PREMIER’S STATEMENTS FALL SHORT SAYS COALITION

The Muskrat Falls Concerned Citizens’ Coalition, headed by David Vardy, Ron Penney and Des Sullivan (the latter also hosts this Blog) wrote the Premier on September 3, 2018 seeking specific commitments and clarity following his statements to the effect that ratepayers would not be expected to bear the costs of the Muskrat Falls project and offered to reinstate the authority of the PUB to set rates.

Following receipt of the letter, the Premier made a further statement on September 6 which fell far short of his earlier commitments. This is the text of the Coalition’s response to the Premier’s latest comments. This post also provides a link to the full text of the letter sent to the Premier.

The Coalition was disappointed that the Premier’s announcement on Wednesday, September 6 falls far short of expectations. We had written to the Premier on Monday September 4 with detailed proposals for reinstatement of the PUB based upon the Premier’s earlier statements that ratepayers would not be asked to repay the cost of Muskrat Falls. The latest announcement refers the matter to the PUB without taking any steps to remove the obligation imposed on ratepayers, through the take-or-pay Power Purchase Agreement, to bear the full cost burden of Muskrat Falls. This is a major reversal from what the Premier said on August 22 and reconfirmed on August 30.

In our letter to the Premier, which is attached, we asked government to seek alternatives to the Power Purchase Agreement (PPA) and to task the PUB with finding the best way to establish rates in an interconnected world to enable consumers in our province, large and small, to participate in competitive markets within and outside the province and buy energy at the lowest cost. To accomplish this government needs to remove the exemptions which kept the PUB from exercising regulatory oversight over Muskrat Falls.

We also called upon government to repeal the 2012 legislative amendments which enhanced the monopoly position of Nalcor and which removed the independence of the PUB, giving Cabinet the right to set the return on equity and thereby effectively to set rates. As a result of these amendments Cabinet can also tell the PUB whether they may convene a hearing or not. These amendments were passed at a time when the previous government was venting its petulant anger at the PUB for its defiant advice that the Board could not recommend Muskrat Falls as the least cost source of power.

The Premier made no reference to reversing these regressive measures taken by previous governments, after almost three years in power. Nor did he clarify the position which he will be taking with the federal government to seek further financial support. We had proposed that government “prepare a strong case for further support and present it transparently both to Ottawa and to the people of the province. We ask that government make public, before January 1, 2019, a proposal for presentation to the federal government to relieve the province and its citizens from all or most of the obligation to service the cost of federally guaranteed debt and to share in financing of equity, possibly by purchasing up to 49% of the common equity in the project as was envisaged under the LCDC Agreement.” Instead the latest announcement made no reference to the further involvement of the federal government.

The Premier did accept our proposal for a reference to the PUB but did not give the Board the mandate which we saw as necessary. Our proposal asked that the PUB be given the following mandate through a special reference which allows them to consult with all stakeholders, including ratepayers, and to report back to government:

 To ensure that future power rates reflect only least cost power and not be required to recover the
cost of Muskrat Falls through a take-or-pay Power Purchase Agreement;
 To recommend rates which will be affordable;
 To recommend a framework whereby Muskrat Falls power can be made available at competitive
rates even if it results in failure to recover the project’s costs;
 To advise on changes in the PUB’s legislative mandate to allow the Board the discretion to set
rates based either on wholesale market prices or traditional cost of service, maintaining its authority to keep imprudent costs out of the regulated rate base.
 To advise as to whether Nalcor’s electricity assets other than the Churchill Falls plant, should be transferred to a fully regulated NL Hydro.
 The PUB should be asked to consider the proposal advanced by Dr. James Feehan in December 2016 and appropriately entitled: “Connecting to the North Atlantic Grid: Time for Newfoundland to Discontinue Inefficient Price Regulation” (Canadian Public Policy, December 2016). Under Dr. Feehan’s proposal Island customers will pay rates that are low and stable yet based on wholesale rates established in competitive markets.

In summary, on August 22 and 30 the Premier gave a categorical assurance that the costs of Muskrat Falls would not be recovered through rates, inferring that the PPA will be shredded. The latest announcement is not consistent with what the Premier said last week.

Now we are back at “mitigating” from sources such as the sale of export power which can produce only a fraction of what is required to keep rates affordable.

This is a far cry from what we asked of government. We asked that they present a plan for further federal support following up on the reference made by the Premier in his earlier statements.

We asked for the 2012 amendments to be overturned, including those which undermine the independence of the PUB. We asked for the exemption orders to be repealed.

We asked that the PUB be free to ensure that rates are based on least cost power, including lower cost power from outside the province. We asked for open access and competition so that our rates can be linked with Maritime/New England rates as Dr. Feehan had suggested. Dr. Feehan has shown that because of demand elasticity a dramatic rate increase will lead to the collapse of demand for Muskrat Falls power and likely a reduction in revenue from rates so the issue of demand elasticity must be considered by the PUB in their assessment of market demand.

