The Mystical Lords of Mu’skr’at Fa’alls #nlpoli

The water management controversy flared briefly at the end of last week thanks to Geoff Meeker’s blog at the Telegram and a couple of interviews by the 2041 Group and Nalcor’s Gil Bennett.

This is one of those issues where a lot of people either tune out early on because it appears highly technical and complicated.  Actually it isn’t.  The topic only appears complicated.

It only appears complicated because of the very convoluted, long-winded, and very unhelpful way the cats at Nalcor talk about the water management agreement.  They go all techie.

Once you get a handle on the whole water management thing, it’s quite easy to understand and it’s quite easy to see where the possible problems are.

When engineering becomes imagineering #nlpoli

Nalcor issued a news release on Monday to correct inaccurate statements about the water management agreement between Nalcor and Churchill Falls (Labrador) Corporation.

Sounds good, except that Nalcor didn’t identify who made the statements.

Nalcor didn’t indicate hat the statements were.

Nor did the company indicate how the statements were inaccurate.

So basically, the company corrected nothing about nothing.

While that is telling – Nalcor claims aren’t backed by evidence -  that’s not the interesting thing.

More Gil Bennett nuttiness #nlpoli

Gill Bennett is a smart guy.  That’s why he is in charge of a project as large as Muskrat Falls.

So when Gil Bennett says something that obviously is not true, it looks a lot more suspicious than when he dodges the important question and answers the question no one asked.

Muskrat Falls: more pesky details #nlpoli #cdnpoli

Tom Adams’ blog post is attracting much attention in Newfoundland and Labrador on Monday.

No surprise in that, given that Adams’ did some calculations of water flows and came to the conclusion that for at least part of the year, Muskrat Falls wouldn’t be able to meet its commitments to ship electricity to Nova Scotia.

But Adams hit such a nerve that Nalcor boss Ed Martin posted a comment on his own corporate blog that purports to correct Adams’ inaccurate comments.

Martin doesn’t really provide anything concrete.  He just points to the mass of stuff filed with the public utilities board.  Some of it comes from the best minds available, donchyaknow. Lots of well worn lines but nothing that specifically refutes anything Adams said.

And then Martin points to the water management agreement imposed by the public utilities board on Nalcor and Churchill Falls (Labrador) Corporation in 2009:

I’m not sure if you are aware of legislation in our province that requires a water management agreement to be in place between Nalcor and Churchill Falls (Labrador) Corporation (Churchill Falls). The legislation requires the two power producers to use available storage, primarily in the Churchill Falls reservoir, and their respective generating facilities to optimize the production of power while maintaining the contractual obligations of Churchill Falls to its customers.

The first sentence is a bit condescending but look at the last bit:  “optimize the production” while maintaining the contractual obligations of Churchill Falls to its customers.”

Priority for Churchill Falls

Not exactly.

Clauses 3.1 and 3.2 of the water management agreement give Churchill Falls customers more than an equal status with Muskrat Falls.

While we can’t be sure Martin is aware of the actual words in the water management agreement and their implications, here they are for greater certainty:

3.1 No Adverse Effect

The parties acknowledge that pursuant to Section 5.7 of the Act, nothing in this Agreement shall adversely affect a provision of a contract for the supply of Power and Energy entered into by a Supplier and a third party prior to this Agreement, or a renewal of that contract (collectively "Prior Power Contracts"), and that all provisions of this Agreement and ancillary documents and agreements shall be interpreted accordingly.

3.2 Acknowledgement of Prior Power Contracts

The Suppliers acknowledge that the following are the sole contracts for the supply of Power and Energy entered into by a Supplier and a third party prior to this Agreement:

(a) the power contract entered into between Hydro-Quebec and CF(L)Co dated May 12, 1969 as well as Schedule III of such power contract which relates to its
renewal (the "HQ Power Contract" );

(b) the Churchill Falls Guaranteed Winter Availability Contract between Hydro-Quebec and CF(L)Co dated November 1, 1998, as amended on March 29, 2000;

(c) the sublease entered into between Twin Falls Power Corporation Limited and CF(L)Co dated November 15, 1961, as amended on April 15, 1963, November 30,
1967 and July 1, 1974 and renewed pursuant to an agreement dated June 9, 1989,and the operating lease between the same parties dated November 30, 1967, as
amended on July 1, 1974 and November 10, 1981; and,

(d) the power contract entered into between Newfoundland and Labrador Hydro-Electric Corporation and CF(L)Co dated March 9, 1998, as amended on April 1, 2009.

