ROCK SOLID: ANOTHER MYTH EXPOSED

Guest Post by David Vardy
Our
credit rating, albeit already downgraded, hangs on a slender thread. It depends
upon the false premise that Muskrat Falls is self-supporting and that Nalcor
Energy is a “self-sustaining” Government Business Enterprise (GBE). Nothing
could be further from the truth. This is the myth which supports our credit
rating and which is our tenuous buttress against falling over a steep fiscal
cliff.

Sturge:
Project Rock Solid

On
March 28, 2019, Nalcor’s then Vice President and Chief Financial Officer
Finance Derek Sturge told the Muskrat Falls Inquiry that the financing of the
project was “rock solid”  (page 26). This is the
same CFO whose contract has just been terminated “without cause” and who was
awarded a compensation package of $900,000, in keeping with Nalcor Energy’s
entitlement culture. Legal counsel for the Muskrat Falls Concerned Citizens’
Coalition had asked him:

WILL
HISCOCK: “So just to get this right, is it your view that any act, really, of a
government authority can make an enterprise profitable? I mean, doesn’t that
just defy the laws of economics? We can’t just write into the law that this is
going to be a profitable project that returns 8.4 per cent return on equity,
can we? We got no actual ability to have that materialize in the real world.”

Mr.
Sturge responded as follows:

“MR.
STURGE: No, I mean, there’s probably risks, but this contract, I think, is
probably as rock solid as it gets in terms of saying that all of the costs
incurred get recovered in rates.”

What
confidence can we place in this evidence? Does the termination of Mr. Sturge’s
contract with Nalcor relate in any way to his evidence that “costs incurred get
recovered in rates”. Was this statement a myth or was it something more
serious?

However
he admitted that a rate “spiral” could occur:

“MR.
HISCOCK: – the rates can go – the higher the rates go, the less power people
use. MR. STURGE: Absolutely, and that’s why then – that’s why it is all – so
you got to sort of separate. The contract itself works, but I agree with you
that there’s a risk that you get into the cycle of rates increase, load
decrease and you get into that spiral, absolutely.” (Ibid.)
 

Derrick Sturge


“Understanding
Muskrat” at 61 cents per KWh
 
Marshall’s
February 15, 2018 presentation at Memorial University, entitled “Understanding
Muskrat,” identified an average unit cost of 22.89 cents/KWh, yet the projected
load growth on page 25 contains a footnote saying the load is forecast on the
assumption of a targeted rate of 18 cents/KWh? Did this reflect a recognition
that not only was it unacceptable to charge rates of 22.89 cents/KWh but such a
high rate would trigger a large drop in demand? Did it reflect an understanding
that the costs of the project could never be recovered in rates because of
consumer resistance? 

Nalcor
assumed that price elasticity of demand would be very small, virtually zero.
The reality is we have little experience of such large rate increases as we are
about to experience. Dr. Jim Feehan’s research indicates that Nalcor may have
underestimated the consumer resistance to high rates and also underestimated
the long term price elasticity of demand 

Stan
Marshall’s presentation informs us that the $808 million revenue requirement
translates into a cost per kilowatt hour of 17.42 cents assuming that all 4641
GWh of power is paid for at that rate. With Island ratepayers bearing all the
cost, and with only 1,324 GWh of Muskrat energy used on the Island, the
inexorable arithmetic tells us that the cost per unit is much higher, at 61
cents or four times the cost of Holyrood power. In fact we must rely on
hydro-electric power sources on the Island to cross subsidize the power to keep
it down to the average unit blended cost of 22.89 cents per kilowatt hour, which
includes low cost power from Bay d’Espoir. Does that sound like a
self-supporting project?