The Premier’s statement is a retreat from Ball’s earlier statements confirming rate stability and delays any decisions on rates until 2020. It does not resolve the uncertainty surrounding rates nor does it discourage unnecessary investments in alternatives to electric baseboard heating such as heat pumps. Our problem is not so much with what is included in the mandate for the PUB Reference but rather with what is left out.

We now call upon government to take the next step and announce that the authority of the PUB will be reinstated and that the 2012 legislative amendments be repealed. We ask as well that the Premier reaffirm as government policy that the imprudent costs of Muskrat Falls will not be recovered from ratepayers either through the PPA or in any other way.

Full text of this Statement and Letter to Premier Ball from MFCCC dated September 3, 2018 

Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.

GROUP SEEKS PUBLIC SUPPORT FOR CABOT MARTIN RESEARCH AWARD

Cabot Martin’s sudden passing, in September, has stirred his friends, colleagues, and others familiar with his work, to honor him and encourage continued work in applied research and public policy development.

GILBERT BENNETT AND THE CONSEQUENCES OF CRONYISM

$1 million is not bad farewell for a fellow whose work performance represents one of the principal reasons for a twenty million dollar Public Inquiry, and who failed so badly in his job so badly that NL Hydro is still trying to define the mess that he (and others) has left behind.

THE “ODE”: SHORT CUT TO POLITICAL CORRECTNESS LANDS MEMORIAL IN HOT WATER

As much as anything else, it is also a simple love song to a people and to their place. It is deficient in the language of inclusion, yes, sexist by the standards of today, too, but only those who misunderstanding the language of respect ascribe to it offense whether to aboriginal, to gender, or to religious belief.

57 COMMENTS

  1. Excellent position and action by the coalition, agree totally with them. And I say thank God for the Three Wise Men of the coalition. They have given our politicians excellent advice, and mainly the premier. So you may say simple, then just do it. But cooler heads must prevail. It is a delicate position we are in, when you consider the entire landscape. And won't really go into that, we all know, or at least the followers of this blog, or other followers of muskrat, and those in the know. Ball pulled back on his earlier statements, as mentioned in the post, because he was beginning to get the attention of the bond and fincincial holders. So have to keep them happy, and at the same time, try and advance the cause of the Feds assuming their share of the boondoggle. And little progress has been made on that front. So, it's a very delicate and fine wire to navigate at the present time. If you say too much, or talk through your hat, you upset one at the expense of the other. That is the delima. As mentioned before we normally had a heavyweight in Ottawa, to navigate the treacherous waters, and fix things in a somewhat reasonable way. But with our tiny 7 and no reliable senators with clout, it is rather bleak looking. The Atlantic Accord is under review, not sure if that is good or bad, but it might be the road to making some progress. It depends who we have doing the negotiations there, politicians or beucrates, and if they are worth their salt. Guess others who are in the know, may know says Joe blow.

  2. Unless Nalcor ponies up 8 billion from oil revenues it will fall to the ratepayer or taxpayer to pay for this ill conceived and unneeded MF project.

    Even if Nalcor has the cash from continued high oil prices it will mean no new HMP, hospitals etc.

    It is sad that asking the tough questions about the political interference to regulatory process is verboten even on this blog. Sad!

    • Can't say I agree with you Bruno. My understanding is the Atlantic Accord is undergoing more than a regulatory process, but if that is all, then I mainly agree with you. But I believe there are fund mental changes occurring under the auspices of regulatory changes, that will affect us in many ways, which then brings it into the political sphere, from which the accord had its genesis. Because the Atlantic region was disadvantaged economically, and could not be rectified by its small population, and hence by its elected officials. The Atlantic region, and particular NL, to get a fair share of its resources that it brought into the federation. We wanted them to be treated similar to those as if they were located on land, as it is through the rest if the nation. Cheers, Joe blow.

  3. I have no faith in either the current liberals, nor the P C's or N D P to solve this issue. They all knew this day was coming. All of a sudden, with a by-election this month. And a general election in a year they have all the answers. Sorry . But forgive me for being negative. Too little to late.
    We are on the hook for 12+ billion.

    • They only thing we can do as voters is vote for a fresh face every time, that way they never be in office long enough to collect a pension – eventually they, the politicians will get the message – of course if they do a "good" job then consider keeping them for longer than a single term or part term in the case of a by-election.

      – strategic voter

    • AJ, as to the fresh faces, they are well displaced in the Telegram to day, so you can observe their smiles.
      You may recall my formula to assess sociopathic tendencies: The corners of the mounth must upturn past the centre of the top lip when you draw a straight line across it,if so then not to worry.
      So the NDP woman has a very friendly smile, and shows her character as well meaning and trustworthy.
      Ches gets a pass barely, while Antle fails big time.
      Now personally I know nothing of the NDP person, and a little from the media about the others. But a picture is worth a thousand words, a smile should be worth thousands of votes.
      You no doubt you have some opinion on this theory over the last 6 months, and it is not fool proof, so maybe like polls, accurate 19 times out of 20, I suggest.And would Walmart deceive you with their smiling ads?
      PF

    • @09:58 – It be Ches Crosbie this time round, NDP's Kerri Claire Neil is too unknown to me, and Paul Antle would be supporting the governing party of Dwight Ball, who hasn't done a good enough job to warrant support for a by-election seat. Don't know about the real election in 2019 but I've got a year to figure that one out.