Note the reference to section 5.7 of the Electrical Power Control Act, 1994. That was part of a package of amendments to the EPCA then-natural resources minister Kathy Dunderdale rammed through the House of Assembly on the second last and last day of the spring 2007 session.

Provision of an agreement void

5.7 A provision of an agreement referred to in section 5.4 or 5.5 shall not adversely affect a provision of a contract for the supply of power entered into by a person bound by the agreement and a third party that was entered into before the agreement under section 5.4 or 5.5 was entered into or established, or a renewal of that contract.

During the very brief discussion in the House – it wasn’t a debate by any means - Dunderdale mentioned this clause specifically:

The amendment will ensure the delivery commitments under existing contracts are honoured, including the 1969 power contract for the Upper Churchill. This protection is explicitly written into the amendment.

When you look at the details,  it’s pretty clear that the water management agreement gives priority to any demands related to Churchill Falls.  As long as there’s enough water and there is no conflict, everything on the river will be fine.

But what happens when the water flows needed at Muskrat Falls don’t match with the needs of Churchill Falls?  Well, Muskrat loses every time. 

This is something that the current administration voted for in 2007.  It’s included in the 2009 water management agreement.

No dispute on Nova Scotia?

With that firmly in your brain, go back and read Ed Martin’s blog post again.

Notice what’s missing.

At no point does Martin mention the problem of delivering electricity to Nova Scotia in the peak winter demand months of January to March.  Churchill Falls will be cranking water down stream to run Muskrat Falls so water management is not an issue.

The problem Tom Adams identified is that Muskrat Falls likely won’t crank out enough electricity to feed the entire island in place of Holyrood and ship electricity to Nova Scotia at the same time.

Surely if Nalcor wanted to specifically refute Adams, they’d have mentioned that big issue specifically.

- srbp -

Curiouser and curiouser!

Even in the Land Through the Looking Glass that is Newfoundland and Labrador these days, a news release about an emergency session of the House of Assembly to deal with an amendment to  a single piece of legislation is very odd, indeed.

As the official version puts it:

In the course of negotiating a water management agreement for the Churchill River, CF(L)Co advised Nalcor that it felt aspects of the Energy Corporation of Newfoundland and Labrador Water Rights Act infringed upon its water rights lease for the Churchill Falls development. This was not the intent of the act, and government has agreed to amend it so as to avoid any ambiguity.

First of all, one must realise, of course, that NALCOR is the parent of Churchill Falls (Labrador) Corporation or CFLCo.  It holds 65% of the shares, in fact, and the two companies are not completely separate entities.  They are rather closely and intimately connected, in fact.

Second of all, one must also note that the section of the Electrical Power Control Act 1994 requiring a water management agreement came into effect this past January. 

In 2007, the current administration introduced this amendment in the legislature requiring two companies trying to generate hydro from the same river to come to some agreement on water sharing have one imposed by the public utilities board.   For whatever reason the current administration did not give it force of law until early 2009.

Third of all, the original lease that CF(L)Co holds has been around since 1961.  its provisions are well known to a host people inside and outside the provincial government.   in fact, given the history of the lease, it’s probably one of the most well studied and well-understood pieces of legal documentation existing anywhere in Canada.

And that’s the really odd thing.

Well, aside from the oddity of the company effectively negotiating with Itself, and then notifying Itself in the course of negotiations that Itself had a problem with something Itself had been party to previously because that infringed on something else Itself had also been party to much earlier.

