WILL THE PUB GO FAR ENOUGH ON RATE MITIGATION?

Guest Post by David Vardy

The
PUB has been asked to make recommendations as to how increases in power rates
arising from Muskrat Falls can be avoided, a daunting task indeed, but one for
which they have been given a broad mandate. 
They have just released an interim report on measures to increase
revenues and reduce costs. Their work plan is quite ambitious and covers a wide
range of options. The question is how far they will go and how receptive will
government be to major changes?
Will
they recommend the kind of surgery needed to right-size our electric power
industry and to extirpate Nalcor as an unregulated monopoly? Will they go so
far as to propose that Nalcor be removed from the power system after Muskrat
Falls has been completed?

Measuring
the problem
In
measuring the magnitude of the shortfall between costs and revenues the PUB
could have included a calculation of the shortfall. In so doing they must
calculate the
  annual “revenue
requirements” arising from the current $12.7 billion cost estimate, along with
likely fuel savings at Holyrood and the revenue impact of the 22.89 cent/KWh
rates which Nalcor deems necessary for full cost recovery. In measuring the
demands on the province the PUB should ensure that the full capital costs of
the project are included, the cost of servicing debt and equity, the cost of
principal repayment and the operating costs of the project. The PUB has stated
the shortfall as $744 million annually, without providing the details of their
calculation or whether it nets out fuel savings or export revenues from export
commitments already made. In the attached Appendix I offer some comments on the
calculation of the shortfall which suggest that $744 million may be on the low
side.

One
of the issues the PUB will have to deal with is the fact that in calculating
cost Nalcor has adopted a hybrid system of accounting which combines “cost of
service” accounting with accounting based on “escalating supply price”. The
latter was adopted in order to reduce power rates in early years by shifting
payment to the province for return on its equity investment to later years. By
so doing they are relying on rising demand over time to bear the cost burden of
equity capital. Without rising demand these costs will simply not be paid. To
deal with this issue the PUB must place all cost estimates  on a “cost of service” basis, which is the
basis on which the other costs in our electrical system are calculated. Simply
put, this “cost of service” approach demands that all costs incurred in a given
year be recovered from rates charged in that year, and not be shifted to future
years and future generations.
In
making the reference the government has confirmed that an increase in rates
from 12.26 cents per KWh to 22.89 cents in 2021 is unacceptable. It is unacceptable
in terms of affordability because it will impose a large burden on vulnerable
citizens. Such an increase is also self-defeating because it will trigger a
shift away from electricity which is likely to gather momentum as increases
continue and accelerate.
Depending
upon the long term elasticity of demand rate increases will cause demand to
collapse so that Muskrat Falls power will not be used within the province. With
falling local demand the power will be exported into export markets at rates
well below cost. If rates rise people will make other investments to reduce
their electricity costs, some will invest in heat pumps while others will
invest in conservation. If the costs of Muskrat Falls are not recovered through
higher rates the costs will have to be recovered through taxation. This means
people will pay twice, first for Muskrat Falls through their taxes and second
when they install alternatives to Muskrat Falls.
The
Board will undertake research into demand elasticity and into innovative rate
design but it is unlikely that sufficient higher revenues will be generated
through higher rates. Additional revenues may indeed flow from electrification
of motor vehicles and ports as well as from additional displacement of fossil
fuels in residential and commercial heating. The danger of de-carbonization and
electrification is that it may accentuate the existing winter peak in demand.
When
it comes to revisiting the financial arrangements to reduce costs it is clear
that the federal government must be prepared to make changes. The federal
government must agree if high cost provincial equity is to be replaced with
lower cost federally guaranteed debt. The federal government must agree to any
changes in the financial arrangements which the province may propose to replace
the intended revenues from rates which were integral to the financial plan and
to the power purchase agreement.
It
is not clear how far the PUB will go in fulfilling what is a broad mandate. We
can hope they will tell government what they need to hear. Governments, both
federal and provincial, need to renegotiate the power purchase agreement to
acknowledge that a take-or-pay contract will not be able to extract enough
revenues to pay the revenue requirements.
Guiding
principles
 I
suggest that the PUB consider the following guiding principles.
1.     First
and foremost, in its deliberations the Board must be mindful of the impact of
rising power rates on vulnerable people. Low income people and other vulnerable
people on fixed incomes must not become victims of this ill-conceived
megaproject.
2.    Second,
the project was fundamentally an ill-conceived megaproject designed to create
revolutionary change (“game changer”) in the provincial economy. It was a
make-work project which follows a long succession of failed development schemes
since Confederation. The ratepayer should not have to pay for this flawed
project because it was never demonstrated to have met the test of section 3 (b)
(iii) of the Electrical Power Control Act which calls for the system to be
managed to
            “result
in power being delivered to consumers in the province at the lowest possible    

             cost consistent with reliable service.”
3.    Third,
we should avoid any solutions that pass additional burdens on to our children
and avoid placing in jeopardy the heritage assets of future generations. We
should not barter our natural resources, our fishery, minerals, oil and gas,
royalty revenues from the Atlantic Accord, or the rights of future generations
to Churchill Falls power after 2041. We should avoid solutions which extend the
amortization period from 50 years to 100 years.
4.    Fourth,
we should encourage regulated competition and terminate Nalcor’s exemption from
the authority of the PUB. The powers of the PUB to protect the consumer should
be restored.
5.    Fifth,
the cost of power cannot be the basis for setting rates because if full cost
were charged demand would collapse. The PUB should therefore consider the
proposal advanced by Dr. Jim Feehan (“Connecting to the North American Grid:
Time for Newfoundland to Discontinue Inefficient Price Regulation,” Canadian
Public Policy, December 2016) where rates are set based on market rates in the
mainland market to which we will be connected:
            “The
fundamental proposition herein is that after connection to the North American        
      grid, the wholesale price of electricity in Newfoundland should be determined
by the 

            external price…When the island grid is connected to North America
,economic 

            efficiency requires that the wholesale price reflect the opportunity
cost of the energy 

            (pages 9 and 10).” 
This
would represent a dramatic change in rate setting policy for our PUB but it is
well accepted throughout North America. It would likely lead to lower, rather
than higher, rates and would provide an incentive for Newfoundland and Labrador
consumers to utilize Muskrat Falls energy rather than to wheel most of the
power into mainland markets, but at great cost to the province’s taxpayers!
 
