbie, B. Barry, R. Grimes, C. Wells, L. Michaels, mainly elder statesmen and woman, and will leave it to others to add one from the following domains; N. S. Power commission, HQ, and Justin's representive. Now what a mish-match that would be. But, can safely say they would not do a worst job than the dirty dozen. Hoops!!! Only got eleven. Please don't criticize the nominees, but I welcome all the critizm or accolades you can heap my way. Cheers, Joe blow. LOL. One last taught, maybe I should have added a representive from one of the major banks, just to seal our fate. I am a brave soul!!!!
One thing a man can always count on – the sympathy of the banks.
Guess everyone heard the announcement this morning on the oil development in the Flemish pass. Wonder if this is what ball mean about being at better tables. Hope not. Cause that is another quintile of fish. Not really being a naysayer, but raises a couple of nervous questions in my mind. Maybe it will become clearer later. First this Norwegian company Equinox Canada, says formally known as the Norwegian state owned company, Statoil. So why not Statoil, guess EC is a subsidiary of Statoil. So should the project go bust, Statoil oil is off the hook. And never agree with govt. taking an equity steak in big oil, too risky for the people's money, let big oil take the big risk, and big profits too if it is a success. Think we need to try and up the royalties, but then again, since outside Canadian economic zone, not sure if we have much more clout in that regard for higher royalties. I am no expert. Husk is a big player 35 percent, seems it would be better with more big oil companies, like Exxon Mobil to be players there too, shows more confidence, and possible risk shares. What if major accident in oil uncontrollable oil spill like in Gulf of Mexico of a few years ago, in very deep water. Guess we are on the hook, for 10 percent of the clean up cost. 11$ billion investment does not seem to great for big oil, but for a poor province, a billion is a lot to borrow, and if Anythng like Hebron, the cost to build could doubled over its building phase. Appears it will not be built here in Bull Arm, too big they say?? Just my initial thoughts, others may point out that my concerns are just in the naysayers column. Others may have different taughts, says average Joe.
Another subsidy ($680 Million borrowed by the province) to maintain the overpaid, bloated construction workforce. How much royalties were given up in return for another GBS I wonder?
The announcement of the proposed new oil field development in our offshore is excellent news for the continued prosperity of the people of Newfoundland and Labrador and our present financial concerns.
You must be a Ball supporter. Ever heard of the need to take seriously the risks to marine life and environmental systems from deep water drilling and extraction? Read up on "Deep Water Horizon", BP blow out in the Gulf. In truth, the current batch of NL politicians have no plan to mitigate human caused climate change effect. They apparently have no plan for mitigation of the hydro rates either. Ref. recent Telegram Editorial.
Not a supporter of any mortal, I just disagree with stupidity like yours and the Quebecois and environmentally stupid commenters on here.
Hi Anon 17:54,
Technically, for something to continue, first it must be at the present moment. I would not consider Newfoundland is in "prosperity" as of now….
As for anything related to oil, its revenue is directly related to oil prices, which are still pretty low compared to what they were when Newfoundland indeed had a short moment of prosperity.
The second factor is the volume. So what is the expected volume of oil expected from this project ? How is it related to existing infrastructure ? If you are adding 8% of the actual volume (example…), is it reasonable to expect about 8% increase in roaylties ? So how much would that represent ? How long to repay MF with that ?
Nice to talk with you,
The biggest expenditure outside of Muskrat Falls is Health Care so wouldn't it make sense to start reducing expenditures in that area first? I would say we implement a tax on all and any unhealthy dietary components such as fast food, sugar laden foods and processed foods. A tax of ten percent on top of the HST and use that money to start an awareness campaign to reduce these food components in the diet of Nl'ers. I am sure that will shave a few hundred billion dollars of the health care budget annually. One only has to look at the statistics to show we are number one in dietary related diseases. Diabetes, heart diseases, obesity and weight related problems are now a bigger health concern than smoking.
I got it, let's take out the seniors first.
And also bring in a fee for those who make multiple trips to the doctor for trivial health issues. Some of these worrywart hypochondriacs will go running off to the doctor even if they happen to think their farts don't sound quite right.
And bring in fees on doctor visits for smokers and those with a BMI over 30 as well.
