I don’t have a pedigree of note, so I won’t try to impress with one other than to say I’m a graduate of MUN. What’s more important is I’m a lifetime citizen of NL since before we joined confederation. I was educated, worked, and retired here. My employment background is in the telecommunications sector in engineering and marketing/sales. I’m also old enough to remember the 1969 Churchill Falls contract and one of Premier Smallwood’s fiery speeches when he said, “this is our river, and it will be developed for the benefit of our people and our province” or words to that effect. How wrong he was.
Quebec was the primary beneficiary of that energy development realizing billions in revenues while this province through CFLCo received barely enough revenue to remain solvent. The main flaw in that contract was the lack of any mechanism to address energy price increases. As a result, Quebec took all the gains resulting from the price increases that occurred after the contract signing. Is that right and just? The supreme court of Canada says it is, and that’s that.
Now to today and the new MOU. Like many of my fellow provincial citizens, I am concerned with the smell emanating from that proposal. For example, at the St John’s MOU announcement with the premiers of NL and Quebec both premiers gleefully led us to believe that the province would receive $1B annually for the final 17 years of the old contract. Upon closer evaluation it appears that 1) that money is really an advancement of future revenues owing the province under the proposed deal and 2) the province actual share is 66% of $1B, the other 34% goes to QH based on the ownership split of CFLCo. That alone blows a huge hole in the MOU. With that misleading opening, how can we be expected to buy any of this very complex proposal that will tie up this asset for another 50 years.
Others have concluded that just like the old contract there is no reopener clause in any of the contract pieces to address unforeseen developments arising during the contract term. In addition, concerns have been raised that the cost-based formula contained in the MOU for determining the price per KWH paid to NLH disadvantages NL because it doesn’t reflect market value of the energy being delivered. On top of that we don’t know where we stand on water rent. Indications are we have seriously undervalued that in this proposal.
All of this is to say we must demand a full, open and independent review from an arms length organization before proceeding further with this project. What we have now appears to be little more than a partizan oversight group with a mandate to bring forward a recommendation that supports the MOU. Shades of Muskrat.