      – strategic voter

    • Ok…everyone is entitled to their own strategy…and probably not universal, including yours PF, lol. But I commented a week or two ago on the by election, and my rational, reasoning, logic, thinking, strategy, what ever one may call it, was we don't need a leaderless party, especially at this time, and sometimes the governing part may give the seatless leader a free pass, or not oppose him too strenuously. So think that should apply in this case. As chess said if I don't win this one, I may As well go home. Way to go chess says Joe blow.

  4. Imagine you are in a restaurant and you are served a sandwich you don't like. They take it back to the kitchen and it returns with the crusts thinly sliced off. The same foul mess exists in the middle unchanged. This is all Dwight is allowing the PUB to do. Nibble away at the edges but don't dare touch the wretched substances in the middle. Ball the waiter is saying, this is the sandwich you ordered and whether or not you eat it, I'll be back with the bill. While we'd like Dwight to change the terms of reference, what are the chances. Let's hope the people of Virginia Waters can reject his candidate, despite the lack of appetizing alternatives.

  5. Lisa Dempster (MHA Labrador) is going door to door promoting Antle. She said it is great that the government has brought back the PUB to keep rates down. I asked her if she had talked to Dave Vardy and she said she knows him well. What really bugged me was the arrogance — the North Spur is safe (cause some engineers said so), MF was too far along to be cancelled, everything is great now because the PUB is back and if you don't vote then you deserve no voice. I told her that if "none of the above" was on the ballet and won, they should all be disqualified. She walked away. Anyone know what is background is or Antle's for that matter? It is hard to have a debate with these people – Dunning–Kruger perhaps.

    • Antle has a monopoly of sorts:any waste, like from hospitals,considered hazardous, must go through his facility for disposal, and I believe it is one of a kind, well, just like Nalcor say. No competition. And of course, he has other businesses I think. Must be a wealthy dude, not worried about a power bill. Ball wants him muzzled because he wants Ball's job. I guess he must be a member of the Board of Trade, those folks that helped bring us the boondoggle.
      PF

  6. See the clowns on TV, Seamus, and Ball and a French canadian federal guy, the 3 Amigos touting 500 million being spend in Nfld, some 70 % by the feds and 30% by Nfld.
    500 million is a lot, except when it is over 10 years, it is peanuts. Must think AJs can't divide, and only hear 500, and not the 50 per year. So take until 2028 to deliver on that. A lot of govn pensions secured by then, for those clowns.
    50 million is what? It would cover our interest payments for about 15 days or so. It would cover half the dome that was never used at MFs and scraped. It could pay severence for 6 Ed Martins. And of the 50, 15 must come from Nfld. So why all the smiles? Because they are all clowns, and think we are idiots. Perhaps someone should take a smelly shoe and throw at the lot of them, like was done to George Bush.
    PF

  7. I reviewed the letter the Coalition sent to the Premier… Honestly, such a position is impossible to achieve : Keep your sovereignty, be off the hook of MF fiasco, safeguard your legacy assets and penalize the ones who got their part right (here, NS).

    To give all of that to Newfoundland would be to recompense the worst while penalizing the best. This is the very reason why Communism is not sustainable: the least productive ones in the society are recompensed with a return that is proportionally bigger while the best ones are penalized and their return is diminished to what everyone else receive despite they did less than this elite.

    The result is that the biggest victims of communism are the most powerful, the ones powerful enough to compromise the system. So they do and the system collapse.

    Capitalism / democracy has its drawbacks, because not all can achieve the same and as such, it creates barriers between classes and people. Despite this, Capitalism / Democracy proved it is the only system sustainable for a simple reason, one that is visible here: Capitalism / Democracy's biggest victims are also its strongest defenders.

    Countless times Newfoundland proved itself unable to manage itself for its best interest. Still, people insist to keep their sovereignty.

    Canada is not a communist country. You have to live with the consequence of your actions and decisions. To blame others because they respected your position and agreed to your points will just guarantee the same thing will happen sooner than later because it would prove Newfoundland is still in denial about the root cause of the fiasco.

    Out of the 4 things requested (sovereignty, off the hook of MF, saving legacy assets and penalizing the ones who succeeded), it is easy to remove one.

    To penalize others for your own mistakes is plain non-sense. Period.

    On the other side, there is one that you can not do without : getting off the hook of MF. That debt is just too big and will crush Newfoundland after few years. That would loose you your sovereignty and / or legacy assets, and more.

    So the choice is down to either saving your sovereignty by trading MF fiasco and a legacy asset for relief, or loosing your sovereignty, so at the end also your legacy assets because you will not exist anymore as a province.

    The only difference is to identify if there should be hope for Newfoundland to one day prove itself capable of autonomy and leading its own destiny. If there is such hope, keep your sovereignty and trade only an asset. If there is no such hope, than better loosing it all at once right now then waiting for the unavoidable.