Government’s
Rate Mitigation Plan
 
When
the government of Newfoundland and Labrador (GNL) asked the PUB to find how to
mitigate the cost of Muskrat Falls they acknowledged that revenue from rates
would be insufficient. In fact GNL put the full revenue requirement to the PUB
and tasked them to find $726 million in rate mitigation for 2021. The taxpayer
was already bearing the cost of servicing the generation equity, estimated at
over $3.1 billion and it has to be added to the $726 million. GNL has already
borrowed that money and its servicing costs are included in the 13.4% of debt
servicing costs reported in a recent presentation by the Economics Departmentat Memorial at page 24.

Potential
for Impairment of value

The
same presentation from the Economics Department informs us that “Prior to first
energy being generated and sold, the asset value of Muskrat Fall will be based
on historic costs and assuming that the price charged will generate sufficient
revenue to cover  debt and equity costs”
(Ibid., page 68). The key point is that the value of the financial assets used
in calculating our net debt is based on “historic costs” which is what we paid
rather than basing the valuation on market value or what the assets are really
worth. The latest information is that $3.74 billion in equity has been invested
by the province in transmission and generation assets.

If
the $12.7 billion historic cost is revalued to $1.0 billion, to pick an
arbitrary number, then a write down of $11.7 billion will more than extinguish
our equity value and will bump our net debt up by $3.74 billion. If revenue
does not cover cost there will be a write down: 
“then either the asset value will fall or and net debt will rise or the
tax payers will subsidize and that will increase the accrual based commitments
and raise provincial net debt.” (Ibid.) This could drive net debt up from $15.4
billion to $19.1 billion. 

The
Economics Department presentation identifies a number of key indicators, or
vital signs, of our fiscal health. These include net debt, albeit an imperfect
indicator, but one which discloses a disturbing trend. Our net debt per capita
(page 19) is $29,264 compared with $17,867 for the rest of Canada. Another
indicator is debt servicing costs of 13.4% compared with 6.8% for the rest of
Canada (page 24). The cost of borrowing is a key issue and we now pay a premium
of close to 120 basis points over Government of Canada long term bonds (57).
All three of these indicators would be adversely affected by a write-down of
the value of Muskrat Falls. We would be forced to pay higher interest on our
borrowing, if indeed we could continue to borrow.

Stan Marshall

On
October 8, 2019 Stan Marshall told the PUB that the province has to be
concerned about the self-supporting status of Muskrat Falls? He said: “the
province has to be concerned that the monies it has borrowed to finance the
equity in Muskrat Falls could be self-supporting, and so it has to have
revenues there to be able to do that and demonstrate that. Otherwise, the bond
rating agencies would downgrade the province’s credit. It would cost more every
dollar the province borrowed…. if there’s not enough earnings from the assets,
it could be that those assets would be impaired and we’d have to write them
down, and again they would show up on the books of the province.” (page 8)

Will
the Muskrat Falls Inquiry deal with the Fiscal Impact?

The
fiscal impact of Muskrat Falls received little attention during the course of
the Muskrat Falls Inquiry? The Concerned Citizens Coalition wrote the Commissioner on February 22, 2019 and recommended he engage an independent
financial expert: The Coalition believes fiscal impact is well within the
Commission’s mandate. Yet it has been the silent elephant in the room!

“We
ask that the Commission appoint an independent financial expert to quantify the
“balance” described in section 5(e) of the Terms of Reference by measuring the
allocation of costs and risks among the various parties to the Muskrat Falls
project, namely the ratepayers of this province, its taxpayers, Emera Energy
and the federal government, based on the agreements and arrangements at the
time of project sanction and how the balance has now changed. This assessment
should include the risks associated with the completion guarantee and with any
indemnification or guarantees for which the province may be responsible as a
result of the federal loan guarantee.”

“Both
Nalcor and the government of Newfoundland and Labrador treated the project as
self-supporting. The expert report should measure the likely revenues from
rates and assess the prospect that the project will be self-supporting.
Finally, we ask that this review provide an assessment as to how the project
impacts on the overall financial position of the province and its credit
ratings, particularly if the project is not self-supporting.” 

