Newfoundlanders won the right to vote in 1832; and the first House of Assembly met in St. John’s on January 1, 1833. The development of [Newfoundland and Labrador’s] natural resources has been in the forefront of public policy eve since. every development has been presaged on the belief that these resources are extensive and valuable, and needed only financial assistance from the government of the day to develop them.
…
Whether failures or success, many of these developments shared one characteristic. They were sustained - and in some cases, created - by substantial financial assistance from the successive governments of the colony, dominion, and province. [With the exceptions of ]Churchill Falls and the Labrador iron ore mines, neither of which received direct financial support from the province’s government, … none of the long list of steps toward the “next big boom” ever repaid the public funds invested in it.
Edward Roberts, The last days of Smallwood, Flanker Press, 2022
Friday, July 16.
Andrew Parsons issues a news release to appoint Jennifer Williams to head the Premier’s Churchill River advisory team of bureaucrats. Parsons mentions the original chair - Brendan Paddick - in passing and in media interviews says he hasn’t even seen Paddick’s resignation letter.
Tuesday, July 22.
Two cabinet ministers excitedly announce what they call the First Step in developing a wind industry in the province. Potentially an $11 billion industry according to one of the minister’s former executive assistants, now a lawyer, who is tweeting about the wind policy for his law firm.
What we are seeing here is less about an exciting new industry than it is a political strategy to distract from the Risley-Paddick megaproject and the controversy over connections between Paddick and Premier Andrew Furey, including the conflict of interest Paddick’s resignation supposedly resolved.
You can get a sense of not just the political strategy but the political thinking going on here if you look at comments by John Risley. He told allNL for its July 28 issue that the government is sensitive to the perception it is doing favours for what Risley called the Paddick team and wants others to be assured they get the same treatment.
“The light is being shone internally and that’s why Minister Parsons has the file,” Risley said. “The policy initiative is his initiative.” According to allNL, Risley added “that, if Paddick wasn’t involved in the project, it’s probable Furey may have taken a more active role in the process.”
Sounds logical enough to some of you, but just think about what Risley is doing here. Apparently, he couldn’t think of another reason for the energy minister to take the lead on an energy policy except that Furey and his best friend got caught in a conflict of interest.
Then Risley noted that if Paddick wasn’t involved, Furey would be all over it. There are a few problems with this idea as well. For one thing, if the process is supposed to be clean and without any political interference, there’d be no reason for the Premier to be involved at all.
For another, you have to wonder why Risley felt the need to offer an opinion about the government’s political problems and how they are managing them. After all, Risley is supposedly just another guy trying to get a megaproject going. Logically, you’d expect his only comment to be that the wind farm proponents would comply with any government rules and process. Period. You want more, reporter, go talk to the government folks. Instead, Risley speaks with some apparent confidence about what is happening inside government. He seems to know what they are doing and why. What’s more Risley doesn’t think that’s unusual or that people will notice.
He didn’t stop there, either. Risley also explained the deal (!) he and Paddick have with Furey, Parsons, and the rest of cabinet about how quickly the government has to get everything done.
We’ve indicated to [the provincial government officials] that we will work through any legislative process with whatever legislative process that they decide to impose on the industry, and [the provincial government officials] have committed to work as quickly as they can so as to address the timelines that we’re trying to work with.” [Emphasis added]
As much as Risley was trying to tell everyone there was nothing to see, he didn’t really do a good job of it. Neither did the government crowd.
Two cabinet ministers held a news conference to announce a call for nominations for Crown land. One was energy minister Andrew Parsons, the guy who just announced Paddick’s resignation. The other was environment minister Bernie Davis, the guy who by Friday this week has to decide whether to send the Risley-Paddick megaproject to an environmental review.
But no Derrick Bragg, the Crown lands minister. If everything was normal and the wind policy was just a government initiative with no connection to Risley and Paddick, then the normal newser would have featured Bragg to make the announcement. After all, as Davis said, no fewer than 24 different federal and provincial government departments and agencies will have to sign off on these projects under the government’s policy. It would make sense for Bragg to be there even if the chair of a cabinet committee on wind energy – there isn’t one, by the way – does most of the talking.
The way government handles newsers these days every minister who touches a policy gets to say some words to reporters. But they didn’t need anyone but Bragg. If you wanted to make everything look really normal, you would do the normal thing without drawing any attention to what you were doing. No reason to be suspicious because there was nothing odd about it.
But no Bragg.
His absence unnoticed by all in the room, including Minister Fairly Tweedle and Minister Transparently Dee.
Absent for a reason no one bothered to mention.
No reporters asked about it.
And when someone asked about Crown lands, Parsons said he didn’t have the information. Seriously. A Crown lands announcement but no minister responsible for Crown lands permits and no details about Crown lands for the guys who did show up. A predictable question and no one had the info.
Just two other ministers saying this was the First Step in a fair and transparent process that everyone knew had actually been through the first step in April. And the two guys who were there said fair and transparent seven times in the space of maybe 10 minutes of opening remarks. They really wanted you to get the message that this was new, fair, and transparent.