    • Heracles, I am late this morning tuning in, and surprised to see no one yet respond to you.
      You have good reasoning as to communism and capitalism, but seem to avoid socialism value, as many European countries prosper under, and perhaps Quebec too have good socialism mixed wit capitalism.
      Yes , if we cannot smarten up and get better leaders and better governance, then we need to be governed by others.
      However as to trading legacy assets for MFs debt, I visualise the not mentioned CFs in your comments. And if we lose that to you, then an halo above the head of Heracles, a feat worthy of the heroic Greek Heracles.
      What other worthy assets would you consider?
      Winston

    • You fail to acknowledge the fact that NL would never have gotten the money lenders to finance this stupid fiscal catastrophy without the FLG. They would have required sound proof of the need for and capability of payback to even consider it. The FLG sealed the deal allowing NL to get whatever money it wanted. The Financiers would never have even entertained the thought of this boondoggle given the half truths, fudged figures and outright lies we and the Feds were fed (pardon the pun). The Feds didn't do their homework, plain and simple and hence giving the FLG,enabled this Williams/Dunderdale fiscal catastrophy. We the NL populace should not bear the brunt of this alone.
      DW and KD will forever live in infamy for the scourge they unleashed on the residents of this province.

    • My employer (Feds) is in the "enabling" business – via 100s of millions in Grants and Contribution" each year. And that includes "make work" projects as MF can be associated to some extents)

      There are NO WAYS we (Feds) can be held accountable if an "enabled" project ultimately ends up as a boondoggle (or gets its sponsor in trouble due to faulty budgeting, mismanagement or fraud).

      Furthermore, what was the intent (if not to protect Cdn's taxpayer) of including all of Nalcor's assets as collaterals in the first place if we're not to exercise it in cause of default?

      So some of you would rather have NL keep all the cake and transfer all the costs/pain to the Canadian taxpayers instead? Wow, replace the word NL with Quebec and riots would instantly occur all across Canada!!!

      This MF's debt can be neutralized via win-win type of agreements – examples of which that we already extensively discussed here.

      NL has definitely the means and the resources to avoid insolvency; face the music and take responsibility of your decisions.

      Unless you guys just prefer letting the Feds do the cleaning for you later on – hoping they'll defend NL's interests in the process…

      I just don't get it with this responsibility / accountability AVOIDANCE syndrome. In my work place, this whole idea is really out of this world…

      And whatever happens, NL has to reduce its bureaucracy & spending's (and reflect current best practices in public administration) to ensure a balanced budget.

      Disclaimer:
      My field of work has defined my understanding of the concept of accountability and being responsible for your actions. This may be perceived as "tunnel vision" by some.

    • If your neighbor or close friend came to you asking you to co-sign a loan for him to access money for a business opportunity, would you wholeheartedly say"yes, where are the papers"? without investigating what you were committing to? This is exactly what the Feds did. They did not exercise due diligence. If your neighbour was unable to pay, would you not be held accountable??.
      By the way your second last paragraph is spot on. We have way too much bureaucracy and a severe spending problem.
      The best solution would be a negotiated one with an outside party(s)but again, the Feds did co-sign and did not do their homework before doing so. This was a Harper/Williams/QC thing in the first place and has grown to what it now is.This project would never have gotten off the ground without the FLG, period

    • Ex-Military Engr, Eric, as a citizen of this nation, called Canada from your comment of 17:35 it is my understanding you are speaking for the Frderal Government of Canada. As such, I demand you identify yourself immediately. The Federal Government of Canada belongs to me as it does to every citizen of this country, including you as a private citizen, but not to you as our employe. When you proclaim that you work for the Federal Government then you are speaking for that Government, then I can only conclude that you are speaking on behalf of your Employer. And your so called disclaimer, just goes to enhance my interpretation that you are acting in that capacity as representing the Government of Canada. As a representive of our Federal Government, I take exception to your bias comment, "Wow, replace the word NL with Quebec, and riots would instantly occur all across Canada!". You will have to be identified, if you so refuse to do so your self, and be held accountable to us through our Canadian Government. So stand up like a man and identify your self. Thank you Sir. Joe blow, average Joe, AJ.

    • Wayne,
      If you have "friends" asking you to co-sign for a loan, you really have to reassess those friendships big time 😉

      Ok, jokes aside.

      Banks/individuals/governments happen to lend money when they should not in the first place. But they still don't lose their recourses, due diligences or not. (I'm using loans as an example as they are even worst "enablers")

      Now, if in order to obtain this loan (or LG), the borrower lies and fudges the books (!?!), then we may add the notion of fraud.

      In our particular situation, NL insisted big time to obtain that FLG. I suspect all parties knew that MF was somewhat under-budgeted. That would explain why the Feds went beyond MF and placed all of Nalcor's assets as collateral.

      Afterward, the Feds could not have predicted how incompetent (or fraudulent?) Nalcor was in project management. Nor the permanent collapse of electricity export prices.

      Anyways, who are we (Feds) to question a province motive? If a province wants a "make work" project, so be it. Or worst, the Feds might also have liked NL's idea of "Anglo Saxon" routing / sticking it to Quebec…

      So the Feds obliged here, and finally provided a FLG (to save NL a few millions – however fishy the plan was). That whole thing was never intended to be paid by the Canadian taxpayers, anyways you look at it.