I got it. Seniors only eat junk food.
What a colossal load of bullshit coming out of that bloody Nalcor… that fiscal monstrosity needs to be put out of its misery, dismantled lock stock and barreled, and sold to whatever private sector entity would be foolish enough to buy it…
To the contrary, 720,000 dollars for a world class team of innovators to help deal with "customers…. to manage the business more efficiently, find efficiencies , eliminate waste, add value to customers and embed innovation as a sustainable part of Hydro's culture" is most excellent.
I always said Nlfd needs a change to parts of our culture.
And note that, Hutchen of Nfld Hydro said the Team has a 2 fold purpose
1. To DRIVE OUT innovation and productivity, and
2. to aid in promoting a culture of productivity and innovation.
Now, I wonder though, once you "drive out" something, how do you get it back to promote it to improve the culture? The existing seeds within the Team, once drove out, may be lost forever, and never come back.
And Pam would not even be impressed if the province offered her a break on a heat pump, if rates soar to 22 or 23 cents. Thumbs down on heat pumps, nothing innovative or efficiencies there to help the customer. Drive out that idea and put a nail in the heap pump coffin, hey b'y. Even Heracles compared that to Peckford's Pickle Palace. Indeed any efficiency for the customer is wrong. But Hutchens says the intent is to "aid in promoting" a better culture, not actually delivering on that culture. The phrase was carefully crafted. hey b'y. Surprising what a dozen protesters near the PUB hearings can do, PR in in overdrive. And the small amount budgeted even covers travel allowances and other expenses, and should deliver in 18-24 months. Elon Musk , Tesla, stand aside!
Congrats for staying away from Heat Pump so long.
As for being objected to heat pump, again, the objection is only pre-bailout or pre-bankrupcty. Once the bailout or bankruptcy is achieved, efficiency will return to a very good thing.
The reason is that Newfoundland is bound by a Take-Or-Pay contract for MF. So there is no point reducing the amount you take because even if you don't take all of it, you have to pay for all of it. In the case of efficiency, it means to pay extra money outside that contract, for taking less power in that contract and that "saved" power remaining to be paid no matter what because of that Take-Or-Pay contract.
Once cleared from that contract and back to a situation where you pay only what you take, then efficiency will return to a very good thing. But as long as this Take-Or-Pay contract exists, you must pay 100% of that contract first. Once that 100% is paid, you have 100% of that energy for free because it is already paid. To pay for efficiency so you consumme less of free energy is a waste of money, money you don't have. But consumming only 10% of MF power is no point because, without the bailout or bankruptcy, you still must pay 100% of it.
That is why paying for efficiency as of now, before bailout / bankruptcy, is not rational target. Find a way out of the Take-Or-Pay first and then we can go all steam toward efficiency. Until then, the Take-Or-Pay contract is what makes efficiency pointless.
Heracles31, I understood exactly what you're saying, the first time you said it. David Vardy said essentially thing in his "Paying For MRF Twice" column.
However, the heat pump crowd seem to be either unable to comprehend, or unwilling to accept, the devastating fiscal reality of the MRF debacle… clinging like shipwreck survivors on a swamped lifeboat to the fantasy that if everyone spends thousand$ upon thousand$ of their own money installing bloody heat pumps everything will be OK.
How daft is that at all?
As Heracles31 has so clearly stated, time after time… under Muskrat Madness, that approach will only make matters worse… the heat-pumpers serving to drive Muskrat Madness electricity rates ever higher.
This province won't be fit to live in after a few years of that.
As you know I monitored my heat load for a full year costing only 313.00 assuming 10 cent power , tax not included, saving about 70 percent on heat. Guess I should leave off my efficient heat and now use my baseboard, to help the cause of the Take or Pay, and in 57 years I can hope my efficient heat unit still works. What do you think? Should I be patriotic? My unit is paid off, and I can afford to use baseboard. And if I give this efficient unit away to someone with heat poverty, Mybe Pam at the Telegram, they would only hinder the Take or Pay, so not logical?
And what are your thoughts of the Hydro innovation and productivity Team, and efficiency and culture change?
