Following release of the Report on the Churchill Falls MOU by the Independent Review Panel (IRP), Premier Wakeham made this statement in a public address: “If the price tag for tearing up one bad deal is being forced to sign a second bad deal, then we will be consigning our children and grandchildren to continue living under the shadow of the 1969 Agreement.”
If the Premier had immediately begun to install a process that reflected the analysis and key recommendations of the Independent Review Panel, as well as his own fear of another blunder on the scale committed by Premier Andrew Furey, Newfoundlanders and Labradorians could begin to relax a little, secure in the knowledge that our “Crown Jewel” – the Churchill Falls Hydroelectric plant and related assets (including Gull Island) – is in safe hands.
Alas, the public should not draw that conclusion: the Premier has not established a transparent plan. Moreover, his rush to deal solely with Hydro-Quebec and to install a new and highly questionable negotiating committee suggests that we cannot be confident that his Administration is any wiser than the Furey Liberals who negotiated the 2024 MOU.
To be more specific, Premier Wakeham is acting as if the claims of Hydro CEO, Jennifer Williams possess merit. Following release of the MOU, Williams stated: “waiting until closer to 2041would likely mean losing out on billions of dollars”, and that “every last drop of value (has been) wrung out of Churchill Falls deal”. Those suggestions are completely without merit but if they possess even a shred, they only add to the reasons to terminate any negotiation with Hydro-Quebec.
More likely, these are the utterances of a naïve and inexperienced CEO, one who a more prudent Premier would have left out of his seem rush for a new deal. Her inclusion in the prematurely established negotiating team (alongside Muskrat Falls guru Jerome Kennedy) are decisions that fail to inspire confidence that Wakeham understands the work that must precede any new negotiation. The appointment of former Cabinet Clerk, Julia Mullaley, who headed the profoundly incompetent Muskrat Falls Oversight Committee, only compounds the proof that Wakeham is on another disastrous track. Interestingly, Maureen Ryan, KC, a member of the “We Believe in Newfoundland and Labrador” group supporting Muskrat Falls was appointed chair of the Newfoundland and Labrador Hydro board of directors.
What we will see next: The return of Ed Martin and Gilbert Bennett!
If Maureen Ryan lives up to her reputation as a commercial lawyer, however, she will demand that Wakeham reform the Hydro Board lifting it from the state of irrelevancy that is part of Danny Williams legacy.
Noteworthy, it was from the Muskrat Falls Inquiry that we learned – though not for the first time – that Mullaley’s oversight committee was a fictitious governance process. She permitted Nalcor to control and edit their quarterly reports, caved to CEO Ed Martin when he refused the “deep dive” into Nalcor’s expenditures sought by the Committee’s Consultant, Ernst & Young, and stayed mum as Martin continued to claim a project cost that was knowingly untrue. Referring to a quarterly report, Mullaley confirmed on the Witness Stand at the Muskrat Falls Inquiry that “some of the information in it is false, and you all know it’s false, but we’re…” — co-counsel Barry Learmonth completes the sentence for her—“gonna prepare it anyway.” “I’m never going to say that it was effective oversight,” Mullaley admitted.
Is this the preposterous level of diligence that Premier Wakeham perceives to be necessary for his new negotiating team? How is this any better than what constituted Premier Furey’s?
Is oversight only acceptable by governments if it is administered by flunkies?
There is more reason for worry, however.
Stated Wakeham at the time of releasing the Report of the Independent Panel:
“We’re not tearing anything up and starting over from scratch. That is not what the Report recommends. [ ] We’re going to build on the parts that work. And fix the parts that don’t.”
The undertone of the remarks suggest either that the Premier doesn’t know what he is talking about or that, once again, another inexperienced politician, like Andrew Furey, is setting us up for five more decades of grief as we fuel the Quebec economy at our expense.
The idea that only a few “fixes” are necessary to make Furey’s MOU acceptable to Newfoundland and Labrador do not jibe with any reasonable review of the MOU’s vast deficiencies. If the Premier believes his assertion, he could have stated exactly on what points the MOU is acceptable. He offers no such illumination, not a single example.
Remember that the MOU is founded on Furey and Legault’s agreement on six major components. They include existing electricity generation from Churchill Falls, turbine replacement adding 550MW capacity, construction of 1100 MW peaking facility, construction of the 2,250 MW Gull Island project, and 340 km of transmission to enable those new developments.
The MOU fails to provide Newfoundland and Labrador with an acceptable outcome on even one of those components. So, the basis on which Premier Wakeham has chosen not to start any negotiation “from scratch” is baffling, unless he has already decided, like Premier Furey, that Quebec should be the major beneficiary of our resources for another 51 years.
Indeed, Furey’s MOU is so badly negotiated that every underlying factor influencing the outcome of the MOU is distorted in a way that favors Quebec-Hydro. I am referring especially to the complete absence of transmission rights and access to market prices for our power, the chief reason for the obscurity of the calculations that puff up the MOU’s revenue forecasts. None of the assumptions made in the MOU, whether present value calculations, forecast inflation, contract duration, power recall rights, electricity resale terms, among others, reflect the terms that would be the basis of a normal commercial contract.
So, again, what is Premier Wakeham referring to when he says he is going to build on “the parts that work”?
Indeed, the IRP Report dismisses Andrew Furey and Hydro CEO, Jennifer Williams’ assertion that the Newfoundland and Labrador Treasury will receive “on average $1 billion annually over the next 17 years”. Williams and Furey’s assertions amount to a Muskrat Falls-sized misrepresentation. Remember Nalcor CEO Ed Martin (and Jerome Kennedy) used to talk about the billions in dividends from Muskrat we were to receive. Reality exposed the inputs used to arrive at the assertion as completely bogus. The same cascade of cold water reduces the “real” average value to $560 million per annum, little more than half NL Hydro’s claim. (Barely enough to cover rate mitigation on Muskrat Falls).
Another statement by Wakeham is equally inexplicable: “I want to acknowledge that there was a lot of hard work done by people who legitimately believed they were acting in the province’s best interests during the negotiation of the original MOU, including – I might add — the Leader of the Opposition, Mr. Hogan”.
Since when do we elevate those who were expected to correct an historic blunder having succeeded only in giving our world class hydroelectric generating asset away a second time? What possibly could Wakeham’s motivation be except to make the bar as low as possible for his own negotiation?
In any other democratic jurisdiction, honor would have dictated the penalty for Opposition Leader Hogan’s grievous error supporting Furey’s MOU; he would already have stepped down.
Premier Wakeham demonstrates that he is not ready for the opportunity that the voting public have afforded him. Indeed, for those and other reasons, the formation of a new negotiating committee, absent preparation, strategy or minimum outcome, is eerily reminiscent of Premier Andrew Furey’s approach.
More than a year later, it is still tough to get the spectacle of the vainglorious NL Premier Furey wrapping himself around the cool, calculating, business-like Quebec Premier Legault out of my mind.
It is fortuitous that the Furey Government was defeated at the polls; it’s just that we should have reason to be more hopeful about the capability and shrewdness of the perceived change-makers – the Progressive Conservatives.
So far, at least, that picture eludes me.