The
Commission did not accept the advice of the Coalition. The Coalition posed
questions on the  financing of Muskrat
Falls and on the obligations falling on the province to  the Deputy Minister of Finance  when she was a witness at the Inquiry. She
did not answer these questions nor were the probing questions ever answered
during the course of the Muskrat Falls Inquiry?
 

The government told the people of the province on December 18, 2012 that we were
protected from any liability arising from the project. “The legislative
amendments also provide for Nalcor and its subsidiaries to sign contracts for
the project on their own behalf and not on behalf of the province. This
protects the province from any liability for contractual obligations with
respect to Muskrat Falls.” Was this a bold faced
lie? 

Despite
the federal loan guarantee it now appears that the province is potentially
liable for payment of the full revenue requirements, amounting over the 50 year
supply period to $74.6 billion (IC-NLH-017, attachment 1, LUEC Tab).

Unfortunately
the Inquiry did not delve into these issues as deeply as the Coalition had
requested. On the very last day of the hearings the Commissioner raised these
same issues with NP counsel Liam O’Brien. 

O’Brien responded: “you heard some evidence that consumer consumption has been on a
decline since 2015, and that’s without Muskrat Falls’ costs being built into
rates. you’ve heard some evidence in terms of the dynamics of pricing and price
elasticity and that it’s hard to predict, but I think it’s reasonable to assume
that this decline would intensify in the face of doubling rates. A sharp
decline could even have the effect of increasing rates further. And we heard
some evidence concerning the utility death spiral, that sort of thing – whether
or not that’s a – will occur, that – there’s some evidence on that.”
(page 5)

We
await the imminent report from the Commissioner. Will he opine that the project
is financially “rock solid” as former Finance VP Derek Sturge stated or will he
confirm that, with contrived load projections and deliberate understatement of
cost, the notion that Muskrat Falls is self-sustaining is nothing but a myth
and that the flawed business plan for the project will trigger a utility death
spiral? 

This
is a time of great peril for our province and time for us all to face the
truth. We must demand that truth be told and demand consequences when truth is
not spoken. Without truth there can be no trust. The institutions on which we
have traditionally relied to provide insights are no longer functioning. Sad to
say we cannot rely on government alone to show leadership to navigate the
perilous waters that lie ahead. Blind faith in our leaders has failed us
miserably. 

My
fear is that neither the Inquiry nor the PUB will disclose the truth about the
fiscal impact of Muskrat Falls. Many do not want to hear the truth. Many do not
want to tell the truth. If we the people are prepared to settle for comfortable
myths in order to carry on without dealing with harsh reality then we must
accept the consequences. But we must also ask: is it fair to our children and
grandchildren whose legacy will be a mountain of debt?

David
Vardy


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.

33 COMMENTS

    • There was a slide in Wade's presentation that implied that we will never go bankrupt because the federal government will bail us out to prevent the hit on the credit rating of provinces in general.

      I suspect that is true. We will never be permitted to declare bankruptcy — but I do see the Federal government taking over the place as part of that bail out.

  1. This is a great analysis – it is great to see actual quotes from these people.

    Their logic can be summed up as:

    If we pay $12 billion for something, then it must be worth $12 billion.

    It is a rock solid investment because the costs will be covered by ratepayers because we wrote it into law.

    The real reason is of course that our local elite wanted a mega project, and that these well paid actors with million dollar golden parachutes did their best to enable it.

    I doubt they believe any of this foolishness – but like many people in government, "it is above their pay grade". They are good "foot soldiers". Given their high level positions, you have to ask – who really makes the big decisions in the province?