Hi again Winston,
Do you remember one of the first explanation I gave you ? I told you that your maths were right but your logic was wrong.
Your maths were and are still right. Using your own money, you reduced your own bill.
Your logic is wrong, for two reasons.
First reason is that you recommend using government's money to reduce everyone's power bill. By doing this, the government would pay to reduce its income. There are cases where such a plan can be very good. One example would be to avoid the need to build extra capacity to satisfy the load. As a clear example, efficiency should have be used to avoid building MF completely. Unfortunately, it is too late for this benefit and the government can not reduce any of its cost by funding a program for efficiency.
The second reason why your logic is wrong is that once everybody is doing it, the base rate will be re-increased to compensate for that too large income lost and / or the ones left without efficiency will be the poorest while the ones with it will be the richest.
Above, I posted a link to the terms of the Federal Loan Guarantees. Go review them, mostly Schedule A. You will see that nowhere in the contract there is a notion of maximum rate. Rates and Taxes must be raised indefinitely until enough money is collected to pay back the loans, despite we both know that this is impossible and ridiculous. Still, Newfoundland signed these stupid and ridiculous terms and must now do with them.
So as for you, you already have your efficient system. Good for you. Keep it and use it to its maximum potential. Just be aware that as a Newfoundlanders, you still owe about 24 000$ to Muskrat Falls and that you will have to pay over one channel or another. If you are the only one with efficiency, the power rate will be increased to its minimum. You will pay less than your 24 000 while everyone else will pay more, including your share.
If only 2 of you switch to efficiency and heat pump, you will still be good.
If 30%, 50%, 70% or more of Newfoundlanders do it, than the government will adjust the base rate higher or will derive a different tax that you will have to pay no matter your efficiency.
Worst is, if that tax is designed to be as equitable and fair as possible, the ones with efficiency should pay more over this parallel channel because they pay less over the main channel. I doubt the government will go as clearly as that against efficiency, but it is useful to illustrate how much efficiency goes against the common interest (your logic) despite it is clearly so good for self interest (your math).
Have a good time reading the FLG terms,
About the new team, I think it is mostly frightening. The reason is that everything in their mandate should have been Nalcor's original mandate from day 1. Either it was, so the team is just marketing and nothing will change, or it was not and in this case, better to dissolve the corporation completely and re-start from scratch.
Also frightening is the fact that about 75% of the people are managers. Not very serious about producing anything. Considering these 4 peoples were already employed and will not be replaced, that also demonstrates how mis-managed the entire entity is.
For me, this team is just another evidence of how the poorest management and business practices are still the rules in that environment and that such a culture will not change.
Heracles, so you , Pam at the Telegram and I agree that the Innovation Team for Nfld Hydro is window dressing and not a meaningful change of culture. I trust you realized that I was joking saying it was a great idea. However it is a puzzle whether you think there should actually be a change of culture as to customer energy efficiency, as you suggest that "the ones with efficiency should pay more", probably a higher power rate?
As there are dozens of efficiency measures, should all or just some , like HPs get dinged? Maybe a tariff applied, as Trump would do, to keep them off the Rock?
Now you seem NOT to understand the concept of how Efficiency NL should work, if copied off NS and other progressive jurisdictions. Likely you did not read my pieces explaining this, published in 2012?
You infer that an efficiency be a government plan "using government money", so by the tax payer. NO , NO Heracles, are you again intentionally misrepresenting what I say?
It is funded by the ratepayers, as the existing Take Charge Plan here, by a small surcharge on the rate. So really a socialist plan, one ratepayer helping another, neighbour helping neighbour. So because I now save on my heat 70 percent, I pay a small surcharge to help others do the same. Very simple. You would think the NDP would be all over this, or the Green Party. The large users, those with monster houses pay more with the surcharge, as they use more energy, and so help the lower income ratepayers to fund their efficiency. It does not cost the government a nickle, but it does reduce revenue for Nalcor and Nfld Hydro and Nfld Power, and such loss must be recovered elsewhere. I have never denied that logic, it is fundamental, and admitted it, but I quibble as to how it is best to recover that lost income.
Rate payers pay their money to the government. So money paid by rate payers is actually government's money,
When you said that "because I now save on my heat 70%, I pay a small surcharge to help another", you are back to your wrong logic. Let's try with numbers this time, it may be easier for you to understand.
