Just a notion away

Our Labrador hydro future

Turns out the secret to what happens in Labrador in 2042 and beyond is the misheard lyrics of a Gino Vanelli song.

Hear me out.

The problem with electricity development in Labrador is not making the electricity.

The problem is getting the juice to a place to use it.

Labrador west needs electricity. Fools believe and liars say it is about what we could get in a new Churchill Falls deal. Truth is there’s plenty of electricity in Labrador right now for all the mines in Yab Titty, as the grandkids of one of the dearest souls in the world used to call it, and Wabush.

There’s just no transmission line and NALCOR has been shagging around with not building one for the better part of 20 years now.

Same thing used to be true of Churchill Falls or the Lower Churchill dams at Gull Island (eventually) and Muskrat Falls. Making electricity was one thing. Getting it to homes and businesses that needed it was a whole lot bigger and more expensive issue.

Transmission hasn’t been a problem for the future of Churchill Falls or other Labrador developments since the late 1990s. Before then, Quebec just refused to let anyone ship electricity through the province and they could get away with it. But under American trade rules that came around 1998, Quebec and any other province could only sell into the States if they allowed open access to their own grid.

You could ship relatively small batches of electricity for a fee after that but stuff the size of Gull Island, say, needed whole new transmission lines and that’s where the cost and the hang-ups came. In 2005, Ontario and Quebec made a good offer to build Gull Island and buy up all the electricity. Both needed the electricity on top of the decent price, they both agreed to cover not only the cost of new transmission lines to Ontario but also the inter-ties between Quebec and Ontario as part of the deal.

The deal Francois Legault sold to the gullible L:iberals - doing business as the Andrew Furey Experience - put that stranglehold back. Sure, NALCOR got less than a third of the capacity from a plant it owns two thirds of but the really stupid part of the deal was the agreement that if NALCOR couldn’t use that electricity inside the province, Quebec got first dibs on it at dirt cheap prices. 1969 all over again.

But now someone else is offering to fix the transmission problem.

We’ve always been a notion away and now we have the idea.

Prime Minister Mark Carney announced last week that the federal government will backstop construction of new electricity transmission lines to double the existing capacity nationally.

That changes the options for Churchill Falls and Gull Island radically. Now there are potentially other customers to develop Gull Island and other markets for both Gull Island and Churchill Falls after 2041. There also other options, like dividing the electricity output of Churchill between the two shareholders according to share holdings.

That would give Newfoundland and Labrador 3,900 megawatts of generating capacity at Churchill Falls instead of the 1,990 that it would eventually have gotten under the dead Legault deal. That works out to roughly 24 terawatt hours of electricity a year, worth $1.4 billion every year after 2041 at the low end of current wholesale rates, all coming to NALCOR. Quebec would get none of it, unlike the Legault deal where Quebec would be entitled to a 34% cut of profits, over 50 years. At best, the Legault-Furey deal was worth maybe $600 million a year to Newfoundland and Labrador, and then only if the Churchill Falls holding company declared a dividend.

Regular readers know this because we’ve walked through it before. Fans of the Legault deal will point to the cash between now and 2041 but what they will never admit is that is really not new cash. It is just money from after the 2041 portion of the deal paid in advance. That’s why the real average price for the Furey deal was less than half what the electricity is worth on the market. What’s worse, that fixed price was locked in and would never change according to changes in the market. Just like ‘69 all over again but really even worse because the 1969 never disappeared. The deal just made it look like it disappeared.

The threat from Muskrat Falls can only be removed by concerted action that addresses the project’s financial burden, restores integrity to the system of electricity regulation, and that breaks, once and for all time, the fundamentally corrupt relationship between the provincial hydro-electric corporation and the provincial government. This is the only way to restore power to the province’s people so that they may control their own future.

Bond Papers, August 2019

Dennis Browne’s contract as consumer advocate at the public utilities board was up in October but with the election and all, Dennis’ patrons left the job hanging until after the election. Too bad for Dennis who is a long-time Liberal partisan. He’s now out of a sweet gig. You can tell he’s a partisan because all the things Dennis started complaining about as consumer advocate after the Pea Seas took power last fall were all the things his patrons did and Dennis kept silent about, even though they shagged up consumers royally.

The most obvious one was “rate mitigation” announced by Andrew Furey and not worth a damn since it ran out of money in 2030. Dennis pointed that out weeks after the Liberals were out of power, not when Andrew Furey claimed to have solved the problem of how to pay for Muskrat Falls. Dennis is still pushing partisan talking points on everything from his replacement - not surprising the Pea Seas punted him out - to the wonderful Churchill Falls deal now in danger of being dead and to the review committee.

This is the sort of mindless partisan nonsense that sours people on politics, especially people with a couple or more of functioning brain cells. It’s hypocritical. Dennis knows the rights of things. And just to line up with the stupidity of the John and Fred show’s endless talk of the Churchill Falls deal, Dennis just confirms what the Pea Seas said about his “oversight” committee all along. Dennis was just too partisan to get the job and do it impartially, which is what an independent review needed. He wasn’t impartial at all the past few years and even his relentless attacks on Newfoundland Power over rate hikes ignored the Muskrat mess his patrons created.

Dennis was just part of the campaign to screw it to blame Newfoundland Power for rate hikes even though the root of the problem was NALCOR and Muskrat Falls and the Liberals’ love of the project despite their denials. Regular readers of this corner will recall one of the early Liberal schemes to pay for Muskrat Falls was to magically keep rates at around 17 cents a kilowatt hour.

As your humble e-scribbler pointed out at the time, that was all good as far as it went but it would create an impossible situation that has come true, although by a different route. Electricity rates cannot stay down, even if we could magically wipe out Muskrat Falls. There are routine maintenance, service improvements, replacements, and all the usual things plus normal inflation that will drive rates up. That was true under the “freeze” scheme Dwight Ball cooked up and it is still true under the non-existent rate mitigation scheme Furey settled on.

The original problem was that people would only hear freeze, not freeze the impact of Muskrat. The result would be a political problem whereby either routine and needed costs got put off or the government wound up subsidizing rates to keep consumers happy. In the scheme the Liberals announced, holding rate increases to two and a quarter percent due to Muskrat Falls has the same effect. It also screws over Newfoundland Power since it has less room to look for an increase without pushing the hike above 10%, which people also heard was some kind of scare point that would trigger a mass run away from electricity.

Well, we got there anyway and had Dennis done the job we all paid him to do this very point ought to have been the only words out of his mouth for a decade. Rather than fix Muskrat Falls, which Dennis rightly opposed, he wound up just adding to the misery of it. Lessening the impact of Muskrat Falls always involved way more than just paying for it, a notion floated by your humble e-scribbler in 2019.

“We are long overdue for substantive [energy] policy change in Newfoundland and Labrador,” SRBP put it in 2019. “The Muskrat Falls debacle has only increased the urgency for Newfoundlanders and Labradorians to reform energy policy. The province must replace the existing dangerous and dysfunctional approach with one that is founded on basic principles that recognise the modern social, political, and financial circumstances that the province now faces and will face in the future.”

Seven years later, we might be headed in the right direction.

---