  2. If the asset value of Muskrat Falls were written down what would be the impact on our borrowing cost and the ability of the province to borrow. Our cost to borrow is 120 basis points higher than that of the Government of Canada and the spread is widening. If all provincial equity in the project, close to $4 billion, were written off and our net debt soared from $15.4 billion to almost $20 billion would we be able to borrow, and, if so, at what cost? If we could not borrow what would be the impact both on current and capital expenditures?
    The Auditor General considers Muskrat Falls to be a self-sustaining project? In the Auditor General’s report on the financial condition of the province for the year ending March 31, 2018 reference is made to Government Business Enterprises (GBEs) and Nalcor is considered to be such a “self-sustaining” GBE. “The debt of GBEs is fully supported by its customers-in the case of the electrical generation and distribution business of Nalcor, the ratepayers.” (https://www.ag.gov.nl.ca/ag/finStatements/2018FinancialStatements/FinancialStatementReport2018.pdf page 51)
    “Each year, Government must assess the value of assets owned by the Crown, directly or through Crown corporations, regardless of whether they are a GBE (Government Business Enterprise) or otherwise, to ensure there is no impairment in value. In simple terms, an asset of a GBE would be considered impaired if expected future revenues are less than the cost of the asset. If that were the case, the value of the assets would be reduced, resulting in an increase in the Provincial deficit and Net Debt.”
    The report goes on to say that the “structure” for Muskrat Falls “ensures” that the project will be self-sustaining: “The existing Muskrat Falls business, regulatory and financing structure ensures costs, expenses or allowances related to the Project will be recovered, in full, from ratepayers in the Province. Because this structure ensures there will be sufficient revenue generated from ratepayers over the life of the project to cover the capital and operating costs of Muskrat Falls, it is unlikely that the Muskrat Falls assets would be considered impaired in value on the financial statements of Nalcor.”
    This is an extremely powerful statement which offers comfort to the financial community, to rating agencies and to the public that this is a self-supporting project. This strong statement affirms confidence in the business plan for Muskrat Falls and in the project’s ability to recover costs without government support. On what basis can such a statement be made without an examination of the business case for the project including the likelihood that high rates would place the project into a death spiral?
    David Vardy

    • The Auditor General is just another political animal. It is an illusion that the AG is protecting the interests of the public. The fact that the AG said this at all is highly disturbing. AG = Government = Nalcor = DW etc.

      Given that we can survive on Bay d'Espoir most of the year, using Holyrood only for the winter peak (but demand and population is going down), Muskrat Falls is worth to ratepayers what it would have cost to refurbish the Holyrood thermal station. I'd say $2 billion dollars max.

      If we need to keep Holyrood anyway for reliability issues, and MF costs more to operate than we can sell extra power through Nova Scotia for and some Holyrood fuel savings, then it may only be worth what Quebec might pay for it.

      It is also possible that it is worth nothing at all. DC link unreliability, high operating costs, no market for the power, the rise of renewables etc.

      I don't think writing this down is going to affect our credit rating very much because banks know that the federal government will prevent us from declaring bankruptcy.

      For example: NewPuertoLand and Ricodor

      In 1984, US Congress explicitly forbade Puerto Rico from declaring bankruptcy under Chapter 9, Title 11, United States Code. … Investors were concerned that Puerto Rico would eventually default on its debt. Such a default would reduce Puerto Rico's ability to issue bonds in the future.

  3. Watch carefully how the Ford Gov is hoodwinking rate-payers in Ontario, by Engineering a 12% reduction on their power bills. Simply put they off load $Billions in Hydro costs onto the taxpayers. BC did the same under the Toryfied "Liberals". This while they incur huge expenses to shut down renewable energy projects, cancelling contracts with wind farm installations. If Ball is serious about carbon reduction, and looking for wind towers, to erect on the windy peninsulas, he should give Dougie a call. Trade Stan for 100 wind towers:-)

  4. our children and grandchildren,simply put, will not live here. they will have to leave for work…unless they are related to the chosen families, or choose a career as a health care provider or repo man. 🙂

  5. Really appreciate having these evidence summaries and analysis. Hats off to Des, David and all the contributors.

    Reality is about to test Derek Sturge's claims about Nalcor being self sustaining. The same reality will test claims from Danny Williams and Cathy Dunderdale about what an awesome benefit Muskrat Madness will be.