To illustrate it with % may not be as clear, so let say you were paying 100$ per month instead of 100% per month, before your heat pump, which clearly was before MF. Also, let consider there are 100 001 rate payers in Newfoundland, yourself and 100 000 others. Lastly, let consider they were all paying the same rate as you did at the begining.
So here you are, paying 100$ per month. The 100 000 others also pay 100$ per month, so the government receives 10 000 100$ per month.
You do your efficiency thing and a drop of 70$ put you at 30$ per month. So now the government receives 10 000 030$ per month. They will not even notice the difference.
Thanks to MF, the government now needs 20 000 000 per month. For that, they double the rate and only you is using efficiency. Others pay 200 per months and you, 60.
The government receives 20 000 060$, so achieved what they needed.
Now, 30% of rate payers choose to go with the same efficiency as you. Now, government revenue drops to 30 001 * 60 + 70 000 * 200, so 180 600 + 14 000 000, so 14 180 600. The government is short by a long shot now.
FLG terms require to collect these 20 000 000, so the government is legally forced to increase the rate by 35%. You and other heat pump users now pay 81$ and others, 270. Government is back with 30 001 * 81 + 70 000 * 270 = 2 430 081 + 18 900 = 21 330 081.
That increase will push more people to efficiency and will keep pushing the price up.
It is not because it is SMART to increase the rate like this. It is actually very stupid.
It is because it is the LAW to increase the rate like this. The FLG terms require this.
So no matter what makes one more efficient, it does not matter. The Take-Or-Pay contract is what makes efficiency pointless, no matter from heat pump or anything else.
You said that "it does reduce revenu for Nalcor and Nfld Hydro and such loss must be recovered elsewhere". Great! To admit that is a gigantic step forward.
So now, people have to pay for their power, they have to pay for their efficiency and they have to pay for that lost revenue at Nalcor caused by their efficiency.
The amount to pay for original power is P.
The amount to pay for going efficient is E.
The saving is S.
So the lost revenu for Nalcor is also S.
So the amount to pay for covering that lost due to saving is also S.
If you don't do efficiency, you pay P.
If you do efficiency, you pay P – S + E + S, so you pay P + E and no more S in the equation.
That is why efficiency is pointless as of now : you pay extra with no benefit. Only when you will have the opportunity to save S without paying it back (no more Take-Or-Pay contract), then efficiency will return as a very good thing.
Anon@23.01: Surely to God you can't be serious in advocating the public not to cut back on electricity consumption. Human nature alone dictates it. Your comments are akin to saying keep the baseboard heaters on all year round so we can give the money to incompetant governments to pay for a collossal catastrophy which is about to unfold.
Agreed! Danny's mess has to be paid for but the first thing for anyone to do is to try and save household money. Also agreed is the fact that the Govt will raise taxes wherever they can.
I said it before and I'll say it again— The UC contract is on the table and we will lose our 2041 right to full ownership in exchange for financial relief on the MF mess. It's the one and only thing we have going for us. Danny, Kathy and Tom—have you any comprehension at all as to what you have done to the people of this province??? Tom you were the Finance Minister at the time all this was unfolding. Did DW bully you too? You had to know the real figures if you were worth your salt yet you failed to reveal the stupidity of DW and KD. SHAME, SHAME, SHAME!!!
Indeed, should UC / the Power Contract be used for a bailout, then efficiency will return to a very good thing for Newfoundland. Once freed from the Take-Or-Pay contract for MF, not to take, so not to pay, makes all sense.
Lets hope the government will tell people sooner than later how they will handle the situation because the longer they keep them in the dark, the more will take the matter in their own hands. For many of them, it is down to Stay-N-Pay or Leave-N-Live. As much Leave-N-Live is a proper solution for individual, as bad it is for the global population. Unfortunately, once they left, they will probably not come back after the bailout is annouced.
Transparency is of benefit in almost every situation, here maybe more than average…
With regards to a tariff on heat pumps, I was in New Brunswick a few weeks ago. Upon inquiring about it, the owner of the lodgings where I stayed told me he had two heat pumps installed in his dwelling the year before, at a total cost of $4200 for both units. He paid for the units and installation himself, without going thru NB Power's heat pump loan program.