You see, there is nothing that would have been noticed during the negotiation of a water management agreement for the Churchill River since January 2009  involving NALCOR, Energy Corporation, Newfoundland and Labrador Hydro or CF(L)Co or whatever name the Crown version of Sybil is using at the moment that wasn’t painfully obvious to NALCOR,  Energy Corporation Hydro or CF(L)Co or Sybil, as she then was, when the provincial government introduced the changes to the EPCA, 1994 in 2007 and then introduced the Energy Corporation of Newfoundland and Labrador Water Rights Act in early 2008.

What seems to be up for discussion here is something  your humble e-scribbler pointed out back in February. 

If that weren’t enough, changes to the Electrical Power Control Act – passed in 2007 but only quietly implemented after the expropriation in December 2008 – ensures that NALCO can enforce its control over future developments through the Public Utilities Board.

If one takes the implication from a set of Hydro Quebec questions about the Lower Churchill environmental assessment, the proposed water management regime appears to require that Churchill Falls be run in such a way as to maximize the generation at the Gull Island and Muskrat Falls dams under all contingencies. 

This might adversely affect CF(L)Co and some of its contractual arrangements to supply power.  It would also seem to go against several sections of the original lease.

If the government news release is clear – and that is by no means obvious – then the emergency session of the legislature is likely to be about passing an amendment that removes the last clause of the water rights act.  That’s the one that requires a water management agreement be reached or that one be imposed by the public utilities board.

What’s so interesting – if that’s the case – is that this is coming in an emergency session and not simply held for the fall sitting.  An amendment to the legislation could have been made later on with the requirement to produce the amendment being made a condition of any water management agreement.

There must be some sort of threat at work here, something much more significant than the prospect of an agreement between  “Nalcor Energy or its subsidiary and CF(L)Co”.  Incidentally, CF(L)Co is a subsidiary of NALCOR. 

Rather, there might not be much hope of a deal at all in the near term.  Instead,  CF(L)Co  - perhaps at the insistence of one of its shareholders – is protecting its interests and ensuring that the legal problems inherent in the EPCA amendment and the water rights act be eliminated now, without question or condition.

And if it was anything else, like say a repeat of the old water rights reversion act, then the thing would have been trumpeted in news conference held by the Premier.  Something says he just wouldn’t be able to resist the temptation to grandstand against any slight. 

Nope.  This is something government is trying to downplay, somewhat.

But rest assured:  emergency sessions like this one don’t happen every day and they sure as heck don’t come for a routine amendment, even if it is one intended merely to avoid “ambiguity”.

There’s something big behind this.

And it may not be pretty for the Lower Churchill project.

-srbp-

Gil Bennett won’t re-tweet this post #nlpoli

After a few weeks’ break, Telegram editor Peter Jackson had another go Thursday at the water management controversy involving Nalcor and the 2041 Group.

Jackson wrote about it in his Hallowe’en column. After digging up some additional information, he went back at it again.

Jackson comes to the same conclusion as before, namely that the lawyers are wrong:  there’s no issue.  Jackson quotes Nalcor vice president, the engineer who is running the Lower Churchill project.  What’s interesting though is that after more research, Jackson still missed a crucial – albeit maybe subtle – detail.

Quebec appeals court decision on Churchill Falls contract no win for Newfoundland and Labrador #nlpoli

Media reports, political comments, and pundit opinions are wrong about the decision last week by the Quebec Court of Appeal in a case about the renewal clause of the 1969 Power Contract between Churchill Falls (Labrador) Corporation and Hydro-Quebec.

The Court decision leaves Hydro-Quebec with virtually all of the electricity produced from Churchill Falls and, most importantly, operational control of water flows on the river.  This will have an adverse impact on Muskrat Falls. As a result, CF(L)Co is likely to appeal the decision.

__________________________________________________

The Quebec Court of Appeal ruled last week that Hydro Quebec retained operational control of electricity production at Churchill Falls. It made a minor change to an earlier decision by the Quebec Superior Court in a decision from 2016.

That’s why Hydro-Quebec issued a statement that it was satisfied with the outcome of the decision.