    I still think Muskrat Madness was a big fraud from the beginning and would have been a devastating social and economic disaster even had it been completed for the originally estimated cost.

    While it seems obvious that Sturge et al. are fraudsters trying to justify their wrongdoing, what to make of the auditor general, Julia Mullaley, endorsing Muskrat Madness as self sustaining?

    Mullaley obviously does not grasp the basics about the project.

    Ontario has been through a long period of the AG slowing waking up on the electricity file and missing the jokes in the early going.

    While in recent years, Ontario's auditor general's office has distinguished itself in documenting some aspects of Ontario's disastrous green energy policies, for many years Ontario's AG failed to grasp key elements on Ontario's electricity situation. Here's one example: https://www.tomadamsenergy.com/2011/12/05/ontarios-auditor-general-snowed-again/

    Now, Ontario taxpayers are subsidizing Ontario ratepayers to the tune of $4.3B/yr and growing. So much for "self sustaining".

    Auditors are backward-looking in orientation, so perhaps it is too much to expect them to have wide enough perspective to see green electricity disaster like in ON and NL clearly as they are developing.

    It is just frustrating to see yet another element of official NL utterly failing to warn folks about the reality of your situation, especially since the lessons from Ontario were so easily available and so clearly could have helped NL avoid what is about to happen.

  6. The "entitlement" culture in Nalcor extends well past Nalcor in this province. Entitlement also thrives in the building trade unions, who expect the government to hand them a monopoly so they won't have to compete, allowing them to be lazy and combative in their dealings with their employers. Entitlement exists in the public sector unions, who place wage increase demands on a province on the edge of bankruptcy. Entitlement exists in the fishery, where a few months of work + EI benefits has become a way of life for many. If you ever have a question about EI rules, just ask anyone in the fishery cause they know it inside out. Entitlement exists in the people, who expect the government to compensate them for failed communities, failed projects and failed industries. NL attitudes are largely based on entitlement and that is one reason why NL fails so miserably most of the time.

    • Entitlement is a worldwide problem and not something unique to Newfoundland.

      Iranians have highly subsidized gasoline and are currently protesting because the subsidy is being removed. 40 million people in the USA are on food stamps. It doesn't matter what the program is, people get used to it, think they are entitled to it, find ways to abuse it and revolt when benefits are withdrawn. They also vote for anyone that promises more benefits.

      Social programs are safety nets that stabilize society, but people become dependent on them and take them for granted and they can get out of control. It will only get worse as artificial intelligence and robots create another industrial revolution, eliminating millions of jobs (customer service, bank loan officers, cashiers — AI can do it all). What is best? Raw capitalism with no government support and social welfare provided by charities, or the other extreme, a nanny state with universal income or something in-between?

      There are no monopolies. All construction paid for by government are public tenders and there is no longer a provincial preference policy so firms across Canada can compete. Small jobs that aren't tendered still require at least three price quotes and if the prices are unreasonable, the job will get cancelled.

      NAPE is fighting for higher wages because everyone is worse off from years of inflation, increasing taxes and fees and zero wage increases, but they also know that wage increases have to be balanced by job cuts since the payroll pot is already empty. All the union bosses know this. It is more a case of union politics and PR directed at recruiting new members rather than existing members feeling entitled to more from their current employer.

  7. Here is a quote from Paul Lane today who dares to ask the Big Questions only to have the Blame Game tossed in his face:
    "Below is the question I asked in the House of Assembly yesterday regarding accountability for Muskrat Falls and payouts to departing Nalcor executives. It is obvious from the reply that nobody in the executive suties of Nalcor will be held accountable for any role they had in Muskrat Falls project. While this should be of no real surprise to anybody, this confirms it.

    Question:

    Obliteration of project timelines, doubling of cost, intentional lowballing of cost estimates, hiding of risk reports, failure to live to up to fiduciary duties, DarkNL. Despite all of this, members of the Nalcor executive team are allowed to part ways with the corporation WITHOUT CAUSE along with hefty cash payouts funding by the ratepayers of our province.