I was somewhat taken aback by that, as I had researched the cost of purchase/installation by local heat pump dealers here in NL, and the going rate for a HP and installation was around $5000 for only the one unit. Total cost for two units and the installation was in the neighborhood of $10K.
So I asked him again to make sure, "$4200 for purchase and installation of TWO units"?
"Yes" he said.
So if there isn't already a hidden HP tariff already in effect in NL, then it would appear there is some kind of clandestine local HP cartel in operation engaged in price fixing so as to keep the cost of purchase/installation of these contraptions artificially inflated.
Wayne, what's the point in trying to save on electricity costs when your savings will only be clawed back in the form of provincial tax gouges and vile "deficit levies" so this incompetent government can meet it's "Take Or Pay" obligations under the FLG?
NLers would be better-served under another arms-length commission of government.
Hey Anon 15:04,
Wayne considers efficiency only after the UC / Power Contract have been used to negociate with Qc / HQ for us to help you absorb MF. Once that is done, you can consider yourself free from that Take-Or-Pay contract, so energy saved means energy not paid, so more money for you and Newfoundland.
Would Newfoundland be in better position under the complete control of an Overlord ? That is another question. But for Newfoundland to return to a sustainable state after negotiating with Qc / HQ offering UC / extension to Power Contract against support, that is also a clear possibility not to be discarded.
Nice to talk with you,
Heracles, That I say that revenue loss from energy efficiency must be obtained elsewhere, is not a great leap forward, and no leap at all, as I have never indicated otherwise, and believe I have have so stated this before. Where else would the revenue come from? I would like to see the Feds absorb some and maybe NS, or if that not possible then through our tax system and it may require reduced services elsewhere. My feeling is that the higher income population, including me, pay more through tax if necessary rather then the real low income suffer heat poverty.
You say power bills is government money. Bills are paid to Nfld Power a private company based on approved rates, who then pay to Nfld Hydro. Only about 5 % is Nfld Power generation . Ball has stated and can opt for rates at 12 or up to 24 cents, but must mitigate the shortfall, 60 or 70 million for every 1 cent difference, but not necessarily from the Average Joe. Some he says from Nalcor, over 200 million, from hoped from oil revenue, or deferred profits by Nalcor, maybe higher personal or corp tax etc, continued borrowing, none are easy solutions,and some counterproductive, and I begin to think that high power rates, though unwelcome , may be one of the better ways, but not that alone.
Your arithmetic, Heracles is juvenvile, as any 10 year old should understand that reduction in sales makes for higher rates, unless rates are mitigated, maybe even by magic, unless we see the Plan.
For older than 10, Economics 101, and elasticity! Vardy asks the question, I think , if we need to invest in HPs and so pay twice? I suggest yes. MF at 12.7 billion, HPs at about 1 billion, and mostly household , not govn money.
Now, at what rate of such investment, as Ex-military knows, for the Goldilocks just right effect and what is the max power rate to avoid too rapid decline in power use; That , dear Heracles, IS the question. Too rapid a decline in power use makes for harder mitigation.
Your belief is that of John Smith, 1. open the windows in winter and use lots of baseboard heat, to justify MFs and make it a paying operation. And 2, your preferred one, use CF as a offset to the benefit of Quebec and Heracles, so the Ox can laugh at the frog. Maybe that must happen. Or as UG suggests some experts can propose the best way forward. Or politics being the art of the possible, some magic may happen: like Quebec take pity on us, and lend some expertise to help solve our problem, some expert better than Heracles , the IT engineer, who seems anxious to see us in poverty. Yes, we need to suffer some, for being so stupid, and electing incompetent leaders. We are like sheep, more so than frogs. But we get frog leaders, and no sign that will change, as long as most are content to be sheep.
Hi again Winston,
You said that you would like to see the Feds or NS to absorb part of that cost. That is a bailout. These costs, as of now, are squarely on Newfoudland's shoulders and nowhere else. To move them from your shoulders to someone else shoulders is a bailout or a bankruptcy.