In other words, English-language media reports and political commentary got it wrong when they claimed “Quebec's top court rules for N.L. in Churchill Falls dispute with Hydro-Québec” (Canadian Press) or “A Victory For NL In Long-Standing Legal Battle With Hydro-Quebec On Upper Churchill” (VOCM).

The English-language reports focused on the idea that Hydro-Quebec could only buy electricity from Churchill Falls up to a maximum each month under the terms of an automatic renewal to the 1969 power contract between Hydro-Quebec and Churchill Falls (Labrador) Corporation.  VOCM went a step further in the mistake department my making it sound like both Hydro-Quebec and Newfoundland and Labrador Hydro could sell electricity from Churchills Falls. 

The clue that something was amiss in the English-language coverage is the statement from Nalcor that said the Quebec Court of Appeal “had ruled substantially in favour” of CF(L)Co on the question of Continuous Energy.

Here’s why.

Firm and Unfirm #nlpoli

With the House of Assembly open again, the major topic of Question Period was Muskrat Falls and the second version of the deal to ship power to Nova Scotia.

Premier Kathy Dunderdale explained it on Monday in terms of firm and “non-firm”.  Firm power is what you know that the hydro plants will be able to produce reliably.  The unfirm power is the stuff that you can get when there is plenty of water.

What’s interesting is how much of this unfirm power the Premier says is around.  It is:

“half a terawatt to four or five terawatts a year. Based on fifty years of hydrogeology, the amount of snow or rain in this Province, we have been able to commit to Emera 1.2 extra terawatts of power on average; …, some years that might be 0.5 terawatt, another year that might be three.”

On the face of it, that is such a really interesting idea that it is worth digging into the notion a bit more.

The price of a dam #nlpoli

If crap was electricity,  Nalcor would have the market cornered.

Da byes running the Muskrat falls project are very good at spewing words but very bad at saying things that have meaning.

Case in point: last fall in the controversy over the water management agreement, chief Muskrat Falls guy Gil Bennett was always ready to insist Nalcor was lily white and had no bad intentions. 

The lawyers in the 2041 Group suggested it would be prudent to confirm the Nalcor interpretation with a legal reference.   After all, there was always the possibility Hydro-Quebec had another view and might take action. Bennett the engineer blew off any thoughts of any legal problem with everything but a contemptuous pfft.

The thing is that Bennett kept avoiding the simple question and answering the irrelevant one. The post in which your humble e-scribbler pointed out this problem has been the most popular post here – bar none – since last November.

And now we can see how much the engineer knew about the law.

Water Rights, Muskrat Falls, and the Muskrat Falls Disaster #nlpoli

Forget everything else that you know about Muskrat Falls.

The entire project hinged on Nalcor's ability to control water flows on the Churchill River.  Nalcor's internal assessments showed that without the ability to control water flows, Nalcor's Lower Churchill project would reliably produce only about 17% of its nameplate capacity.  That means that Muskrat Falls would have a firm generating capacity of about 140 megawatts,  which is less than the free block of power Nalcor guaranteed Emera and Nova Scotia.

Nalcor gambled on a dubious interpretation of the 1969 power contract and lost.

The impact on Muskrat Falls will be devastating.

Here's why.

Nalcor: Generations #nlpoli

Telegram editor Peter Jackson took a hard look this week at the implications of Nalcor’s effort this week to jack up electricity rates.

As part of the company’s rate application to the public utilities board,  Nalcor said a relatively dry season on the island had deleted its water reservoirs.  As a result it had to burn more oil to make electricity and therefore ratepayers needed to cover that cost.

Jackson notes that with Nalcor’s plan to scrap the Holyrood generating station, we’ll be left to rely on Muskrat Falls and its relatively small reservoir.  That small reservoir means the Muskrat Falls generators will depend on a water management arrangement with Churchill Falls.

And then Jackson puts everything in perspective:

There’s desperate and then there’s Dunderdale #nlpoli

Take away the bluster:  “The agenda won’t be set by Quebec in terms of how we do our work, how we develop our resources, and how we access markets.”

Take away the old fairy tales :  “I would characterize this as a desperate move by a company that’s been trying one way or the other to thwart development on the lower Churchill for a number of years, unless it was clearly in the best interests of the people of Quebec.”