6.    Sixth,
the power purchase agreement should be renegotiated. The PPA was to be the
anchor for the Muskrat Falls project and it was to be the mechanism whereby
consumers would be held hostage to Nalcor. We learned during the Muskrat Falls
Inquiry (Exhibit P-00043) how this was going to work.  The plan was that for  NL Hydro to generate the necessary revenues
Government would
              “structure
the electricity industry in the Province to ensure regulated ratepayers                    (the 
majority of whom are customers of Newfoundland Power) will be captive to     
              NL
Hydro 
to the extent necessary to support these revenues.”
The
notion that the PPA will guarantee a rate of return on equity is flawed.
Without demand for power there will be insufficient revenues to recover costs,
including the return on equity, which tends to be treated in public utility
accounting as a cost of doing business which will always be recovered. The
business model upon which Muskrat Falls is built assumes there is a deux ex
machina
, or divine providence, which guarantees that the ROE is delivered.
Perhaps the ROE is guaranteed for Emera but is it really guaranteed for the
government of Newfoundland and Labrador, which will have invested $4 billion or
more? The reality is that profitability cannot be ordained from on high, even
by the House of Assembly!
It
was always known that power rates would rise so it should be no surprise that
both demand for energy and revenues will be adversely affected when rates rise.
Nalcor CEO Stan Marshall’s, in a presentation at Memorial in February 2018 revealed
that rates were going to 15.12 cents/KWh in 2021 even if the $7.4 billion costs
estimated at the time of sanction had been achieved.  This is shown below in the last row of
the table below where power rates rise from 11.7 cents per KWh to 15.12 cents even
without cost overruns!
 

7.     Seventh,
the PUB should focus on major cost reductions in the power industry through a
fundamental restructuring of the industry. A province with 500 thousand people
does not need Nalcor, another Crown Corporation, on top of Newfoundland Power
and NL Hydro. We need to open the door to competition and invest in low cost
renewables with a small environmental footprint. The PUB must identify
efficiencies in the power system, eliminate duplication of services within
Nalcor but also within the whole system, whose revenue requirements will double
to $1.6 billion unless drastic surgery is undertaken.  Nalcor must be dismantled!
Conclusion
 In
conclusion the PUB has a broad mandate to recommend major changes. Only with
major changes in our system can we cope with the massive costs which will fall
upon us in 2021. At that time the cash infusion from construction will be
replaced with the requirement for large cash payments, mostly in the form of
interest to external lenders. Let us hope that the PUB will present the bold
recommendations necessary to reform the electrical power system.
  These recommendations should include dramatic
reductions in the huge overhead costs which have been loaded on our system
along with regulatory changes to protect the consumer. It should restore the
powers of the PUB so that it can function as an independent regulatory body
with the authority to discharge its statutory duties to deliver power at the
“lowest possible cost consistent with reliable service”.
David
Vardy
Appendix:
Measuring the Shortfall
 In
his update at Memorial University a year ago Stan Marshall presented the
following chart, which showed the load growth projected, compared with the load
growth assumed at the time of sanction. The update told us that we would need
to charge 22.89 cents per KWh, beginning in 2021, to recover the cost of
Muskrat Falls. In the chart there is a footnote which tells us that the demand
projection is based on an assumed 2021 rate of 18 cents per KWh.
 

I
submitted an ATIPPA request which included (as question number 6) the following
question:
            In
the February 2018 chart the latest load growth data are based on a target rate
of 

            18 cents/KWh, escalating at 2%thereafter. Page 28 of the same presentation
shows 

            that a rate of 22.89 cents/KWh in 2021 and rising would be required to
cover all 

            costs. What will be the revenues from rates and the deficit arising
from the load 

            growth shown on page 25 and escalated each year from 18 cents/KWh
by 2%from 

            2021 to 2070?
In
the reply from Nalcor dated January 18, 2019 I was told they had “no responsive
records”. In other words they could not tell me the shortfall arising from
charging 18 cents/KWh compared with 22.89 cents/KWh which is purported to be
needed for full cost recovery. Upon receiving the ATIPPA response I went back
to Nalcor and asked them to provide me with the revenues from rates, the
revenue requirements (i.e., the annual costs which must be recovered) and the
shortfall not only in 2021 but in each of the ensuring 50 years.
The
revenue requirement provided to me April 18, 2018 showed that for all three
project components (the dam itself, the Labrador Island Link and the
transmission line from Churchill Falls to Muskrat Falls) the total annual cost
to be recovered in 2021 is $808 million.
In
Stan Marshall’s presentation of February 2018 he disclosed a cost per KWh of
17.42 cents. Adjusted for line losses to Soldier’s Pond the output of Muskrat
Falls is 4.6 billion KWh so multiplying this by 17.42 cents produces $801
million in 2021, remarkably close to the revenue requirements provided to me in
ATIPPA response PB0242-2018 on January 18, 2018. Whether it is $808 million or
$801 million it does not provide enough money to cover the province’s targeted
rate of return (established in the power purchase agreement at 8.4%).
If
that target is to be met then at least another $185 million must be added in
2021 to cover the full return on equity rather than shifting it to future
generations. This addition is one of the steps which must be taken to restore
full “cost of service” accounting. This raises the $808 million to $993
million. In my calculations I have deducted $150 million in fuel savings and
$50 million for export revenues, leaving a shortfall of $793 million, based on
estimated capital cost remaining at or below $12.7 billion.