Once such a bailout is enacted, then Yes efficiency comes back to the table and can offers a lot of benefits. But that can not be before the bailout. MF and Peckford Pickle Palace were both plants built before finding appropriate customers to sell their product to. To do things in the proper order is definitely a lesson Newfoundland should learn. Here, the bailout is required first and only after it efficiency can be talked about; not before.
What is the magical price that will offer maximum revenue ? The bailout will define it and will work from that point because without it, there is no maximum.
About the idea of the richest to pay more, that concept is included in every fiscal system. The problem is, when you go too hard against the highest class, they can and will fly to a better sky. It happened at Detroit, it is in progress as of now in Newfoundland and the longer it takes for a bailout, the more of these rich people will be gone.
Go read this excellent articles. Numbers are based on Qc's system, but the idea is valid for every systems, including Newfoundland. I reviewed the automated translation performed and I confirmed it is good.
Going after efficiency before the bailout is shooting yourself in the foot. If you did not hurt yourself bad enough already want more of it, sure do it : shoot yourself another round in your foot and tell us when you are done. Just know that you would be better to do things in order : bailout / bankruptcy first. Once defined, see how efficiency can be of use.
Have fun reading that excellent article about the tax system,
"use CF as a offset to the benefit of Quebec and Heracles, so the Ox can laugh at the frog"
Well, UC is just an asset that can be sold (or "rented") to the highest bidder – which could be Emera, the Feds, Massachusetts, HQ or what not.
We must just ensure NL gets the maximum value from its assets so it can payoff some of its debt.
HQ is just a potential bidder for one of those assets. The more bidders, the better.
Or you can just do nothing, expecting a free federal bailout, and be extremely disappointed of the actual outcome.
Rates must be strictly set in order to ensure maximum total revenues, while minimize damage to NL industrial base/job creation. As Winston agrees, past a certain point, we have diminishing returns (EE kicking in) and we might also hamper business competitiveness.
Now, about implementing an EE program (paid by "taxing" the rate payers, or taxing the taxpayers, whatever); any EE savings will strictly get shifted into a similar revenue shortfall for Nalcor. Then, as you admitted Winston, this shortfall will strictly be transferred to the taxpayers, no less, no more.
Strictly no financial gains for NL as a whole (actually, the "program costs" are wasted).
Disclaimer: EE becomes relevant if demand approaches Nalcor capacity and forces Nalcor to buy additional power. (From HQ, or facing penalties by not providing the Emera block)
Also if it forces Nalcor to continously run its fossil generating stations.
Sorry, but I have to disagree with you on one point : "UC can not be sold or rented to the highest bidder which could be Emera, the Feds, Massachussetts or HQ".
Because of the Power Contract, about 96% of the value produced by UC is already HQ's and that, up to 2041. As such, there is basically no value that can be sold or rented to someone else. UC's value has been sold already up to 2041. Only value generated after 2041 can be sold or rented. As such, as of now, only HQ can have a serious interest for it. Anyone else would engage his own responsability with no potential for benefit before 23 years.
For that reason, I do not see how one can be ready to offset MF multi-billion catastrophic impact in exchange for a share of UC that he will not have for so long. In my view, only HQ can do that.
Nice to discuss with you,
Totally agree with you there are basically no revenue potential before 2041.
However, Nalcor's 66% CFLCo ownership still have a "present value " (calculating the present value of the future profits – past 2041).
If I remember well, you (or Bernard) assessed UV present value at what, between 10 and 20B?
I however agree that the term "renting" value is not really applicable. (I was alluding to extend the 1969 contract)
Heracles, along the lines you wrote, I must agree that HQ is by far the best "tooled" utility to acquire 100% of UC, possibly operates MF (if operable) and provide wholesale power to both NL and NS.
HQ should however not acquire NL/NS distribution tought; I suspect many Quebec haters would refuse to pay their bills…;-)
If faced with rates of 18 to 24 cents, and an arrangement with Quebec, NS NB PEI and NL for rates similar to Quebec, (likely to need feds paying transmission capability from Que into NS), then I think there would be few Quebec haters and many lovers if rates were at 8 or 9 cents for the whole region, and Quebec to use up its surplus.
Likely Nfld Power haters here soon as they send out the bills .