Dispose of all the crap and what’s left of Premier Kathy Dunderdale’s comments on the Hydro-Quebec legal challenge about the 1969 is very few words that reveal much.

The Tempest Tick-Tock: key events in the Hydro Quebec and NB Power tirades

It helps to put a timeline on things sometimes.

2006

May:  While a bill that is supposed to create the energy corporation is introduced as the first bill of the session, the text of the bill doesn’t show up until near the end of the spring 2006 session. The record for the bill is bizarre.  It shows the bill passed through second reading and committee stage four days after it passed first reading.

2007

June 4 and 5:   In a couple of short sessions and with very little public debate and discussion, the legislature passes two bills revamping the hydro corporation and creating the energy corporation.  This amounts to a massive  reworking of the province’s energy corporation, originally created in 2006.  

Newfoundland and Labrador Hydro forms the initial core of the company but internal structure  creates series of interlocking directorates of subsidiaries.

NL Hydro retains exemption given in 2006  to EPCA restriction that electricity producers in province delivering to customers in province may only be engaged in electricity activities.  PUB must still set Hydro rates to ensure profitability.

At some point in the re-organization, CF(L)Co becomes a subsidiary of NALCOR instead of CFLCo.  This makes NLH – the Lower Churchill proponent – equal within the internal corporate structure  to the company that was once its subsidiary.

June 13 and 14: In a high-speed process and with very little debate or public scrutiny, the  House of Assembly amends the Electrical Power Control Act 1994 (EPCA) to lay out method for making water management agreement where two projects exist on same watercourse.   Amendments to take effect on date set by cabinet. 

2008

June 3 and 4:   At high speed and with very little debate, the legislature approves major changes to the energy corporation legislation. Includes significant changes to the rules governing creation of subsidiaries, as well as massive changes to the province’s Access to Information laws to shield the company activities from scrutiny.  Cabinet retains the ability to transfer any function to the energy corporation it wishes to transfer, regardless of what it is about. 

June 3 and 4:  At high speed and with very little debate, the legislature passes a water rights management bill later revealed to strip CF(L)Co of its lease to Churchill Falls.

December 16:  Surprise seizure of hydroelectricity generation and transmission assets of three private sector companies on the island of Newfoundland (AbitibiBowater, Fortis and ENEL).  Assets assigned to NL Hydro.  NALCOR given responsibility for all government negotiations with Abitibi on compensation.

2009

January 16:  EPCA  amendments made in 2007 come into force.  Amendments are gazetted along with regulations but there is no news release or other public notice.

April:  Talks start on water management agreement between Newfoundland and Labrador Hydro and CF(L(Co) .

August 31:  Ed Martin (CEO of provincial energy corporation) tells Toronto Star that he :

… doesn't see the Quebec issue as a major stumbling block, as regulation requires the province to allow access to its grid in return for a set tariff. Hydro Quebec and Nalcor are just working out the details. 

Any costs to Ontario would build in the price of that tariff, but what's most important is how that final cost would compare to the next-best alternative. [Emphasis added]

01 Sep:  Emergency session of the legislature called for September 8 to deal with amendments to 2008 water rights legislation. 

Amendments and session are given rather benign description initially:

"This amendment is necessary in order to facilitate an agreement between Nalcor Energy or its subsidiary and CF(L)Co," said Minister Dunderdale. "As these negotiations are currently underway, we wanted to get into the House early and make this amendment to avoid any uncertainty to the parties involved. We thank the opposition for their cooperation on this matter and we look forward to further discussion on the amendment when the House reconvenes next week."

03 Sep:  In a speech to a national audience, Premier attacks Hydro Quebec for supposedly throwing up roadblocks to lower Churchill development.

04 Sep:  Dunderdale reveals the full  - the real - story.  (Locals media have not covered Dunderdale’s comments two and a half months later)

09 Sep:   Amendments pass in House emergency session.  True nature of story is revealed in comments during the debate:

“They [Churchill Falls (Labrador) Corporation lawyers and directors] felt that we had extinguished their rights to the whole watershed area that they require to produce electricity in the Upper Churchill and that would cause them some concern,” said [natural resources minister Kathy] Dunderdale.