      Quebec claimed this FLG was distorting the inter-provincial hydro market and would favor one province over another in the US hydro exports. Quebec was then accused of being "un-Canadians" by NL (Well I read way worst, but I can't type it here)

      ———————————-

      If Ottawa end paying, well I have a great boondoggle that I'm waiting the feds to reimburse: the Montreal's 1976 summer Olympics!

      Not only the Feds "enabled" this thing, but they promoted and pushed Montreal's candidacy worldwide! They also committed us that all venues would be functional/ready on time.

      All those "enablers" ended up costing Montreal (and Quebec) Billions!!! Where is my money Canada???

    • AJ; you are probably the only one here that thinks my comments do not reflect my personal opinion, but rather my employer's.

      But beside your current excitement / bullying attempts, I enjoy reading your comments 😉

    • Ex…it just takes one citizen, to call you out and lodge a complaint against you to your Employer. Let's hear from others, that say, your comments appear that you are speaking for your Employer, the Frdeal Government. As for bullying, you are the one using your bully pulpit, as an Employee of the Federal Government of Canada, to make your words appear to have a great effect, and a greater level of authority. So I call on you again to identify yourself. Will others do the same, and call you out. Thanks, Joe blow, average joy, AJ.

    • AJ, the Montreal Summer Olympics were in 1976.

      In 1967, we had the Expo 67. (50 millions entries over a 6 months period)

      ——————————

      I would not mind this blog forces everyone to ID themselves. That would include Nalcor's or NL employees etc.

      This way you would know if I'm Waldo or whoever else you accused me of beeing in the past.

      Now, as I mentioned in a couple of occasions in the past, obviously my comments are strictly my owns and don't represents my employer's, my mom, my neighbors, my dog or anyone else.

      Now AJ, if you don't want to hear central Canada's and Quebec views on the subject and wants to believe in Santa Claus; that's all fine. But you'll be in for rude awakening. And lots of ressources/$ would have been wasted in the meantime.

    • EX…I don't see anyone one else here, that boast or proclaim, that they are an Emplyee of Nalcor, NL Government, or Federal Government, or of their dog or cat, besides you. No one else besides you are using their Government Position to appear to add weight to their opinion. And the last time I checked, no law has been broken by writing anonymously, but when you indicate, or portray yourself as representing Any Government, then you have crossed the line, or broken the law. We have heard lots of views from central Canada, as you and your cohorts write more and more often than anyone from this neck of the woods. I take, "rude awakening" comment as another threat from you bully pulpit, but we don't frighten…sorry. Cheers, Joe blow, average Joe, AJ.

    • The federal government did not loan NL any financial power to get the monies for MF – hence the QC argument at the time it was distorting the fiscal balance between the provinces was not valid in my opinion. Many others should review the FLG terms, most do not understand what a LG is, it is not a typical cosigner agreement where a 2nd party loans financial support to a party to get a loan.

      We only get to borrow money at the Feds 'lower interest rates' – considering that since the FLG was issued, NL on its own borrowed long term monies at comparable rates I am still not sure just how the FLG enabled MF.

      A most interesting term and definition in the FLG is under article 4.13.

      PENG2

    • Hi Winston,

      About using UC as an asset to compensate for MF, there are many reasons.

      1-Just the right value

      UC is estimated to 20 billions and Newfoundland owns 65% of it, so 13 Billions. That is exactly the amount of debt MF represents. An asset of lower value would not be enough to cover for MF and one of higher value would be you paying too much.

      2-UC is required to extract the most value out of MF, and HQ is the one controlling UC

      As such, it is just logic to keep them together and have them operated by a single entity. Because MF will not be compensated before the end of the actual power contract, to have it extended accordingly is just pure logic.

      3-The other asset mentioned here time to time is not Newfoundland's anymore

      Hibernia is now paying mostly the feds according to what people say here. As such, because it is not of such a high value for you, you can not trade it or cash it to compensate for the fiasco of MF.

      4-Not loosing any value you depend on right now

      As of now, Newfoundland's cash benefit from UC is still limited. So to transfer it would not have a great impact on the government and its budget. Its value is mostly as an asset and the corresponding cash will not be part of the budget before 2041. As such, you would not loose any cash flow. Should you trade an asset related to oil or similar, that would have an immediate impact of reducing your income, aggravating the problem of previous debt and structural deficit. Trading UC avoids that.

      Should you have an idea of another asset, that is estimated at a value of about 13 Billions, owned by Newfoundland and for which you have an interested buyer, by all means tell us about it. As for me, UC is the only one I know of.

    • Wayne,

      Do you remember a past article on UG about how Nalcor modified the independent engineer's report to smooth it and make them look better ? The Feds did required a due diligence; it was Nalcor who obfuscated everything.

      As for your example of a friend asking me to co-sign, as Ex-mil said, I would not only say No but would re-evaluate that "friendship". In fact, there was people in the past who asked me for money they did not have and the bank refused them. I refused them too for their own good more than not loosing my money.