The
key question relates to elasticity and the PUB review will include further
research on demand elasticity. Based on the information we have it is highly
unlikely that revenues will generate more than an additional $100 million even
if the rates are doubled. What I am saying is that the idea that 22.89
cents/KWh will recoup costs is a delusion.

THE PROOF MUSKRAT FALLS IS NOVA SCOTIA’S PROJECT

The substance of Hydro’s mission is to satisfy the contracts with Emera to get large amounts of power flowing into Nova Scotia for the betterment of that province and its ratepayers.  The Island could easily live without the Muskrat Fals project and in fact, other than for the onerous Emera contracts, NL ratepayers would be best off if it was abandoned and left to rust.

FIRST YEAR OF OFFICIAL ENERGY DELIVERY NOT QUITE WHAT EMERA BARGAINED FOR

PlanetNL52: Happy Anniversary Emera on 1 Year of Official Energy Delivery Not Quite What Emera Bargained For Despite all the bad news related to Labrador Island...

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.

73 COMMENTS

  1. RE Mr. Vardy states in part that "the PUB must place all cost estimates on a “cost of service” basis,…".

    My February 28th, 2012 written submission to the PUB 2-option cost-comparison review argued, among others, that the Terms of Reference for that review required the PUB to do such a comparison (they did not) — WHY NOT, and can the PUB be belied on now to do what is needed?

    Below are some excerpts from issue # 2. of my written submission (available on the PUB or my http://www.vision2041.com website)

    QUOTE:

    2. System Planning Assumptions: the failure of Nalcor to provide a year by year breakdown of the costs of both options using a cost of service method, thereby
    making it impossible to "compare" the relative merit, the appropriateness and the effects of their `planning assumptions' especially as they relate to Nalcor's
    planning assumption that an escalating supply method is the most appropriate;

    Not only does the Reference Question include within its scope Nalcor's `system planning assumptions', but the Terms of Reference also requires that "(i)n answering the Reference Question, the Board: shall consider and evaluate factors it considers relevant
    including (but not limited to) NLH's and Nalcor's … system planning assumptions…(emphasis added)".

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

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

    It is respectfully submitted therefore that:

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

  2. The key question from this piece is :Does Dave Vardy know how to do arithmetic? Or is that function past "best before date". My take is that not Vardy's and also the application of arithmetic to economic analysis is first class. Should I dare to say even world class? Vardy, continues perhaps to be first amount equals of our three wise men: Vardy, Sullivan, and Penny, also known as MFs naysayers.
    Second question: Does Maurice know how to do arithmetic? Seems that too, the answer is yes, in my opinion. My opinion has merit only if I too know how to do arithmetic, otherwise my opinion is worthless. Arithmetic and/or it's application is what I have suggested that Bruno fails, as to did Nalcor.
    Arithmetic is important. Slick Willie (Bill Clinton) often noted the importance of arithmetic. We older folk learned it at a young age, but now I wonder if kids learn it at all.
    And too, Maurice noted to Average Joe that he is no expert,as to his opinions, having but 2 years of MUN. However, I stand to be corrected, but those 2 years were in engineering studies partly or mostly. I suggest he has more than average insight in applying arithmetic to engineering concepts of power demand, geotechnical aspects of the North Spur, as well as economics, as indicated from his blog and letters.
    However, neither have much commented on MFs power reliability issues, which PENG2 acknowledges can be serious. Also the power control act requires lowest cost power delivered consistent with reliability. There is a difference in the lowest cost power being delivered and lowest cost power consumed. The first put an onus on the power companies, including their efficiency, the second included onus on customers, and their efficient use of that power. An IR management approach includes the latter, which Synapse seems to advocate, but our government has always avoided. Recall Gilbert Bennett seemingly baffled as who has responsibility for CDM and customer efficiency, suggesting t rested with the PUB.
    Vardy suggests we will pay twice, first with the boondoggle cost, second as to heatpumps and conservation. I suggest this second cost will be a reality, and needs more discussion and analysis.
    Winston Adams

    • Bruno, that piece confirms the luke warm embrace of battery storage, as a result of regulator requiring this. Yet they still bring on 4 times more gas electricity production, so how can this reduce emissions overall. Gas is at 7 year contract instead of 20 year, suggesting that if battery costs drop more, eventually battery may overtake gas. Also no significant wind was added.
      So, you can still NOT do arithmetic, Bruno, but you do cling to a vision that I too hope happens. But with 11 years to achieve global success with all renewables, it is daunting, that 10 to one odds, I suggest, we will NOT achieve it.
      Again , write your piece and show your arithmetic for Nfld context, for a 1000 dollar A prise challenge.
      The piece you reference confirms my arithmetic:current volume of battery storage is peanuts, and especially not very cost effective for Nlfd as to alternatives.
      Winston

    • If you have read any of the articles on wind/battery installations you see that they are springing up like mushrooms and the cost of batteries are in freefall not the decade old price you quote. Millions are earned with batteries balancing the load in real time.

      You are odd trashing my ideas Winston while you hope I am right. The facts aren't with you Friday, let the facts speak.