Unspecified time in September:  Deal reached with CF(L)Co on water management.

October 23:  According to NALCOR, this is the date the CF(L)Co board met and rejected the deal agreement.

October 29:  NB Power deal.

-srbp-

Nova Scotia would get Churchill Falls power for free #nlpoli

If you’ve been following the ongoing Muskrat Falls saga, you will recall that energy analyst Tom Adams raised some questions a couple of months ago about whether or not Muskrat Falls could actually produce the power Nalcor and the provincial government claimed.

The problem basically came down to this: 

• January through to March is when Muskrat Falls needs to produce the most power.
• That’s when Holyrood would be cranking at full tilt to meet demand on the island for lights and heat in the winter months.
• At the same time, the Nova Scotians will need to get their guaranteed block.
• Upstream, Churchill Falls will be cranking at full tilt to feed Quebec under the 1969 contract and the 1998 Guaranteed Winter Availability Contract
• But the water flows in those three months are the lowest for the year.
• And at that point, Muskrat Falls would have a problem generating much more electricity than Holyrood did, despite the fact that Muskrat is – on paper – considerably larger.

Nalcor’s official line is that the water management agreement imposed by the public utilities board gives Nalcor access to the Churchill Falls reservoir. 

With production at Muskrat Falls completely integrated with Churchill Falls, this means that during May and June Muskrat Falls will be producing at full output, and the resulting production not required on the island will be displacing production at Churchill Falls. This energy will be drawn down when rivers flows are lower, and during peak winter periods when electricity demand is higher on the island.

Problem solved.

Yeah, well not really, as you will see in a little bit.

Adding the technical to the legal on the WMA #nlpoli

“We are potentially paying 6.4 Billion for 170 MW of firm power, which will just be enough to meet the Emera commitment,”  notes JM in discussing one scenario in his latest commentary The Water Management Agreement and Peak Load Delivery to the Island. 

The scenario JM is referring to involves irregular production by Churchill Falls of 20 days at full capacity and 11 days at a minimum level. Nalcor laid it out in one of its presentations to the PUB:

This adds a significant new technical dimension to the ongoing water management agreement controversy.

Pride goeth, more undisclosed risk, and all that #nlpoli

There are so many ways that Ed Martin, his crew at Nalcor, and the provincial Conservatives and all their supporters have screwed themselves and local ratepayers it is getting harder to tell which one is worse.

On Monday, the Nova Scotia regulator approved the Maritime Link but only condition that Emera secure enough extra electricity at market rates to make the project the lowest cost option.  Meanwhile in Quebec, Hydro-Quebec announced it was seeking a court opinion on its right to access virtually all the output from Churchill Falls.

The interplay of the two things could work together to deliver a horrible result for the people of Newfoundland and Labrador.

Churchill Falls reversion fails for second time

The Newfoundland and Labrador government  is making quick changes to a 2008 law after lawyers for the Churchill Falls (Labrador) Corporation  - CF(L)Co – raised questions about the impact of the bill on the company’s 1961 lease and rights to all property related to Churchill Falls.

Lawyers for CF(L)Co raised the issue with the provincial government’s  NALCOR Energy company during talks on water management for the proposed Lower Churchill project. 

The changes were tabled Tuesday in an emergency sitting of the House of Assembly.

It appears that - reminiscent of the 1980 water rights reversion bill - the 2008 bill stripped CF(L)Co of its lease.

In the original 2008 bill - Energy Corporation of Newfoundland and Labrador Water Rights Act - the Lower Churchill River is described as including “all waters that originate within the Churchill River catchment area and all rivers that naturally flow within the catchment area or from diversions into the catchment area.”

Clause three of the then stated that

any property in and rights to the use and flow of water, previously conferred by a grant, lease, licence or other instrument or under a statute of the province, or vested in, acquired by or accruing to a person by whatever means relating to the Lower Churchill River are extinguished.  [Emphasis added]

By combining the two clauses, the new bill effectively cancelled the 1961 Churchill Falls lease.  The 2008 law also blocked rights holders from any legal action and stripped them of  any entitlement to compensation.  