      Newfoundland put Nalcor assets, including UC, on the line to get financing. That was enough to get the money and the FLG were not required. As such, it is a mistake to think that MF would not have be started without the FLGs. UC is of enough value to protect anyone's investment in MF so once offered as a guarantee, you would have found enough investors for MF.

      Your leaders promised you to double your electricity rates and you said Go For It.
      Your leaders told you it would be a single project the size of 100% of the government budget and you said Go For It.
      You needed a buyer and partner for the project and Hydro-Quebec gave you the actual number which proved the project as impossible. You said (–bad words–) and We Go For It.
      Your second potential partners told you they would go for it only if they are ensured to pay not more than about 15% of what you will pay yourself and you said Go For It.

      And now you try to convince yourself you are not the sole responsible for your entire situation ?

      You may kid yourself, but you will not kid anyone else….

    • PENG2

      I agree the fiscal imbalance was rather marginal; the net savings were what, just a few millions per year?

      Now if we are to believe this FLG actually "enabled" MF's go ahead (despite NL saying they would go ahead anyways), then we may pretend that new additional hydro was being artificially "dumped" in the market – at the expense of other existing players.

    • Ex-Mil @ 21:24:

      I don't agree with artificially dumped – even is MF was completed for the initially estimated $6.2B capital, operation and transmission costs would have made MF power more expensive that that currently on the market. MF power always would have to be sold at a 'loss', the only good thing that could come from MF was proof of concept for GI.

      In the end, all that was proved was in the battle between politics vs engineering vs accounting vs common sense is that no good comes of it. Available MF surplus power will be sold on the market, though at a loss and that will generate some revenue – the question will be will the revenue be enough to cover the operating/transmission expenses, that is the only question now because if not we will be paying for a losing operation (the capital is sunk, so only now to consider operations and transmission).

      I do think we need a regional solution, but I don't agree with how the PTB are going about it. And I don't think anyone except NLers are to blame.

      PENG2

    • Everything you just wrote is definitely correct PENG2.

      Also I totally agree that MF's capital is now sunk/gone, so now we only have to consider operations / transmission costs. (And rates should reflect those variable costs only?)

      ——————

      I meant that an hydro "capacity" was artificially being dumped in the market, at below the costs of producing it.

      Let's say Nalcor exports some MF hydro in the US, at market prices. That would be considered "dumping" by the US "ITC" as it would be sold below the costs of producing it.
      Also, that would most probably pact of an equal amount an HQ sale. So MF would contribute into lowering furthermore the already depressed US hydro market.

      But I admit this is now irrelevant we now believe NL would have gone ahead with MF anyways. (Here I agree with you PENG2, and also with above Heracles logic's of UC as a collateral)

    • Hi Anon 20:16,

      No, it is not that simple. If you default, the consequences are defined in the warranty. One is that all of Nalcor assets can be sold or mortgaged to get the required money to pay for the default. Just like on a regular mortgage on your house : if you default, the bank can seize the house and re-sell it. Here, it is not only MF that is subject to be sold, but all of Nalcor assets.

      If these assets are to be used to compensante for your default, better to be in a controller way negociated by Newfoundland than under the forced action of the FLG.

    • 1-Heracles-

      You are right in principle on the matter of a default versus (a) negotiated settlement(s), but I'd like to ask a question which I think most of the participants here at Uncle Gnarley's probably won't ask and definitely will not like:

      Considering NL's terrible track record when it comes to negotiating (The Upper Churchill, Muskrat Falls…), and looking at things from the point of view of the average inhabitant of NL…might defaulting on the loan not be preferable to negotiating? At least a default would take all these assets out of the hands of the very NL political class whose greed/corruption/incompetence caused this entire costly mess to begin with.

      2-AJ: The accusations you are directing at Ex-Military Engr are groundless, and frankly I think an apology on your part is as much in order as a spellchecker (I'm sorry if the last point seems petty, but your comments are borderline incomprehensible at times). Ex-Military Engr has never claimed to be a spokesperson for the Government of Canada, and assuming he must be one because he is a Government of Canada employee is a leap of (il)logic that, to put it politely, does nothing to enhance your overall credibility -quite the contrary, as a matter of fact.

    • Here is a suggestion for you Etainne, if you find my comments be be incomprehensible, then you are under no obligation to attemp to read them. You can just skip right pass me, as I vary rarely read all that you write. And as often as not the problem is as much with the reader as with the writer. So feel free to just pass me by. As for your comment, that I hold Eric an apologize, don't get ridiculous, he was coming very close to crossing the line, SO HE OWES ME A BIG THANK YOU, for calling him out and bringing it to his attention, when least expected. You both read my comments, so will leave it there, as I take no pride in getting anyone in trouble with their employer, even when they do cross the line. It is really not my style, but I hesitate not to call anyone out when they begin to bring their perfossenional dealings dangerously close to their personal dealings and belief. And the separation can sometimes be a fine line or blatant. You be the judge this time. Cheers, Joe blow, average Joe, AJ.

    • For a start, by continuously misspelling Etienne’s name, it "seems" pretty illustrative of your personality and intents AJ.