    I ask the Premier: What degree of negligence, incompetence and/or maleficence would one have to be guilty of in order to be fired WITH CAUSE and in the case of the now former chief financial officer of Nalcor, what portion of the $900,000 payout would the ratepayers not be on the hook for had he had been fired WITH CAUSE?

    Response:

    MR. SPEAKER: The hon. the Minister of Natural Resources.

    MS. COADY: Thank you, Mr. Speaker.

    I'm going to stick to the facts of the matter in this case. There is no legal case for cause I understand, Mr. Speaker. No legal case for cause therefore the individual under discussion has a contract and he has paid out a long-standing contract that pre-existing contract that goes back to the 2000s, Mr. Speaker. He's been paid out according to that contract.

    I can say this, Mr. Speaker: It is this government who's cleaned up the mess of Muskrat Falls, it is this government who initiated the public inquiry and it is this government who sent a reference question to the Public Utilities Board.

    SOME HON. MEMBERS: Hear, hear!"

    We are drowning in incompetence and idiocy and out and out fraud.

    • That is a beautiful question:

      "I ask the Premier: What degree of negligence, incompetence and/or maleficence would one have to be guilty of in order to be fired WITH CAUSE and in the case of the now former chief financial officer of Nalcor, what portion of the $900,000 payout would the ratepayers not be on the hook for had he had been fired WITH CAUSE?"

      The law hasn't been in the habit of convicting powerful people. It seems to be the reverse. Laws are for little people. For big people and firms we have new laws like Deferred Prosecution Agreements.

      Nalcor and its officials are apparently well above the law.

      We don't have any institutions that are worthy of the public trust. Government, courts, RNC, AG, Citizens Rep — together they form a dirty club. They protect each others interests and serve their masters. We are just their food source.

    • You need a Natural Resources Minister with some balls to begin to solve the badly out of hand Nalcor problem created by Danny Bye/Kathy et al and exacerbated by Ball et al. Sioban Coady does not have the required attributes and will never have the required capability. Dare I say it, try Gerry Burn? Or election soon please.

    • Sounds like a plan, but if I was Quebec, I'd arrange a referendum for the 27,000 people living in Labrador and offer them vastly improved services if they are willing to dump the island. I'd offer to take over all outstanding NL debt – in return I'd have settled territorial land claims, gained fishing rights, iron ore, nickel, Upper Churchill and Muskrat Falls.

    • Why slurs, mud slinging, looking up at the gutter, going back to primitively times, taking a page from Trumpies iodioligy, or is it the other way round, but of course only takes two or three, or maybe just one to light the match or gas, and up she goes, or maybe I should say down she goes, below the gutter says Joe blow.

  8. We now see that CBC's Anthony Germaine has submitted an analysis on the Crown Prince of Bullshit himself… GERRY BYRNE… and his recent abjectly disgraceful attempt at distracting from the issues with his over-the-top theatrics and self-immolationary attempt at deadcatting the HOA to avoid the question as to why he kept the deaths of millions of farmed salmon a weeks-long secret from the public who pays that fucker's salary.

    Germanine sums up Byrne's ridiculous, fremdschämen-evoking antics quite nicely…

    https://www.cbc.ca/news/canada/newfoundland-labrador/anthony-germain-analysis-gerry-byrne-attack-and-distract-1.5369767

    This greasy Byrne individual has been afflicting NL politics like a purulent boil for the last 25 years… that's twenty-five YEARS! That such a cynical, oily fake can continue to thrive in NL politics for so long is a lamentable statement on the abject lack of capacity for critical and independent thought of those who continue to vote for the likes of that cheesy bugger.