The bill became law on June 4, 2008.  There is no indication when cabinet issued the license to the energy corporation, now known as NALCOR Energy.

The changes introduced in Tuesday’s emergency session make it plain that the 2008 water rights law applies only to the Lower Churchill and that, for absolute certainty,  the 2008 bill “ excludes the area described in Appendix A to The Churchill Falls (Labrador) Corporation Limited (Lease) Act, 1961, and all waters while they are in that area.”

Emergency sessions are rare

For its part, the Williams administration is downplaying the session and the hasty changes.  In a news release, Dunderdale said that the act was never intended to cover Churchill Falls.

But the very fact the session was called to deal with one set of amendments to one bill suggests the issues involved are far from routine and that the legal implications of the water rights bill would be significant if left unamended.

Emergency or special sessions occur very rarely and usually only deal with extraordinary issues like war or labour disputes that threaten public health and safety.

Ordinarily – and if the implications of the bill were considered inconsequential or inadvertent -   CF(L)Co and NALCOR could simply have made routine amendments in the regular fall sitting a condition of an overall deal on water rights management on the Churchill River. 

Interestingly, the provincial government also tried to downplay the water rights bill in 2008, even to the point of making apparently misleading statements in the legislature.

In June 2008,  natural resources minister Kathy Dunderdale told the House of Assembly that the bill was needed since government had decided against using the  Lower Churchill Development Corporation as the vehicle to develop the Gull Island and Muskrat Falls power projects. 

But the 2008 water rights bill didn’t repeal the 1978 Lower Churchill Development Act, nor did it remove the LCDC option for development of the Lower Churchill.  The 2008 bill merely extinguished previously existing rights, leases, grants and licenses. 

Deja vue

This marks the second time since 1975 that a Progressive Conservative administration in Newfoundland and Labrador has found itself in hot water over legislation related to Churchill Falls.

In 1980 Brian Peckford’s administration introduced the Upper Churchill Water Rights Reversion Act.  The bill expressly cancelled the 1961 lease.  A subsequent legal challenge by creditors led to a landmark decision by the Supreme Court of Canada that ruled the 1980 statute was illegal. 

One of the influential factors in that case was public comments by politicians that identified the real purpose of the bill as being to undo the 1969 Churchill Falls agreement.

If the 2008 water rights bill effectively expropriated the Churchill Falls complex, it would be the second such move by the Williams administration in 2008.  In December 2008, the Williams administration moved to seize assets of Abitibi, Enel and Fortis including hydro-electric generating facilities. 

Confusion reigns in hydro policy

Revelation of the 2008 water rights ploy is the fourth Lower Churchill-related blockbuster news in a week.

On Friday, natural resources minister Kathy Dunderdale revealed that the provincial government had been trying unsuccessfully for five years to interest Hydro Quebec in an ownership stake in the Lower Churchill project. 

Dunderdale told Open Line Show host Randy Simms and his audience that the provincial government proposed to “set the Upper Churchill [issue] to one side.”

This move came despite commitments by Premier Danny Williams that there would be no Quebec involvement in the Lower Churchill without redress for the appalling 1969 deal that sees Hydro Quebec buy electricity at better than 1/30th the cost for which it is sold to consumers.    Williams has repeatedly railed against the 1969 deal as an example of a resource give-away by previous provincial governments.

The offer of an ownership stake to Hydro Quebec also flies in the face of Williams’ 2006 commitment to develop the Lower Churchill without any outside help:

"It's an opportunity for us to get back some of what we've lost on the Upper Churchill, and the fact that we're going to do this alone is significant," Williams said in an interview.

The Dunderdale revelation came after Williams accused Hydro Quebec of doing everything possible to block the Lower Churchill project. 

Williams also said last week that  his government would no longer plan to string hydro lines from the Lower Churchill through a UNESCO World Heritage site.