    • Bruno, nothing odd at all: most reputable knowledgeable people know we are failing as to slowing climate change caused by fossil fuel burning: coal use up 80 % since year 2000 I read yesterday, and I guess oil and gas consumption. Against that, wind, solar and battery storage cost is coming down, and uptake increasing, wind and solar ahead of battery storage. Battery cost falling about 10 % per year but still very little yet in service.
      The uptake of all of these need to multiply many times to counter growth and reverse fossil fuel and we are running out of time. That is the reality countering a green vision. Adults want no negative impact to lifestyle, which fossil fuel provides:air travel, long range cheaper cost auto gas engines. Low quality house construction etc.
      So I am not trashing your hope and vision, I trash your arithmetic as not factual, and doubtful if it can succeed in time. Efforts so far are very small as to impact.
      Batteries that has energy for a few hours can help in some areas but effectiveness is limited by how many hours they can deliver, and generally, now, where being used, are good for only a few hours. Storage cost is much more than wind and solar generation cost. Other things like footprint size for batteries and solar compared to gas is a problem. Too few care for the environment to create renewable policy, and most politicians don't care.
      Even if all including battery storage is lower cost, ramp up to replace oil, gas and coal is monumental.
      Whether carbon tax, or trading, not 5 on this blog supports cut back of offshore production. My arithmetic, my recollection: not 5 names on this blog! Not sure if you even called for oil production reduction? If this not factual, then state the names and date of comment. If more than 5, I am wrong on my memory, which is possible, so show me.
      Winston

    • I am visionary and care not a tinkers damn about 5 people. You miss the point as usual. Batteries main function is load balancing in real time. Battery farms are getting larger as well so your concerns are reactionary. Wind/sun plus batteries is the future for load balancing as well as backup. Most utilities, unlike Nalcor, have good maintenance and rarely have extended failures.

      Look through Nalcor's incompetence and see the renewable future that most utilities are moving to.

    • "I am visionary You care not a tinkers damn about 5 people" you say. 2 of those 5, engineers, myself and Robert. Robert especially talk of renewable energy and sustainability. I can't name others beside you who show concern. Point is, I guess more than a thousand reading UG, so if only 5 concerned, it means (by subraction arithmetic), more than 995 people are not concerned enough to express an opinion. So, you dwell on the 5, who are largely aligned with with you, and care not for those 5. I care about the 995 who do not see the problem as a priority.
      You say most utilites are moving to a renewable future: but at a snail pace Bruno, and often when forced, and many not forced so do little at all.
      The big picture: 11 years or we likely fail worldwide. We are not the path to failure says the experts, because of inaction, thought many solutions are ignored. Your vision ignores the extent of the failure. I had 2 Jehovah Witness ladies visit, and they wait the coming of God's new kingdom here on earth. They admmit they often travel by air, and drove off in the car burning gas. They say they alone cannot change things, so not worried either, as they are to be saved for the new earth where all will be rosy. So there is vision and tunnel vision. You have blind faith like those ladies?
      Winston

    • What about you Winston? Is your buggy and team of mules hitched up and ready to go?

      Don't make reactionary statements if you want to be taken seriously. People travel by car and magic carpet today.

  3. My own training/experience seems to cry out for a discussion on sustainability.
    Given that excessive cost, (debt +cash), has been committed to the Power system, how will the Owner secure economic and technical sustainability?
    What estimated annual costs over the life of the system, are projected?
    What are the overall prospects for capital cost recovery, (annualized over the life of the system)?
    What operating deficit funding needs be mitigated?

    Let's have this useful discussion.

  4. Any experts feel free to shoot this idea down, but I had the thought of eliminating "rate payers" altogether and creating an electricity consumption levy for all working people in the province. Rate payers currently foot the bill for all energy users. I believe I saw someone post a figure of approx. 80 thousand rate payers in the province. The financial burden could be spread out over all working peoples in the province (approx 200 thousand) in the form of a levy based on their level of income. This would eliminate monthly bills altogether, and possibly increase the amount collected overall without the shock that a rate increase would have on a rate payer. Pair that with commercial consumption, which would be billed as normal, it could work. I'm not saying it would generate 100% of required revenue, but it would ease the burden on regular folks.

    • Any method that involves our tiny population paying off 20+ billion in debt is futile. If I tell you you that you must pay down $30,000 but only as long as you live in this province, there is a good chance that you'd just move away. Others are proverbial turnips – you are going to get much blood from pensioners, the unemployed or children.

      If Muskrat Falls had been a private endeavor, it would go bankrupt and the assets would be sold off for what they are worth, which isn't much. The new owner would do just fine and the banks would absorb the loss.

      I don't see why the population of this province should have to pay for regime debt. Those responsible should be in jail, and the creditors should be stiffed. The province would lose its equity and we would all struggle on, paying off the still enormous, non Muskrat Falls debt.

      If it is any consolation, it may not matter. The entire western world is mired in debt that cannot and will not be repaid. The USA has about 200 trillion in obligations for example, which includes the official debt plus entitlements.

    • I don't think carbon trading will survive — countries that are paying into the system will end up opting out. It is just another non value added service that profits traders and allows the rich to feel less guilty about polluting.

      How about this: We stop offshore oil production completely, forgo the revenue and claim that by preventing production, we have sequestered a vast amount of Carbon (or more precisely, prevented de-sequestration). For that, others should pay us for our service to climate change.

    • An excellent piece to read Robert, as to carbon tax or trading. So again I offer the A prise to anyone who writes a good piece for UG on this topic as to NL.
      With first successful award of 500 dollars going to Salvation Army, via AJs interest in the last challenge on island peak demand behaviour, (PENG2 also a contestant, so only 2 took interest), this prise for 1000 dollars.
      Winston

    • Indeed, excellent read Robert. Thanks foe the link.

