For me, the glitter on this deal started to dim after 30 minutes watching these two politicians perform "The art of the deal". Within 24 hrs I thought this was another bad deal for our province, not a fair deal. I was anxiously waiting the detail analysis by Ed Hollett, Dave Vardy, Sullivan, and M Adams and others. I worked with Acres Canadian Becthel on the Upper Churchill as a student engineer and later, as an electrical engineer, with Nfld Hydro for 5 years at high voltage (230kv) terminal station design and controls and protection. Then angered at the blunder by Danny Williams to saddle us with the massive debt with the boondoggle of MFs, which I knew would would not be a reliable not cost effective power source. Now another scheme that shows little fairness. This site should be lit up with comments.
A good deal sells itself. Hype is a con job and the more hype the bigger the con.
in this case, Dave Vardy and Jim Feehan are already precluded from talking because they signed NDAs in order to be on the so-called advisory team. it was really just for window dressing.
Des and Maurice may be out of the game for different reasons.
Ron Penney did a good job this morning on CBC Sin Jawns Morning Show.
Dennis Browne is also out of the 2041 game since he is a government appointee.
That leaves me, Bern Coffey and a few more.
By the end of the week, people should have a very different view of the deal and how it works. I have one or two more pieces that look at the bigger piece so that people can have the benefit of a more subtle, nuanced, and fair understanding of what happened here. it will also help them appreciate 1969 but also understand why both MF and the new CF are even bigger issues. After all, the first time, you can excuse mistakes or decisions based on lack of knowledge the first time. But the second? or third?
They can then decide for themselves whether it is good or not.
Good information and you made some good suggestions. The devil is in the details. Making resource rents tied to market prices is hard to disagree with.
Legault came to the table not only because of 2041. HQ may be in a difficult situation with respect to its existing contracts with customers.
The potential of hydro contracts being “transformative “ for the NL economy and the government still exists.
Given the changing economic world, it’s time for NLers to consider the resource rents it receives from its mineral resources. The focus must go beyond jobs to focus on overall wellbeing.
If you go back to what I wrote two years ago, HQ;'s strategic interest was naked: extend long-term access to the 15% of their generating capacity that is CF and do it for as low as possible.
The CF contract was the centrepiece and was the one aspect that could provide enormous cash returns for GNL.
Instead, we will be paying double digit electricity prices in NL while HQ continues to supply single digit electricity prices thanks to an astonishingly obvious give-away. And it is locked in until 2075, a century after HQ started getting low cost electricity from NL.
This is great analysis that caused me to reread again the MOU. Having done that i think that your analysis can be improved by correcting the assumption that HQ is getting 30terawatts of power annually to 2075 from the existing CF plant. As pointed out the allocation table in Schedule E of the MOU clearly outlines some decline over the decades to 2075 by some 1,105 Mw , that is not insignificant. Having reworked all these #S to adjust for the changes in annual allocation of capacity over time the average rate CFLco is getting per Kwh is indeed higher than you reference at 2.2 cents and is more like 2.7 cents per Kwh. Nonetheless, the benefit to NL is only 65.2% of that , its share of CFLco. The point being that it is still a terrible deal , and will only be judged for what it is by future generations as people today judge the 69 Smallwood contract. As you well point out there is no exit, a fixed cap on value, the only extra value from HQ may come from NL deciding not to use its capacity allocation and selling power for a price to be determined under the definitive contract language to come. In dollar value terms this contract puts Danny's "Boondoogle" to shame as this give away will be multiples of the MF fiasco.
It was an agreement between a private company and HQ with HQ as a minority shareholder. The strategic contexts of the two agreements are radically different, which is why it is amazing that HQ has been able to secure essentially its core principles - all of which were supposedly anathema to NL - and with NL the second time welcoming the same thing as if they'd never seen it before.
read the Friday piece, The Gulls of Churchill Falls.
You are completely wrong on the comparison between this and MF. This is on par with or worse for sheer stupidity. It undersells CF in exchange for nothing. You make too much of the exchange of power shares when it really is the output that matters. In making your conclusion, you ignore the key point, which is that the MOU secures *all* of HQs benefits from the precursor agreements, which would include the amount of electricity received.
Thank you, Ed. The big spenders in office act like they just won the lottery. Please keep the analysis coming.