These is a case, I think could be made , that high rates here would not be that bad, and why so few protest, assuming MF can actually deliver any power worthwhile. If not, then EE will be urgently needed, and another failed opportunity to ramp up. Of course some EE will proceed, whether Heracles or the government likes it or not, as it is human nature to reduce costs. To say EE cannot proceed until a bailout is poppycock, as how to you prevent a person from that? Studies show that off the Avalon baseboard heat as the main heat started to decline in 2010 or 2011 , before sanction, but no one took notice.
Like to discuss further, and propose the case for higher rates, as probably least damaging if compared to bankruptcy and loss of assets, but other matter have priority for a while. So hash it out guys. where's average Joe?
Hi again Winston,
Again, the difference must be made between personnal initiative and collective strategy. Of course there is no way to prevent an individual to go after a heat pump or any other efficiency solution. The point is that such choices can not be pushed or encouraged at collective level, by some kind of official program, because as true they are at individual level, as wrong they are at collective level.
Also, if the bailout includes that from now on, HQ will provide power to Newfoundland, I doubt the end user price in Newfoundland will be the same as in Quebec. The reason is that HQ will certainly sell at a first price to the government of Newfoundland and the government will re-sell it at a higher price, so they keep collect revenues from electricity.
Should we use the deal with Massachussetts as en example, that could mean HQ selling to Newfoundland between 6 and 8 cents and Newfoundland re-selling somewhere between 12 and 15. This would be way better than anything expected from MF, with the benefit of being a stable price. It would be sound business for HQ and Newfoundland would maintain its revenue from electricity.
As for AJ, no clue where he can be 🙂
FWIW, HQ offered NB a fantastic deal a few years ago. It did not happen – with the help of DW…
I suspect HQ will never approach NB again, except for wholesale power.
NB missed a golden opportunity to have affordable rates and have their grid modernized for free. (Thanks the Lords, HQ did not buy it!!!).
For MF, the stakeholders are NL, NS and the Feds.
HQ is a possible solution for all of them, if a win-win agreement can be found. If one party (NL) feels it's not beneficial, it just won't happen, as simple as that.
EME, I'd gladly pay HQ 10¢ per kilowatt-hour than pay that crowd of "world-class experts" (what a joke) of the Nalcor monstrosity 20¢ per kilowatt-hour.
HQ failed to secure the deal with NB, when NB decided to maintain control of their transmission lines at NL's request. This did not satisfy HQ's requirement. I wonder why?
Why are you spreading fake news again?
"Under the deal (NB Hydro sale), Hydro-Québec would have acquired most of the province's power-generation assets, but New Brunswick WOULD MAINTAIN CONTROL of transmission and distribution."
Again, NB missed a fantastic opportunity to wipe out NBH debt, obtain much lower power rates and modernise its assets at no costs.
But hey, HQ is evil anyways! So those facts must not be real, right?
"An economic analysis (commissioned by the Graham government) to Washington's NERA Economic Consulting estimated that the tentative deal would save New Brunswick ratepayers $5.6 billion over a 30-year period compared to the status quo. The study also showed that residential, commercial and wholesale customers would reap 60% of the savings, but the savings would happen later than the discounts granted upfront to large industrial customers."
In Quebec, that deal was more and more perceived as giving away 100% of the cost savings to NB Hydro clients (well, "subsidizing" was the term used), while taking over crumbling assets that would need huge repair investments.
But hey! Luckily NB avoided that some of its power generating capacity fell into "foreign hands"!!!
I see you guys monitor this blog pretty closely. Did you say you have a job and work also?
Don't worry, I just copied and pasted what I wrote here, in 2016.
Heracles31, "The Team" is just another ridiculous farce of a shit-show from the so-called "world-class experts" at that fiscal monstrosity Nalcor… nothing more than a tawdry carnival side-show precipitated out of their panicked struggle to maintain a semblance of credibility as their slow-motion MRF train-wreck careens off the rails.
About the only positive aspect regarding the province's looming bankruptcy is that the collateral damage will likely result in this bloody Nalcor finally being put out of its pathetic "lean six sigma" misery.
And what a great day that will be for the NLers remaining.