  9. Here are my DIRECTIVES to Nalcor, if I was the govn minister:
    1. Tender for 400MW of wind energy for the Avalon, immediately. meanwhile select the sites where these shall be installed. On average these will give about 200MW of wind power. On cold windy days these may hit 400 MW. These will substantially reduce fuel burn at Holyrood and dirty coal power imports.
    2. Tender immediately for the island 3rd 230ks line to go from Western avalon to Eastern Avalon.
    3. Tender for the 150 MW of capacity increase at Bay De Espoir.
    4. Upgrade the cost estimates of the 6 island small hydro sites for consideration for some to proceed.
    5. Implement an aggressive CDM plan immediately, with priority to reduce winter peak heating loads : Minisplits and insulation upgrades.
    6. Consider if gas turbines are needed to supplement, or items 1-5 with existing thermal is sufficient. Likely some gas turbines would be beneficial.
    The cost? That is secondary. Reliability and fuel use reduction is priority.
    The elephant in the room? Lack of MFs reliability. Time to face the disaster, it 's not just the MFs cost but no reliability
    CA , Dennis Browne says cap the spending. How long and how many power outages, and how much fuel burning is Dennis satisfied to tolerate?

    Was it 2012 on UG that I first cited lack of reliability for MFs power to feed the Avalon?

    Now read Russell's piece at the Telegram : An awful lot riding on Plan B ( Stan Marshall's Plan B that is, which is really not a plan a t all.
    Winston Adams

    • Is it only me?

      The "experts" have spent $13+ Billion Dollars on Muskrat Falls.

      And we still don't have a reliable power system?

      You can cut the irony with a knife!

      Why not, it's just as well we payout our Nalcor executives for a job well done?

      I think I just threw up in my mouth!

    • Anon 19.37 I made a case for this BEFORE MF was built and the response I got from the government at the time was that "there weren't batteries big enough to handle wind turbine electricity storage". And these are the same morons still running us into the ground.

    • This should be about; How do we come up with a better plan to manage our Natural Resources? The Irony is that Seamus has ridden his way to take responsibility for this Cabinet post, for the whole country. Oil and Gas has become dominant in Western and NL as the "preferred National Energy choice". We all know where the subsidies go. The argument as to better choices rages on. We continue to waste non-renewables, (oil, gas and coal), at the danger of planet killing emissions. What will the Ball government do to get NL out of the last place carbon dependent lifestyle? When Seamus comes to town, (bearing gifts??), who will be in the Room?

  10. Mainly wishful thinking Winston, maybe as it was in 2012, nalcor is not about to take any directives from you or anyone. They had their heads in the sand and heels dug in then and still do. The maratime link is great, we can play around with our toys as we see fit, bring in dirty coal power from the mainland, and it works, send a few electrons their way, and that works. Wow, connected to the North American grid, that was always their ambition, to defy logic, but to show they could do it, the devil take the cost. As it stands, there is no great advantage for us to be connected to the NA grid, or only in someone's dreams. All in anticipation for 2041. We will be experts too in power grids. Think they will be giving out electric cars next Xmas rather than heat pumps, to boost the power use age on the island if it is flowing on the LIL. Use gas cars in winter and electric cars in summer to get the bump up all year round. That's my plan says Joe blow. All part of the energy ware house plan.

  11. I dug up the link the the eight quarterly report from Liberty, link below, 18 pages.

    Some excerpts:

    The past quarter has been a disappointing one across a broad range of fronts in the transition to operations (TTO)of the Lower Churchill Project (LCP). For a project whose schedule should be approaching completion, the persistence of long-standing problems, the emergence of new ones, and a continuing lack of work completion are troubling. Not only will the Labrador Island Link(LIL) that connects Muskrat Falls generation to the Island Interconnected System (IIS) fail to enter service this winter, but its operation for the next one is now becoming less certain.

    http://www.pub.nl.ca/applications/IslandInterconnectedSystem/phasetwo/files/reports/The%20Liberty%20Consulting%20Group%20Eighth%20Quarterly%20Monitoring%20Report%20%20-%202019-11-15.PDF

    So this is BAD news.