-srbp-

Water Management Controversy Hits Nova Scotia #nlpoli

Okay so the locals might call it Information Boring, but CBC’s morning Halifax radio show took a look at Muskrat Falls this week.

The interviewed Dennis Browne from Group 2041 on Wednesday.  The next day they came back with a discussion of the water management controversy.

Here are links to the audio files:

• Dennis Browne
• Bern Coffey and the Water Management Agreement

-srbp-

Christmas money

In December, the provincial government announced cash for a number of projects.

1. Public Service Pension Plan. Then-finance minister Loyola Sullivan announced the provincial government borrowed $400 million to address the unfunded liability in the provincial public service pension plan (PSPP). The money was borrowed at 4.5% interest over a 30 year term.

The news release on December 6 mentioned another unspecified amount would be borrowed before the end of the fiscal year (31 March 2007)

It will be interesting to see if the provincial government carries out the planned borrowing and, if so, what the amount will be.

2. Economic development. InTRD minister Trevor Taylor announced money on December 28 for economic development, disbursed from a $5.0 million fund already established.

About $12, 000 will be spent to conduct a test fishery on shark-catching as a tourism venture. This sounds great as a tourism idea but as an environmentally-sensitive project it seems a bit dodgy. Shark fishing may attract anglers, but there is no indication if the sharks are dumped - inevitably dead - back into the ocean or if there has been any thought given to use the shark flesh for any type of subsequent commercial use.

Taylor also announced the province would drop the princely sum of $1875 - yes, that's all the digits, Virginia - into a study on using water from Gisborne Lake as a source for bottled water. As the release put it:

The [local development] association hopes that by making available details of the lake and the surrounding infrastructure, local development officers will be able to use the study as a prospectus to attract businesses to the area to develop a local water bottling industry.

Like no one has thought of Gisborne Lake for such a purpose before. The last time out, a private-sector venture foundered over concerns about impact exporting water in bulk from Gisborne Lake would have on water under the North American Free Trade Agreement. The federal government eventually banned bulk exports of water in 1999. The provincial government joined in but talked about lifting its own ban in 2001.

The general characteristics of the lake are well known, so one must wonder why the provincial government must spend any cash at all on this venture. In 1998, then-opposition critic Tom Osborne questioned the bulk export proposal but indicated his party favoured bottling water for export.

Fair enough.

But there just doesn't seem to be a demand for exporting bottled water. If there was, surely someone would have invested in it by now.

If that wasn't enough, there are always the environmental and ethical issues now being raised about bottled drinking water.

Maybe there are good reasons why the provincial government is investing such a paltry sum. Of course, that still wouldn't explain the tardiness of the Williams' bunch from bringing forward the sustainable development act mentioned in the infamous Blue Book. The new legislation was to be a major accomplishment of the first term.

Back in 2003, Danny Williams believed there was "a brief window of opportunity to legislate a balanced development strategy for this Province that protects water resources, assures fair benefits for the Province, and provides a hospitable and competitive environment for investors."

Williams categorically rejected bulk exports but did commit that:

We will legislate a water resource development strategy that adheres to the following principles:

* Sound management and sustainable development of fresh water resources.

* Development of a fully integrated water resource industry, which includes value-added processing in the Province.

* A fair regime for assessing royalties and taxes, procurement of goods and services in the Province, and first consideration for Newfoundlanders and Labradorians in employment and related training.

* Promotion of local ownership and local investment in the development of the primary resource and related industries.

When these policies are enshrined in law and their intent expressed in every government-industry agreement to develop our water resources, this Province and businesses in this Province will have the opportunity to become global players in what may well become the most important resource industry in the world.

There is still time. If Danny and his cabinet get busy they have 10 months to deliver.

Like water for muskrats #nlpoli

Wednesday it was Kathy Dunderdale.

Thursday, they sent Tom Marshall to chat with Bill Rowe on Open Line to do damage control in the wake of two huge setbacks for the Muskrat Falls project.

Some people think Tom is a good spokesperson because he talks in soft tones.  But truth be told, Tom’s really a bit of a train wreck.