      IMHO, cap and trade is way more "efficient" than a straight carbon tax. It ends up cheaper (to you as a consumer) while obtaining even lower overall emissions.

      Industries that can easily (or cheaply) diminish their emissions will diminish theirs big time. That will enable them to sell those carbon credits and make a profit.

      Industries that can't really diminish their emissions (if prohibitively expensive) will have the option to buy those carbon credits (or close shop altogether).
      Still, there would be less many plant closures compared to a straight carbon tax.

      Basically, those that can diminish easily their emissions will do more than their fair share, and make a profit in process.

      If someone else happens to have better explanation skills than me, please pitch in…

    • Ex, I had a quick read of the piece and think Quebec has accumulated some 3 billion so far from this program?
      Why not submit a piece to UG to try for the 1000 dollar A prise? I see the Nfld Premier is in Ottawa today before the Senate to oppose the Environmental bill , as it may impact offshore drilling here. Oil on the brain is a serious illness here on the Rock. Once, in this area, whale oil was of high value, then cod liver oil, but nothing does as much damage on the environment, or human greed, as the black oil.
      Winston

    • A province makes money with the initial issue of those carbon credits (and also with any additional issues).

      Then after the "free market" (well somewhat free) triggers who gets to lower the most its emissions. All that indirectly subsidized by those that can't lower theirs and are stock to buy carbon credits.

      In general, its about four times cheaper/easier to abate from stationary sources than transportation.

      So (outside Quebec and NL) you should see electricity, heating clean up before transportation. (In Quebec/NL, we already kind of cleaned up heating as we already switched to hydro electricity…)

      Etc

    • Least we forget: I offered Bruno a price of 500 I think, if he would write a credible piece for UG on the benefit, cost effectiveness, of solar power for the island of Nfld. Has any reader seen Bruno's piece? Did he do it and UG reject it?
      Bruno says solar for Nfld is great, best thing since sliced bread,and that is Bruno's facts and evidence in the form of "I Bruno said so" so no debate, no evidence based information. So pass over the 500 Winston. I wasn't born yesterday.
      As to prises being self serving ego driven: I have offered 4 or 5 ranging from 500 to maybe 25,000, and not a single taker,to give an opinion, except AJ, and PENG2 , sort of.
      So : basically no takers. Why? Because I cannot pay? Because no innovative ideas? Prise too small? Questions too difficult? My opinion reasonably unchallengable, like Bruno's solar obsession, is bull? Are all Nflders too well off to try for a prise of 500-25000? They fear I go to the poor house if I pay up?
      The challenge, like the solar one , my motive : STFU Bruno, if you can't articulate your ravings on solar and other things. If not ravings, boost your ego by claiming the prise, via a piece on UG, with well reasoned opinion and evidence and facts such as Vardy and others can do , in their area of expertise.
      So there. Take that trashing. But I love you still, Bruno, ……sometimes.
      Winston

  5. Always remember PCs/Nalcor were OK with 16.4c kWh electricity for residents by 2017 and did zero studies on how excessive rates would alter the economy. Ignored price elasticity or ways to reduce demand with energy efficiency initiatives, charging more for peak hours or past 1000 kWh per month. Nalcor failed when they forced the Labrador Island link to always be bundled with MF and their ideological/Trump reasoning for not even willing to talk to HQ about a PPA. Least cost option with only 2 rigged choices, reliability took a back burner within Nalcor/Hydro. Nalcor did not even put out an RFP for a long term natural gas supply contract to get an honest kWh cost of that option or RFP to build a NG power plant. Why did Nalcor have to be involved in the construction at all?

  6. Yes, all very important stuff, this muskrat stuff, and now the Justin-snc-Raybould stuff. But we can't ignor that, nor can we forget the world scene. Trumpie and Micheals love affair has come to an end. They met the old fashion way, and for more than a decade they were inseparable, Mickie would do anything for Trumpie, he was his protector, his compodant, his partner in crime, he even said he would take a bullet for him that was the state of their affair. But Trumpie in his unfaithful dealings and wheeling began to eye kimmy from afar, think they first mention on e-harmony and after a first visit expressed his puppy love for kimmy at first sight. This was a terrible blow to mikie so he began throwing spit balls at Trumpie for the last few months, it was on the rocks and not worth saving Mickie began to believe. But when before the entire World, Trumpie expressed his unending love for kimmy and was going to meet his excellency at an undisclosed location ( it got out Vietnam) then Mickie could bear it no longer, he knew it was over this time, he had been abused too much by his abuser and could take no more so he went before congress to tell and expose all. And although he is headed off to jail because he had lied to protect his abuser, he is a reformed man, and has turned his life around. The GOP heaped further abuse on poor mikeie for ending the relationship, blame the victim kind of attitude, and wished he'd burn in hell for his sins. What a wicked man and pathological liar. He learned well from his master, that he called a fraud and a con man. Meanwhile, the trumpie-kimmy dinner and date went awry. The WH had already posted the menue for the hundreds of invited guess and the signing of their vows to put an end to all wars and to embrace and publicically express their continued love for each other. But then the worst, the unthinkable, the unbelievable happened, kimmy baulked when Trumpie would not withdraw the sanctions. So it all ended, yes, without the dinner ever happening. Trumpie walked. But in a meantime on his leaving he had no sympathy for mikie, that was over for him too, mikie had gone too far, the rotten rat. So will Trumpie be now left out in the Cold War or will he now turn to Putin, his other friend. Will he proclaim his undie love for Gladamar next. Stay tune, says Joe blow.