      It "seems" that when you are not happy with the message AJ (and short of counter-arguments), you just switch the discussion to groundless accusations; hoping nobody notices your inaptitude to astutely argument (it "seems" so anyways).

      So AJ, I still haven't seen any of your counter-arguments pertaining to my FLG views.

      Do you have any???

    • Come on now Eric and Etienne, Eric has stated he likes AJ's style, as do I and others no doubt. It puts some flavour to the comments here. And as for apologies, I thought you and Etienne would have called out Heracles for saying I make money off minisplit heat pumps: a false assumption on his part, and he has had lots of time to fact find and apologise.
      Now Etienne seems to be a bit of a perfectionist, and is very proficient in English, and I do like some of his view points, and yours too, but spelling by AJ is not a big issue, and I think he uses it as a tool, like calling Ches Crosbie as chess, I think. Sometimes your motives leaves me to wonder, but I try to assume good intent and sincerity by all.
      Frankly I wonder if we are capable of good self governing. I see only 61 people following the MFCCC meeting tonight. I watched for 30 minutes but very poor sound, I could not hear it, and was disappointed.
      Winston

    • It's not worthy of a comment Eric, as that is one thing I never do, and that is intentionally spell any one's name incorrectly, so to say I always do is so childish of you, but you want to pick up on honest mistakes, that's your problem. But thanks for telling me anyway. Now as for politicians and other people in public life I intionally spell their names incorrectly, like Trumpie, ball et al. And chess as Winston mentioned. So get a life by, and don't be so super sensitive. Cheers, Joe blow.

  8. OMG, AJ, I turn my back for a few hours, and everything is gone crazy here. The engineers have take over. HQ has got the UC, only solution they say, and tonight on TV, someone promoting Fortis taking MFs and tranmission for a song.And who missed the USA ambasitor to Canada in Gander saying "a friend in need is a friend indeed" that USA a real friend to Canada, forget the squabble over Nafta. And to top it off, today Putin and China getting cosy with military might, was it 1000 military airplanes in the sky and 36,000 military trucks. This Putin, the man who likes Trump, we are led to believe! And this the aniversity of 9/11 when 6000 or so Yanks pitched in Gander and renewed friendships from 1945.
    Now all tis today a coincidence? And the coincidence also , as Heracles states: that CFs asset just exactly matches the debt of MFs!. And today too Andy Wells blowing steam, that Leblanc tardy if he don't uncover criminality as to MFs.
    Now is this anything but a grand conspiracy, AJ? Quebec get all of CFs Fortis get MFs and the DCline. Emera gets power at little of no cost. And AJ gets shafted, to pay for this mess….all your own fault AJ
    I'm getting google eyed doing catch up reading all this tonight.At one point I thought Heracles said Uncle Grarley was worth 13 billion, but blinked a few times and saw it was UC not UG.
    And no one seemed to notice that PENG2 is like Ex Militiary, except Nalcor employee.
    Now sometimes I stir the pot to keep her goin. But no stirrin needed tonight.
    Now I here, my wits being tested: is an RFA better to remove a tumor than a liver resection. Cost me 25 grand to get an answer that confirms my our research; the liver resection is best. And the dust not settled on that when faced with : should the drug Avastin be deleted to avoid a possible PE? And again, my research confirmed, stick with the Avastin, but now too late, have to see the results a month from now. Life and death decisions, and meanwhile poor Nfld on its own deathbed, in just a few hours, she gone b'ys she's gone. The Rock is sinking. Is it? Too few fighting Nflders. Gone without a fight. Nothing worth fighting for?
    So was Trump eyeing the goings on in Nfld, and sucking up today, "A friend in Need" Might he be thinking moving some military might from hurricane prone Norfork to Northern Labrador, to counter Putin? What is our real estate worth in billions to the USA. In recent times they pay big dollars, and not that long ago bought Alaska from the Russians. Must make Putin puke.
    Maybe I wake in the morning and find I dreamt all this engineer talk tonight on UG. And Florence about to hit, and they can't get gas enough to escape. Oh my. Me nerves is rubbed right raw.
    Winston

    • Lol, Winston, except for your family medical challenges, and you have my empathy, you have included it all in one snapshot, and harilous one I might add. And you got it all, almost right. Even UG being worth 13 billion if he can save us from this boondoggle. Yes and all happening on 9/11 and on the cusps of Florence with millions of Americans running for their lives again. When it all dies down as you suggest maybe ball et al will get his talk to Trumpie, and and we can become a state under the Stars and Stripes. Right up Trumpies alley to add a new state. And no we are not another Porta Rico, with no assets, other than a few sandy beaches and hurricane prone like most of the US mainland. As you know, I have mentioned that possibility before. And you also made reference to Peng2 being an employee of Nalcor, but I don't think you really know, just speculation on your part. But he has certainly not come out and proclaimed widely and loudly that he is, and that's why he knows more than you or me, about boondoggles and loan guarantees. He doesn't have a bully pulpit, like our friend military engineer that proclaims loud and clear to all ensundry, that he is a Ottawa beucrate dealing with Federal Governments loans, etc. and that's why he is an expert in the field. So I can only conclude that he speaks with some authority, and is speaking as an employee in that capacity and as a Ottawa beucrate in telling us how loan guarantees work and the penalties he will impose if we default. But I digress, and Winston you were not dreaming, when you awake it is all as you summarized on UG. Cheers, Joe blow.