That just told anyone paying attention the opposite was true. This is so much a thing there is a name for it. The Rule of Opposites. Not X = (x).
When someone insists – usually a little too much - that something is X, then the chances that the something is not X go up substantially.
Danny Williams was famous for this stuff. “Nothing could be further from the truth” something was the truth itself. There was a caller to open line shows back when Williams and his crowd organized people to spread the official government word using a script sent out from political staffers. The caller said that “it’s not like someone from Williams’ office called me up and told me to come on here and..” say these things. Well, of course they did.
Now last week’s news conference and everything Parsons, Risley, and Davis said makes sense, doesn’t it?
You can reach up and turn off the light bulb that just went on over your head. Save electricity.
That wasn’t the only oddity in the newser as the cabinet ministers tried to convince that everything was just fine. Parsons stressed how fair and transparent this new Step One of the wind policy would be by likening it to the offshore lands process.
In the offshore, companies interested in exploring for oil and gas nominate parcels for exploration. They have their own data plus they have government data to use in deciding which offshore plots have the best potential for holding commercial amounts of oil and gas.
A joint federal-provincial agency puts the blocks for bids. The highest bid – a commitment for exploration spending of that amount - gets the parcel under clearly known and understood rules. Politicians do not make the decision.
What everyone heard last Tuesday is the exact opposite of the offshore land sales process in every respect. Nominate parcels. Not all will go for bid. The highest bid will not win. Instead, government officials will use some criteria Parsons could not explain – because they haven’t decided on them yet – to figure out which proposals offer the best value.
Then there’s the issue of timelines ands fair rules. Risley talked about government’s interest in applying the same rules to all. The day of the newser, Parsons’ former EA tweeted about how in his view this new process wouldn’t give any advantage to folks who’d gone first. Like say Risley and Paddick.
Okay.
If everything were on the up and up in April both with the policy announcement and with the Risley-Paddick megaproject, there’d be no reason to invent new rules. The policy doesn’t apply to one project. Supposedly there are potentially dozens of projects and dozens of parcels. There’s plenty of land and plenty of wind. Any company can apply for land and set up a wind project at any time. There never was an advantage to going first, at least not one we are aware of.
Since last Tuesday, things are different. All the rules have changed. To get Crown land you no longer just apply. You have to go through some bidding process, the rules for which Parsons could not say because he hasn’t figured them out yet. Companies who started from scratch in April are now faced with an eight week window to not only decide on land but submit a proposal that will offer better value compared to something else. That something else may not even be the same type of project. And there’s no definition of better value.
On the face of it, changing the rules - that’s what actually happened last Tuesday - now looks a lot more like *giving* an advantage than taking one away. When there was no timeline, when government used existing rules, everyone was treated the same. Now there’s a deadline that never existed before. And what looked like a policy to support many projects and many opportunities might just be about one opportunity. That may be why Risley was so confident no one else would get in on the action.
Related Links
The Lyin,’ the Sitch, and the Boardroom
Wind, Bay du Nord, and NL Energy Policy
Policy confusion does no one any good (SRBP 2020)
The politics of history (SRBP 2005)
There are all sorts of confusing things about this new policy for wind farms and unforeseen knock-on consequences.
Confusion like what the policy actually is.
Back in April, the whole thing was clear. Check the text of the Order in Council (CO2022-086) that sets the new policy. Dated April 5, it wasn’t available when Parsons spoke in the House of Assembly that day, but we have it now.
The Lieutenant-Governor in Council is pleased to amend OC2006-026 to allow industrial customers seeking to self-generate wind energy for their own consumption, and industrial customers or retailers seeking to generate wind energy for export, to apply for Crown leases or grants, under the authority of the Lands Act, and Environmental Assessments [sic], under the authority of the Environmental Protection Act.
You can build a wind farm and sell the electricity outside the province.
Or you can build and windfarm and power your operation in this province.
Simple.
A smart reporter asked Parsons last week about the impact that might have on Muskrat Falls. If companies make their own electricity, then that takes them out of the pool of folks paying for Muskrat Falls. Fewer people paying means rates go up.
Look at what Parsons said:
“… the reality is that we have to be concerned with energy usage [in the province] and how that works but that will be outside of this. This is mainly for … an export opportunity scenario.” [Emphasis added]
Ok. Well, if that’s the case, Parsons just changed the policy again. What’s worse, he isn’t talking about Paddick and Risley. They want to build wind farms to power an operation in this province. The fact they will export the ammonia and hydrogen is no different than a fish plant or a mine that would like to use cheaper electricity to run their plant in the province and export the product they make, not the electricity.
Yet, Parsons said on Tuesday that *isn’t* what this policy covers even though – at the same time – he talks about the great opportunities that come from exporting ammonia and hydrogen.
Either way this wind policy is bad for Muskrat Falls and for ratepayers. Export wind farms will compete with NALCOR-Hydro and undermine sales from Muskrat Falls. Taking industrial customers out of the rate base - what this new policy clearly does or is supposed to do - will drive up the costs for everyone else. That undermines the entire scheme Andrew Furey and Brendan Paddick used to pay for Muskrat Falls by hiking electricity rates across the province every year for the next 50 years.