  7. I am surprise to see M. Vardy being that disconnected on his point No3. It took about 40 years to payback a well designed project like UC. 40+ years is also the range for all the well-designed projects HQ did. So if a well designed project takes over 40 years to payback, how can M. Vardy asks for a terrible fiasco like MF to pay for itself in the same range or faster ? There is no way a fiasco like that one can be paid in less than 50 years and without compensating with the value of existing assets like UC.

  8. Good point!!! What do we compare our system of justice to. Guess we can only compare it to other similar democracy's. And guess it is simplest to compare it to the USA. If this same thing, muskrat happened in the USA, a government agency, would they be charged in a federal or state court, and if found guilty be jailed. Like the inquiry these guys seem to be so casual, just coming in for a chat, and Eddie had to be told by the judge you are not in control of these proceedings. Eddie would say to the co council, after answering a question, you may proceed now. They even show distain for the proceedings, or appears to me says Joe blow.

    • Anony @ 18:11 and AJ @ 09:28:

      The main difference being Enron is a privately held, publically traded corporation – more akin to Fortis that the MF project groups, so Enron is not really a good comparison to MF.

      The MF project groups were setup up by a government that ran 2-3 elections on a MF development platform and had support of the populace of 70-80%. It was only in 2017 that there were more than 50% of people polled in the province with an anti MF stance.

      If you want to know why there will be no charges (infact cannot be) – read Gomery, reasoning is laid out quite clear.

      PENG2

    • Peng2 you keep quoting 70 to 80 percent of the population support. Yes maybe of an uninformed 90 percent of the population, or misinformed 90 percent. As I mentioned yesterday govt. officials up to and including the premiers communicated to the shareholders right up to the election that the number was 6.2 and holding, so you can't blame the voters for making a wrong choice or support the project. We were misinformed, which is worst than informed and still supported by the public. Plus right from the beginning we were lied too. We needed the power and it was the least cost option. Two more blaten lies. We were going to make money on the sale of power. Another lie. DarkNL was caused, Liberty said that, by the powers that be to sabatoge our power supplies, to convince us all that we needed the power. More lies. With all the lies they told and efforts to convince the people they should have had a 100 support. Tks. average Joe.

    • AJ @ 11:29:

      Being willing blind isn't a defense – there was more than enough info for people to make up their own mind and not believe the government BS line. It is the voters that made the mistake – check out document 14-MC-2012-02-27 presented to the PUB in 2012, lots of info available if you cared to pay attention.

      Bruno @ 09:59:
      Have you bothered to read the FLG, Gomery or any of the other documents or just prefer to opine with no backup?

      PENG2

    • So PENG2, ——-"Being willing blind isn't a defense – there was more than enough info for people to make up their own mind and not believe the government BS line."

      That would support the Commission reaching a conclusion that the "knowledge available at the time", especially for the most educated and informed "at the time", i.e. the premier and cabinet, MHAs and Nalcor's world class experts — should have known better than to sanction and proceed with Muskrat.

      There was therefore nothing 'reasonable' about the whole fiasco, even based on the knowledge available at the time. NO?

    • AJ @ 11:29:

      The voter is 100% responsible for the actions of government (especially when reelecting with such wide support on known platforms), arguing otherwise means we will only repeat a MF in another format – it was very simple to generate an informed opinion, if you read and pay attention.

      Continuing your train of thought – if we elect a PC government in 2019, 20-30% of the caucus will likely be the same that gave us MF circa 2013.

      Who will you say is responsible then, just remember what you said about my opinion that due to the FLG we must complete? All I did was read publically available info back then. No good to say you only skim documents and get the jist – that is not informed opinion.

      PENG2

    • MA @ 11:51:

      I don't think I ever said any else? I always said the decision to do MF or GI was made the voters box in 2003/2007 and MF was political and not based on Engineering.

      What will become interesting is how section 4.13 of the FLG is to be interpreted – I think I have mentioned this several times before.

      PENG2

    • Garbage PENG2.

      You ignore the point I make and ignore that government (and political parties and agencies, such as Nalcor) spent millions influencing, persuading, and misinforming citizens/voters.

      Few people have the time, means and capacity to "read" fully reams and reams of technical reports.

      'Informed' and 'uninformed' are not black and white categories.

      There are, and there must be, degrees to which individuals are able to attain appropriate levels of informed opinion ——– ESPECIALLY WHEN GOVERNMENT AND NALCOR MISINFORMS THEM.

      The premier,cabinet, MHAs and Nalcor would have and/or should have been at the very highest category of those with the "knowledge available at the time".

      They should have made 'reasonable' decisions associated with this purposely crafted fiasco.

      However, there is nothing reasonable about the willful blindness associated with pushing this Muskrat fiasco through.

    • Thanks Maurice for making my point clearer. And to peng2 will just mention two points. Yes, it appears we may elect a PC govt. again thus year. And we only have two choices, the NDP has failed us miserable as an alternative, and was really their best opportunity ever in the last couple of years to distinguish them from the other two in terms of muskrat. Ball et al should have paused the project after they got elected and evaluated our options. As you say, the FLG said must complete, but don't think it says it can't be paused to reevaluate. Nope they just gave another 3$ billion to send the fools further. Harper gave the FLG to shaft us, not sure why Justin followed suit, maybe to prevent shut down and evaluate or as per the first FLF so that we could complete. So the bottom line is when ball failed to pause and evaluate he took ownership of the project the same as the pc's, so we have the two parties as co ownership. So people might conclude it doesn't make any difference in which party we elect, they both have blood stained hands. Maybe the PC hands are drier now because they were the first to make the plunge. I would also say that when muskrat was being cotentiplated the other two parties did not mount sufficient opposition to it, they voted against it in the house but did not inform the voters well enough of the catospratisohy that muskrat would lead us to. Or we did not need the power and it was not the least cost option. I suspect Ball has regretted many time of his first mistake after taking office. "Not to pause and re-evaluate our options". AJ.

