PlanetNL51: Risley’s $10 Million Gesture
A Case Study In Business Ethics Emerges
It’s becoming plenty clear that John Risley and his partners don’t want to risk parting with any of the potential profits from their proposed World Energy GH2 wind-to-hydrogen project slated for the area surrounding Stephenville.
Their tactics to fast-track the proposal for a 3000 MW wind farm, and associated hydrogen/ammonia plant, really seem to be gleaned from what we might expect to find in the developing world. The kind of places where Risley and partner Brendan Paddick, former chair of NL Hydro and close friend of the Premier, made a great fortune in the cable business in the Carribean, for example.
They have even adopted an indigenous name for the project, Project Nujio’qonik GH2, despite not actually having taken on any local indigenous group as a project partner. For many, this may be an inappropriate act of cultural exploitation.
Risley and Paddick have surely used their political connections to get a head start over competitors before word leaked of their venture. Risley hosted Premier Andrew Furey at his posh Labrador fishing lodge and apparently neither wanted to talk shop there. Still, somehow, public policy on wind energy did a massive U-turn; Risley is the leader of the pack. Coincidence to be sure!
Furey’s other close pal, Paddick, had NL Hydro responsibilities prior to his resignation from an apparent conflict of interest; only later did it arouse public controversy. During that time, WEGH2 seems to have developed an angle to connect to the NL Hydro grid, allowing for storage and return of excess wind energy. Hydro’s capacity for this clever power service would substantially bolster WEGH2 profits in ways that other operators could not achieve if WEGH2 can lock up NL Hydro’s scarce capabilities first. More coincidence, of course.
Risley, the main WEGH2 pitchman, also repeats that valuable time is being lost with Government’s request for proposals and environmental review process which have stalled them from for many months and counting. Those with access to allNewfoundlandLabrador (paid subscription service only) will have read many well-researched articles by Alex Bill that get into the details of WEGH2’s methods.
Alex Bill gets a shoutout for another article on October 20 revealing that Nalcor had consultants prepare a detailed study for a wind project on the Port au Port Peninsula in late 2015. The consultants appeared quite impressed with what they found although we, the public, are denied access to the many redacted sections, including anything contemplating costs. Why Nalcor and NL Hydro dropped their interest in the site remains unexplained.
Brendan Paddick, appointed as Nalcor Chair of the Board in 2016, would likely have seen this positive report. In 2022 we find that Paddick again teamed up with his major business partner, Risley, for the WEGH2 project on the same site. Surely this is just another coincidence that the Premier will explain, giving us the assurance of no abuse of privilege on Paddick’s part.
Grease For the Wheels
How do you stop squeaks? Get out some grease.
On October 16, a new CBC article found Risley in possession of a new tactic. He had offered local communities a total of $10 Million to be released during the 3 years construction period, calling it a “community vibrancy fund”, which the communities can spend as they please. Clearly this is a gesture meant to increase local support for the project; a divide and conquer tacting making it difficult for those who object, due to environmental and other issues including the lack of local benefits.
For a massive 3000 MW wind energy development, not to mention the associated hydrogen/ammonia plant, anticipated to cost well over $10 Billion, the $10 Million in total cash distributions over 3 years doesn’t seem like much. Is Risley pinching his pennies too tightly?
Sometimes the dots connect quickly. Minutes after reading the CBC article, an October 14 posting on The Weather Network was discovered, providing a useful comparable. It described how a wind farm in Quebec’s Gaspe Peninsula is delivering financial benefits to indigenous communities.
The Mesgi’g Ugju’s’n (MU) project is a 150MW wind farm commissioned in 2016, a 50-50 partnership between the people of three local Mi’gmak communities and renewable energy company Innergex.
The indigenous ownership share was squarely purchased and financed; the communities are expected to earn at least $10M profit annually. The project also delivers substantial local employment benefits and other indirect regional benefits, too. These are important measures; people in the vicinity of Project Nujio’qonik GH2 should take notice of them. In particular, they will find no local equity or profit sharing opportunity on offer. Risley and company have no desire to dilute their profits with the locals.
But that’s not all. Innergex is committed to deliver, from their half of the revenue and profit, an annual indexed contribution of $675,000 to the local County Municipality and another indexed $75,000 to a local social development fund.
When the Innergex payments are scaled up to reflect the 30 times larger WEGH2 proposal, equivalence suggests that WEGH2 should be offering in excess of $15 Million annually. Over 20 years, with indexing, the total would well exceed $300 Million.
Those figures exclude any further benefits related to the substantial potential revenues earned by the hydrogen/ammonia side of the business, something the MU project is not doing. If this new industry is truly viable, then it will be the hydrogen/ammonia part of the business that will really drive corporate profits. Taking this into account, a conservative estimate might double the potential for community benefits (estimated in the paragraph above) to $30 Million annually, or in excess of $600 Million over 20 years.
Risley and WEGH2 are offering $10 Million spread over 3 years of construction; nothing once the facility is in operation. To compare apples to apples, Risley has placed on offer just 1% of the relative benefit provided by Innergex. He has tied a very tight bow on his tiny gift to ensure it does not grow.
It’s just one example found in a half hour or less of reading. Many projects may be less kind to local communities butmany others may be a lot more generous.
The lesson here is that local groups in the area should be scouring for relevant data to ensure they get their fair share and nothing less, just as the Province needs to do. Getting that out of Risley, might be an impossible challenge. Especially when he plays the political game so well and seems to have cast a spell on our Premier and other elected officials.
When Can We Move On?
Based on the patronizing and insignificant concessions observed to date, the callous attitude toward the environmental review, and the not-so-hidden desire to exploit NL Hydro to their sole advantage, stakeholders including area locals and any honest politicians should be telling Risley, Paddick, and WEGH2 to take a hike.
Setting a stern example for the next firm ready to take WEGH2’s place – and there are likely many eager to do so – would be in their best interest.
Risley and Paddick for their part should be considering an honourable exit and taking their plans elsewhere. Maybe others would be happy to have them and their approach to doing business.
Or, they can remain oblivious to the optics of the situation. They may yet crash and burn and take their friend, Premier Furey, down with them – because theirs is a strategy unravelling into one heck of a stinking mess.