That’s not the only way this wind scheme will affect rates in the province. The government will subsidize wind farms by forcing local ratepayers to cover some of the costs, just like it did with Muskrat Falls.
Remember that Parsons told Ashley Fitzpatrick he didn’t see any need to change any laws. Well, that would leave the NALCOR-Hydro monopoly from 2012 in place. That would also leave the 2006 wind policy intact as well, the bit that forces companies to do deals with NALCOR-Hydro.
The one part of the 2006 order left intact was the requirement that referred to a 2005 request for proposals. It ordered that “the Minister of Environment and Conservation shall not issue Crown leases and/or grants for commercial wind energy generation projects which propose to produce energy for sale, unless the proponent has a Power Purchase Agreement and a Power Transmission Agreement in place with Newfoundland and Labrador Hydro.” [Emphasis added]
Just for good measure, there’s a line in the guidance for the bidding process that lines up with this perfectly.
Page 7. Right after a reference to domestic rate impacts, there’s footnote 3. It reads:
While upgrades required for the interconnection of a project may be specifically assigned to a proponent, some transmission and generation upgrades may be classified as "common" and would result in rate impacts for existing customers. The evaluation process will include an assessment of any subsidization of upgrade costs through customer rates.
Local ratepayers will foot the bill for upgrades to the provincial transmission system through their rates that come from the Risley-Paddick and any other wind scheme. Not all. But some. Not may. Will. Definitely. Even though NALCOR-Hydro’s estimates of demand and supply don’t require bags of new electricity for the province.
That’s not all. The government plan to subsidize wind farms doesn’t match the government’s newly released renewable energy policy (2021) and this wind policy.
“Newfoundland and Labrador is well positioned from a green hydrogen perspective,” the renewables policy states, “due to its abundant developed and undeveloped hydro resources, surplus energy, strong wind resources, available crown land, available fresh water, deep marine ports, and proximity to US and European markets.”
Paddick and Risley make no mention of using existing sources of electricity in the province to make electricity. None. There’s electricity from Muskrat Falls, including the stored energy in the Smallwood reservoir. There’s Gull Island waiting to be developed. Yet Paddick and Risley make no mention of either, nor is the government insisting they buy local first.
The political fall-out from this could be huge. Clearly, the government has already exempted Risley and Paddick’s project from the existing rules. Other companies will want the same treatment. If they get it, the Muskrat Falls rate scheme collapses. If they don’t get it, local companies can rightly wonder if the same rules really do apply fairly, transparently, and equally to all.
Lastly, there’s the issue of backing another megaproject with public money. Don’t quibble. The government’s already decided to subsidize these projects with capital costs (through electricity rates) and who knows what else. They are rushing things to satisfy Risley and Paddick. Clearly, they learned nothing from the spectacular failures within government and within NALCOR-Hydro at Muskrat Falls megaproject despite a $30 million inquiry.
Make no mistake. This wind policy is every bit as big as Danny Williams’ fiasco. The Risley and Paddick scheme alone involves three wind farms each with 1,000 megawatts of installed generating capacity. That’s as much generating capacity as Gull Island (unbuilt) and Muskrat Falls, combined.
The environmental registration documents give the estimated cost of the ammonia and hydrogen plants production plants at slightly more than $1.0 billion and one wind farm at an additional $1.6 billion. The application mentions two more wind farms and hydrogen plants and in media interviews, Risley said the two extra phases are needed to make the thing viable. That brings the whole thing to roughly $8.1 billion, more than the original cost of Muskrat Falls. The whole thing could easily be twice that cost before it’s done and the application mentions the need to raise $17 billion.1
When finished, the Risley-Paddick megaproject will be the second largest wind project in the world. There’s a project in China that right now has about 5,000 MW installed. The next largest is a project in the United States that has an installed generating capacity of about 1500 MW. Risley and Paddick want to install 3,000 MWs of new wind generation to make ammonia and hydrogen.
Just one project covered by this new policy is every bit as big as Muskrat Falls. Government has already bought into it despite the lesson from Muskrat falls and countless other projects that proponents overestimate the benefits and underestimate the costs and problems. Government policies are arguably more confused now than they were before April. The government clearly has not looked at the implications of the Risley-Paddick project, let alone any of the others. Cabinet is changing policies on the fly, short-circuiting regulatory processes, and, as we can easily expect, ready to grant exemptions to other regulatory processes to suit the project proponents.
Karl Marx began his essay on 1851 coup that made Louis-Napoleon Bonaparte the last French monarch with a quote that is more widely known these days than the essay or the erstwhile heir to the first French emperor named Bonaparte.
[Friedrich] Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce.
In Newfoundland and Labrador, we have gone through the same schemes so often and to the same disastrous ends, we might wonder what comes after farce.
Updated 08 August 2022 to give correct cost of three phases of the project, based on the project application.
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