    How about these: "identification of a potentially serious converter station control software issue. Potentially, the issue compromises the complete design of the converters."

    "The May re-baseline called for the completion of 41 critical activities in the third quarter of2019. Again, management’s completion of only 19 reflects less than half the planned number."

    "recently discovered vibration and rotor binding issues identified during commissioning present risks"

    I can't help but feel that Nalcor is in over its head and that much more time (perhaps a few years) and money (perhaps billions) will be required to get this system running reliably.

    • This is some interesting reading.

      The latest quarterly report by Liberty Consulting for the PUB regarding Muskrat Falls dated November 15, 2019.

      Obviously, there are a substantial number of issues to be resolved, and it is more than a simple "software" issue as reported by our own "transparent" NALCOR!

      There is little doubt that NALCOR are in way over their heads literally from conception upto and including today!

  12. So much for Nalcor/Stan and Ball's (party elite-driven) mantra —- "finish strong" !!!!.

    A deceptive slogan derived from the same elite/top-down irrational/single-minded thinking and governance planning (?) process (ROOTED IN ARROGANCE) that was followed by the PCs.

  13. Good to see a few reading the Liberty report. I commented 2 days ago after reading Russell's piece. Later after reading Liberty I saw it was even worse than Russell indicated.
    Anon @ 12:20 says it may be a few years before this gets reliable operation. That is being hopeful and wishful and as the saying goes "Live in hope an die in despair"
    I have passed being hopeful and so suggested alternate steps. If being hopeful mean several years to get 95 % operational where 99.97 % is our standard, that we will never achieve reliability.
    This today we should have seen being debated in the HOA, even Daley on VOCM had callers about lack of reliability for this line. This is a scandal under Stan's watch and risking life and death as to power reliability . We need alternate planning and action, not kicking the can down the road, which is happening. If Liberty was asked they would likely make recommendations, but not sure they see massive fuel use as a detriment, and just say more gs turbines.
    Strong finish Stan ? Maybe Never Finish Stan. Recall PENG2 saying complete but not operate!
    Back to the future> the least cost alternatives. This time both least cost and reliable. That is not wishful but practical and risk adverse. Nalcor, Stan and Ball are playing the same risk taking with reliability as with Ed Marin on project costs. Time Ches showed true grit on this issue. This is where dependence on inefficient baseboard electric heat has taken us…….and the writing on the wall for 15 years. The winter HUMP on the grid increasing and wanting to increase it more. Incompetence and continues: 24 schools and MUN and EVs and domestic oil to electric, all on the assumption of MFs reliability and soon. None of that should happen on a wish and hope of MF reliability. It make a bad problem worse, digging deeper with deception.
    Winston Adams

  14. How much longer do you all think the Fed can print more $CAD, increase deficits to bail the provinces? US is already into QE to infinity. I assume, having donated our stock of gold to the American cause, our own Mr. Polluz (?) has been minting a sizeable warehouse of fiat. How else could they keep sending my own CPP/OAS remittances? My goodness it is happening this evening, again?:-)

  15. Now that the CN strike has settled through collective agreement, (the only way), how dependent is NL energy needs, on propane tanks delivered from Western Canada? What is Ball doing to reduce by 5-10% annually carbon emissions, in Ottawa today? Ref: UN Report on procrastination regarding Climate Change Action.

  16. BBC overnight did a report on the huge cybercurrency coal fired thermal plants, needed in Georgia and Ukraine to fight American economic sanction wars. What do you want to bet that Freeland's Ukraine/Russian network has not put boots on the ground in Goose Bay, moving their techies and computers, to juice up the Muskrat operation. (Finish strong), forget about the LIL and non functional transmission to Avalonville. What would it cost to relocate a thousand bright people to GB, get them out of the freeze in the dark poorly insulated houses in the coves, so to speak? I see a real rate mitigation/relocation project for Seamus to get back to his Labrador roots.