    • MA @ 12:19:

      Noone walked into the voters booth and forced anyone to vote in those who endorsed MF – there was lots of info publically such voters should have raised questions. the fact that the government actively undertook a program to quash dissention should also have been a hint to voters. Remember the 'when the cows come home' comment?

      AJ @ 13:43:
      I said a long time ago that because of the FLG MF had to be completed – I think you called me on that but you never actually read the terms. I will also say there was no practical way to pause when DB was elected – the course of MF was set much earlier, and the FLG isn't Harper's way of 'shafting us'.

      Until the population takes ownership of their mistakes, we will never hold our politicians to task, doomed to repeat history.

      Maybe both of you want to review 14-MC-2012-02-27 and realize just home much clear language opposition there was to MF – no one said anybody needed to read every report to understand MF wasn't right.

      PENG2

    • "- no one said anybody needed to read every report to understand MF wasn't right." Huh!??

      Whatever that means you have been BSing folks that have been informed (by the EIS, MHI Liberty etc.) since 2010 onward and have been warning of the absurdity of MF.

      You are a troll come lately with a huge ego and a little knowledge (as in little knowledge is a dangerous thing). Please don't insult the "naysayers" with your nonsense.

    • Peng2 maybe you have read the FLG in more detail than I have, but from my reading we have to be totally desolate, everything sold off, on our hands and knees begging for mercy. That's how Harper wrote the FLG and KD was so desperate to get the loan she would have signed anything placed before her. Imagine making the rate payers totally responsible regardless of the cost. What if it turned out to be 2000 $ a month???? That's what I call shafting the people. It was not a negioated document. It was a take it or leave it document, with a wink and a nod from Harper and if possible a wry smile. Joe blow.

    • Bruno @ 14:17:

      If you want to contribute to solving the MF problem NL now has, maybe start to petition the Nova Scotia government to relieve NL of its power supply obligations, so we wont be compelled to operate MF and endure default penalties under the Maritime Link agreement.

      Otherwise, there was a significant base of publically available knowledge prior to sanction/endorsing the FLG that should have warned people of the issues.

      PENG2

    • AJ @ 14:23:

      I think you are not totally understanding the terms of the FLG. It is quite clear in the FLG that the NL Crown commit to making the COD or let Canada complete and send us the bill. It is also clear that MG, LTA and LIL are joint while the ML is separate when considering default.

      Aside from that, here is a link to an article in 2012 just after signing the FLG – in plain words the media and opposition parties did say it wasn't good:
      https://www.cbc.ca/news/canada/newfoundland-labrador/terms-of-muskrat-falls-federal-loan-guarantee-released-1.1203708

      So you know, the FLG terms were released via 'nrcan' ~60 days prior to endorsing – I stand by my comment that we allowed ourselves to be deceived.

      PENG2

    • Yes, peng2 that's one point we can agree on for sure, "we allowed ourselves to be deceived", however I used different words, but it means the same thing. We did not negioate the contract, it was written by the Feds, and KD was so desperate she would have signed anything. And hopefully the inquiry will focus more on those so called negioateions. And was not enough for the opposition to say it was not good, they should have been shouting it from the rafters long and hard to raise holy hell. That's what opposition parties are for. Now I am not blaming the opposition parties as much as the ruling party, but they should have been talking to the naysayers. That would have been a good idea too, as a tactic, let the Feds complete, and send us the bill. Hhhh..mmmm still laughing at that one. Tell them to deduct from our transfer payments, that are non existent. Joe blow.

    • Boys and girls, we are past the shocking details of what was, who do we hug, and who to reject? As Tor says we need a plan, what is the plan? Making change happen, takes some thought and action. To a better future for our sons and daughters! Individually, we are toast. Let's do something which will improve "outcomes".

  9. I read the Ball "The way Forward: Climate Change", 52 pages, without throwing up. How much did this document cost, and what "communications" people composed this bullshit, the intent being to do nothing meaningful, but mislead the public that we are doing our part to help solve an environmental crisis looming.
    In particular, what does PENG2 think of this document, and it's intent etc?
    How many Nflders are gullible to think this government is serious about dealing effectively with climate change, and this document sets the plan? Not exactly a Green New Deal vision.
    Winston

    • WA @ 23:18:

      I read the opening page and gave up – I don't think much of this type political document, I prefer technical documents.

      Honestly, I would say 70-80% of the population will buy into this nonsense – same percentage as bought into MF and they will realize later it was a political piece only.

      I agree with the concept of efficient living – Canadians currently rank about 10th in the world on a per-capita basis of GHG production, but Canada as a whole only produces 1.65% of the total in the world. Unless a normalized analysis accounting for #people/km2, heating seasons, developed areas etc is completed these type of per-capita numbers don't mean a whole lot.

      To make per-capitia ratios meaningful the NWT needs to be compared to Siberia / Alaska, Ontario compared to Michigan, Newfoundland to Denmark / Australia etc.

