Exploding Myths about the MOU

By Andrew Parsons

Editor’s note: This first appeared on Facebook on Tuesday. It is reproduced here, lightly edited, with permission from Andrew Parsons.

Andrew Parsons is a former cabinet minister in Newfoundland and Labrador and was energy minister during the negotiation of the Churchill Falls memorandum of understanding.

I have been staying away from this, but felt after seeing the news today that I needed to provide some input. As Danny Williams himself once said, “former Premiers should “shut up” and go away once they leave office”. Given Danny has broken his own rule, I will also quickly weigh in on the current Churchill Falls MOU debate.

As I’ve said before, I (among many) had to spend a lot of time cleaning up the Muskrat Falls mess. It’s frustrating when you’ve been cleaning and cleaning something, and then the person who made the mess tells you how to hold the mop.

Unfortunately, Danny’s belief in what is best for the Province is tainted by an absolute obsession with getting revenge against Quebec. He built Muskrat Falls to get around Quebec and look where that got us. We need to look forward, not backward.

Myth #1 – the new MOU pricing is “fixed” and does not contain an escalator clause. I’ve heard Mr. Wilson say the same thing. I’m starting to think these gentlemen are playing politics with this because they are both intelligent enough to know better - again, another reason why I need to counter.

We are getting a forecasted $33.8 billion in present day dollars from the new Churchill Falls deal, but that is just a forecast. The MOU says very clearly: “The block structure (pricing) will be designed to provide diversification and ensure the prices paid reflect the FAIR VALUE OF THE GENERATION over the ENTIRE TERM” of the new agreements, and, the price will be “reflective of wholesale electricity market value in Quebec, replacement costs in Quebec, and wholesale electricity market value in northeast export markets.”

In other words, if Quebec win (like they’ve done since 1969), then we win. The price we get is directly tied to the market prices beyond our borders – precisely what we’ve wanted since 1969.

Myth #2 – The price is too low. Again, Danny’s Muskrat deal put us back by billions and billions of dollars, but I’ll stay on subject.

Since 1969, it’s been reported that Quebec has gotten $28 billion from Churchill Falls, and NL has received $2 billion. Under this new deal, we’re getting upwards of $225 billion (nominal dollars). Our net debt as an entire province is just under $20 billion.

This is a staggering amount of money and literally changes everything for our province. How else do we pay for all the needs that we have as citizens?

Myth #3 – We can sell it for more to somebody else

The MOU is a non-binding document. It’s been published now for nearly a year. If anyone wanted to outbid Hydro Quebec, they could have done so in the last year.

Has anyone done so? No.

The Bottom Line: Whatever anyone’s thoughts on the MOU, the reality is we are still negotiating. The question for all of us, in my mind, is who we want at that negotiating table. I want the person that represented ratepayers at the Muskrat Falls Inquiry and probed Danny Williams’ negligence. I know him - he feels the weight on his shoulders to deliver the best possible deal, and he won’t sign on that dotted line until he knows its right. He’ll do it calmly, with professionalism, and with ruthless insight. That’s John Hogan.

The other person walked out of the House of Assembly without casting a vote for or against. Who is letting people like Danny W talk for him? Who needs to know that leadership involves making very tough decisions - not walking out on them? That’s Tony Wakeham.

I’m obviously biased – make your own call, but I know how I’m choosing.

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