  9. AJ: "…in telling us how loan guarantees work and the penalties "he" will impose if we default…"

    Wow AJ, above is false AJ and you know it. I strictly referred to how "Grants and Contributions" works. I also brought Banks practices for "loans" (loans, not LG) and the related defaults implications. (Also, I never said "I" would impose penalties)

    ==> Anyways AJ, what are your counter arguments for everything I said on the FLG?

    Not sure I've seen any so far… 😉

  10. Well,AJ, it was a restless night. And sadly, as you confirm this morning, I was not dreaming. And all the crazy talk last evening seems to have halted this morning, perhaps many scratching their heads, that it is really this bad.
    How could it happen, that we put our children and grandchildren's future on the alter of the Almighty Dollar to make the fat cats fatter, and sell out our people and province? Heracles makes his points that we collectively let it happen. But was it entirely the fault of the AJ's or of being mislead by scroundels, rouges and scallywags?
    Now, of EX military and Heracles, and somewhat to PENG2 and Etienne, what do you make of their concept of friendship and loans? I am astounded at their opinion, that they would never make loads, even to a friend, with being fully secured. Maybe there is a fundamental difference in rural and city people in this regard? And does it speak to morals and one's ethics, or religious or spiritual belief.
    Perhaps a dozen times I have made loans,mostly to family, and never asking for security. And to their credit, the loans were always repaid. I think but on one occasion I charged interest, and that 25% lower than prevailing rates. And once loaned to a neighbour, and a few times to friends, and that repaid. And as to business, loans without security I do all the time, it is called credit. And almost never a problem in 40 years, but got burned once, in my early days.
    And so, as to our federation, a family of sorts, but where security of Nfld Hydro,(all our island hydro capacity and facilities, and back up generation at Holyrood) and our 66% of Churchill Falls, and I suppose our oil royality revenue, and what else, to be all taken to put us in poverty. Yet hardly a word by politicians as to this blood sucking scheme. Most citizens are still in the dark as to this. And Leblanc gets a dump of 2 million documents to tie them up in knots, and fatten the fat cat lawyers for 2 years,and another 30 million wasted, and to hold off on his report until Ball is re-elected. As to Premier Ball: Pat Coombs of UIC (Upper Island Cove ) describes him as a vacuum cleaner salesman type. They get high commission, once the contract is signed. And Ball could get 10,000.00 a plate at a fund raising dinner, was it, with a little help from Tobin and friends in Ottawa? Such is our democracy.
    The Whitehouse is now called crazy town, under Trumpie. How would you describe our House of Assembly? Oh, yes, that Greek word mentioned by Etienne. It implies a class of Bloodsuckers? House of Vampires, that adheres to voodoo economics, for sure.
    Winston

  11. Hi Winston,

    Money is never the solution to a money problem.

    When a friend told me she was in a poor financial situation, so bad that she was scared not to be able to feed her son, I convinced her to let me manage her money. She accepted.

    She had a debt about 100% of her net annual income and both her personal and corporate finances were in terrible shape (she is self-employed).

    I could have pay for her debt. I could have use my credit to lower her interest rate. Still, I did not. I told her what to do and how to do. At first she objected for different reasons but I told her No. You do as I said. She did. Within 18 months, everything was fixed. She was clear of all of her debts.

    To lend money to someone how is short is million time more harmful then helpful.

    Herself had a friend that went bankrupted twice. She kept lending him money and he always paid her back. I told her a million time to stop doing this because it harms him. The guy must understand that when there is no more money, there is no more money. But as long as she is there to lend more, for the guy, when there is no more money, there is still more. So the guy will never learn until he faces the actual consequences of not having money.

    So definitely, I maintain that lending money to people is not what help them. Help them by making them a budget, help them by showing them where they should put their money, where they should stop spending, etc.

    But to lend more is not to help.

    • Yes, a couple of times I encounter people who have no capacity to handle money, and provide some money not expecting it back, so not a loan. But to say money is never a solution,I disagree. I received a little assistance in my youth, appreciated it, and repaid it.
      Trumpie boasts of having been massively in debt. Most ordinary people start off in debt, they borrow for education, for mortgages etc, and most repay. But for loans, our big banks would fail.
      Perhaps we should separate personal loans from government loads, as you wish to mark Nfld for their foolish high debt, which is a sound critism. But even big business, there is Chapter 11, is it, where assets are frozen, some debt is written off, and they continue on again.
      But that you lump all people as not reliable to repay a loan is strange to me. A hand up ( a loan than is repaid) rather than a hand out(charity) is not inappropriate. For some,finacial instruction as you suggest is also good. But to say "money is never the solution to a money problem" is silly I think. And I suppose food is not the solution to hunger, nor heat for those that are cold? Nfld must "hurt enough to learn a lesson" you say. Some truth to that, but define ENOUGH.
      Winston