      PENG2

    • While reading the report, it came to mind your argument that 70-80% of Nflders were in support of MFs, as not interested to be informed. MA argues that this area is complex,and the pubic was intentionally misinformed by govn and Nalcor, so could not be expected to see the flaws.
      I come down in the middle, and both are factors.
      With that in mind, now with climate change policy, 70-80 % may think this policy is great, so likely the same result, incompetence and mismanagement.
      And too, mention climate change, or carbon tax etc, and seems readers of UG freeze: no opinion at all. Everyone drunk on the black gold koolaid? We need the revenue, as do every other worldwide oil producer!
      As mentioned to Bruno, Jehovah Witness know the end game. The 2 ladies, they left me a phamplet, and it says: "Jesus provided a beautiful preview of what that Kingdom will do for its subjects-Revelation 11;15, and world conditions confirm that God's Kingdom will soon come, as just before the Kingdom brings peace to earth, our would would be plagued with wars, famines, and earthquakes :Matthew 24.3.7. We see those very conditions today. So we can be confident that God's Kingdom will soon bring an end to all such problems".
      So there you have it. Why worry about climate change, CO2 rising or methane from permafrost melts?
      With the right Vision, whether Bruno's of JW's , not to worry, take no action.
      I seem to recall Revelation, and the 4 horsemen, showing a horrific earth , before the beautiful restoration? Maybe I should brush up on that as to whether wind, solar or battery energy saved the day, I think not?
      Winston Adams

  10. MORE ON PEAK LOAD
    Recall last week we were about 100MW peak load above our renewable capacity, for daytime, past where we ignore the morning ramp up in load, , due mostly to programmable thermostats, as well as regular nite set back to heating. Setbacks gives a temporary reduction of peak load at night , but a big penalty from the rampup, adding hundreds of MWs early morning, especially during extreme cold and high wind conditionss.
    Last week's day time data was was conditions colder than average , yet the peak only exceeded our renewable (water and wind generation) by about 100MW.
    So what if conditions were nearer to normal?
    We have about 1200MW renewable island power, could we meet our full load with island existing renewable , on a typical average winter day?
    Yesterday, Saturday, was nearer to normal average . Averabe is about close to 0C daytime , and -8C night time . Average wind is 20 mph.
    Here is the data for yesterday.
    10am ; 1319MW, -4.4C,-15C WC
    1:30; 1214 MW, -2.2C, -12C WC, wind 40 mph, 65 km/h
    2;35; 1190MW, -1.9C, -10C WC, 25mph, 41km/h……….MISSION ACCOMPLISHED?
    3:25; 1182MW, – 2.1C, -10C WC, wind 23 mph, 37km/h
    4:10; 1198MW
    5:30; 1301MW
    6:40; 1367MW -4.5C, -13C WC, 24mph, 39km/hwind
    10:30 1301MW -7.0C, -14C WC, 11MPH, 18kph
    12;10 1242MW -7.2C, -14C WC, 10mph, 18km/h

    So, at 3;25 Pm we bottomed our on our grid peak load,at 1182 MW. This means we needed none of the approximately 100MW of green energy we now get over our DC indeed, our 12.7 billion legacy project. We needed no thermal generation to meet that load.
    Strictly speaking, 1182 MW of generation does not equal 1182 MW received and used by customers, as there is some transmission losses over the power lines and transformers.
    But also, yesterday was still about 2 degrees colder than normal, but it was also sunny, which reduced the heating load . Also relative humidity was again unusually low at 47%, boosting heat pump performance for heating.
    So it is reasonable to speculate that at normal temperature, which is a little warmer, we could meet the daytime load, from our existing island renewable generation, even allowing for transmission losses!

    Al in all, a Remarkable Day and achievement , was it not? Will the main media or the power companies or government report this achievement, coming just 1 day after The Way Forward:Climate Change plan here? Will Minister Letto not want to take credit? Or the fact that no MFs power was needed an embarrassment?
    Winston Adams

    • WA – most of our off-island import has come from Nova Scotia for the past 4 weeks. LIL has been more off than on and limited to a scant 42MW when running. ML import, peaking up to 170MW is almost certainly surplus NSPI solid fuel (coal, petcoke) = not green.

      Don't forget though that your Saturday numbers are lower than Mon-Fri load levels. You've chosen a soft target with a Saturday. Also your numbers ignore that a certain amount of firm spinning reserve equal to the largest generator (ie BDE#7 is 154MW) is needed to remain unused: your scenario for yesterday has zero spinning reserve. Aggressive CDM and DSM could address both of these issues but I doubt these were high on the agenda of the Climate Change plan.

    • I suspected that less than 100 MW was coming over the DC line, whether lack of power from Labrador or technical issues to get more than 42MW more the issue, if you can clarify.
      Yes Saturday is a bit of a soft target,and never chose it that reason, but to get a day when temperatures were close to average winter temperatures. Also as most are not working, heat load during the day is not generally set lower, but constant, vs Mon-Fri.
      Yes I did not include spinning reserve. And I guess Holyrood large units operating at minimum? Which is a lot.
      Also if transmission losses is 5 %, then this is about 60 MW. So actual customer use is 60 MW less than that produced. Any load reduction from future customer efficiency improvements, further reduces transmission losses, permitting less generation needed.
      Agree that aggressive CDM and DSM is not high on the Climate Change Plan, Whether they roll out anything prior election time, pst Synapse and PUB assessment?
      Sad to think 6 years after MF sanction, that we need to import dirty coal power, up to 170 MW, for our cold snaps, and where we could have been, with better isolated island options.
      Overall, our 1200 MW load for yesterdays conditions, I suggest is far lower than Nalcor wound predict in 2012 forecast.
      Also it suggests ability to flatten the winter peak as Synapse suggests, not that Synapse needed to tell that to the power companies?
      Winston Adams

    • Winston, what demand trends are showing up which would indicate that per capita domestic demand since 2012, for heating, are in decline? Who is reporting such stats, taking into consideration variations in climate factors, (daily temperature, wind, moisture, etc.)?