For me, the glitter on this deal started to dim after 30 minutes watching these two politicians perform "The art of the deal". Within 24 hrs I thought this was another bad deal for our province, not a fair deal. I was anxiously waiting the detail analysis by Ed Hollett, Dave Vardy, Sullivan, and M Adams and others. I worked with Acres Canadian Becthel on the Upper Churchill as a student engineer and later, as an electrical engineer, with Nfld Hydro for 5 years at high voltage (230kv) terminal station design and controls and protection. Then angered at the blunder by Danny Williams to saddle us with the massive debt with the boondoggle of MFs, which I knew would would not be a reliable not cost effective power source. Now another scheme that shows little fairness. This site should be lit up with comments.
Winston:
A good deal sells itself. Hype is a con job and the more hype the bigger the con.
in this case, Dave Vardy and Jim Feehan are already precluded from talking because they signed NDAs in order to be on the so-called advisory team. it was really just for window dressing.
Des and Maurice may be out of the game for different reasons.
Ron Penney did a good job this morning on CBC Sin Jawns Morning Show.
Dennis Browne is also out of the 2041 game since he is a government appointee.
That leaves me, Bern Coffey and a few more.
By the end of the week, people should have a very different view of the deal and how it works. I have one or two more pieces that look at the bigger piece so that people can have the benefit of a more subtle, nuanced, and fair understanding of what happened here. it will also help them appreciate 1969 but also understand why both MF and the new CF are even bigger issues. After all, the first time, you can excuse mistakes or decisions based on lack of knowledge the first time. But the second? or third?
They can then decide for themselves whether it is good or not.
Good information and you made some good suggestions. The devil is in the details. Making resource rents tied to market prices is hard to disagree with.
Legault came to the table not only because of 2041. HQ may be in a difficult situation with respect to its existing contracts with customers.
The potential of hydro contracts being “transformative “ for the NL economy and the government still exists.
Given the changing economic world, it’s time for NLers to consider the resource rents it receives from its mineral resources. The focus must go beyond jobs to focus on overall wellbeing.
Doug:
If you go back to what I wrote two years ago, HQ;'s strategic interest was naked: extend long-term access to the 15% of their generating capacity that is CF and do it for as low as possible.
The CF contract was the centrepiece and was the one aspect that could provide enormous cash returns for GNL.
Instead, we will be paying double digit electricity prices in NL while HQ continues to supply single digit electricity prices thanks to an astonishingly obvious give-away. And it is locked in until 2075, a century after HQ started getting low cost electricity from NL.
This is great analysis that caused me to reread again the MOU. Having done that i think that your analysis can be improved by correcting the assumption that HQ is getting 30terawatts of power annually to 2075 from the existing CF plant. As pointed out the allocation table in Schedule E of the MOU clearly outlines some decline over the decades to 2075 by some 1,105 Mw , that is not insignificant. Having reworked all these #S to adjust for the changes in annual allocation of capacity over time the average rate CFLco is getting per Kwh is indeed higher than you reference at 2.2 cents and is more like 2.7 cents per Kwh. Nonetheless, the benefit to NL is only 65.2% of that , its share of CFLco. The point being that it is still a terrible deal , and will only be judged for what it is by future generations as people today judge the 69 Smallwood contract. As you well point out there is no exit, a fixed cap on value, the only extra value from HQ may come from NL deciding not to use its capacity allocation and selling power for a price to be determined under the definitive contract language to come. In dollar value terms this contract puts Danny's "Boondoogle" to shame as this give away will be multiples of the MF fiasco.
Gabe Gregory
Smallwood did not sign the 1969 contract.
It was an agreement between a private company and HQ with HQ as a minority shareholder. The strategic contexts of the two agreements are radically different, which is why it is amazing that HQ has been able to secure essentially its core principles - all of which were supposedly anathema to NL - and with NL the second time welcoming the same thing as if they'd never seen it before.
read the Friday piece, The Gulls of Churchill Falls.
You are completely wrong on the comparison between this and MF. This is on par with or worse for sheer stupidity. It undersells CF in exchange for nothing. You make too much of the exchange of power shares when it really is the output that matters. In making your conclusion, you ignore the key point, which is that the MOU secures *all* of HQs benefits from the precursor agreements, which would include the amount of electricity received.