Showing posts with label Fortis. Show all posts
Showing posts with label Fortis. Show all posts

29 June 2011

Fortis, Gaz Metro in war for Vermont utility

Newfoundland and Labrador-based Fortis (CA: FTS)  isn’t alone in its bid to buy Central Vermont Public Service.

The CVPS board announced on June 27 that the company has authorized talks with Gaz Metro on Gaz Metro’s unsolicited acquisition offer.  Gaz Metro is offering $35.25 per share.  That’s slightly better than Fortis offer of $35.10 per share, which the CVPS board accepted in late May.

CVPS is the largest electrical utility in Vermont.

Vermont Governor Pete Shumlin thinks the Gaz Metro offer is better for the state given that Gaz Metro already owns an electric utility and a natural gas utility in the state.

Fortis isn’t happy with the unsolicited offer from a rival. The company wouldn’t comment on the story earlier in June with Canadian media but  Vermont Public Radio quotes Fortis chief financial officer Barry Perry as saying: 

"It is a hostile bid. In the utility sector, hostile bids are not normal.  They're rare, in fact.  So, usually you end up negotiating a transaction, the board selects a party and that's the end of it.    The party is then required to get it approved by the regulator and the shareholders of the company. In this case GMP did decide to go hostile. It is a little unusual."

Under the agreement with Fortis, CVPS could wind up paying Fortis US$19 million if the deal with the company falls through.

If it is successful, Gaz Metro would create a new utility that includes a share of the state’s transmission assets.  VPR reported that as part of the merger, Gaz Metro would create a public trust comprising 30% of the shares in the state transmission utility. The trust would reportedly generate $1.0 million a year in income.

 

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25 June 2011

Fortis fighting two tin-pot bureaucracies

Newfoundland and Labrador based Fortis is seeking compensation for electricity production assets seized by two governments half a continent apart.

The company is seeking payment for its interest in a Belize electricity company seized this week by the government of that tiny central American country.

It is still locked in talks with the Government of Newfoundland and Labrador for the 2008 seizure of its assets in that Canadian province.

Odds are Belize will settle up first.
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22 June 2011

Belize dannys Fortis

Almost three years after Danny Williams’s Conservative administration in Newfoundland and Labrador expropriated Fortis’ electricity assets in the province, the government of Belize has taken a leaf from Williams’ playbook and seized Fortis’ interest in Belize Electric Limited.

Fortis held a 70% interest in the company at the time of the seizure.

Compensation for the expropriation has yet to be determined.

In related news, Standard & Poor’s is warning the Belize government that it may downgrade the country’s credit rating in the wake of the move.  According to Reuters:

"The final details of the acquisition and its impact on the government's debt burden and fiscal flexibility are uncertain. However, based on the information currently available, we believe that there is significant likelihood that we could lower the ratings to 'B-minus' upon the conclusion of this transaction," S&P said.

In its statement, S&P said Belize's general government debt as a portion of gross domestic product is already a high 85 percent, with the interest burden around 15 percent of its revenues.

“The proposed bill would allow the government to take over Fortis's share, with an estimated book value of $100 million," S&P said, which noted Fortis holds 70 percent of the company's equity.

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14 June 2011

Belize wants to buy out Fortis interest in Belize power company

From Fortis:

“The Government of Belize (the "Government") issued a media release on Friday, June 10, 2011 announcing the Government's interest, "...in purchasing majority shares in BEL so as to assume control of the company." No purchase proposal has been received by Fortis Inc. ("Fortis" or the "Corporation") (TSX:FTS).

Fortis holds an approximate 70% ownership interest in BEL, an integrated electric utility and the principal distributor in Belize, Central America, following investment at the invitation of the Government in 1999. In addition to its investment in BEL, Fortis owns Belize Electric Company Limited ("BECOL"), a non-regulated hydroelectric generation business that operates three hydroelectric generating facilities in Belize.

In June 2008 the Public Utilities Commission of Belize ("PUC") issued a rate order that has had a significant negative impact on the financial condition and operations of BEL. The order effectively disallowed the recovery of previously incurred fuel and purchased power costs in customer rates and set customer rates at a level that does not allow BEL to earn a fair and reasonable return. BEL appealed the PUC rate order to the Supreme Court of Belize. On March 15, 2011, the court rendered its judgment dismissing BEL's application and finding that, among other things, the generally accepted concept of Good Utility Practice is not applicable in Belize. BEL has appealed this judgment to the Court of Appeal of Belize; however, a hearing is not expected until the first quarter of 2012. On May 16, 2011, the Supreme Court of Belize granted BEL's application to enjoin the PUC from engaging in any rate making proceedings or taking any enforcement or penal actions against BEL pending the appeal of its judgment. BEL has been in default of covenants under its long-term lending agreements since 2008 and has had no access to credit during this period.

As at March 31, 2011, the assets of BEL represented less than 2% of the total assets of Fortis; the combined assets of BEL and BECOL represented approximately 3% of the total assets of Fortis.”

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30 May 2011

Fortis buys Vermont power utility

Fortis Inc. (FTS-T) announced Monday it will buy Central Vermont Public Service Corporation. CVPS serves 160,000 customers throughout the state.

This is the first American purchase for Fortis, a company that owns electricity generation and distribution services in Canada and Belize.

The reported price tag for the purchase in US$700 million including $230 million of debt.

Here’s a quote from Fortis chief executive Stan Marshall, taken from the abysmally written Fortis news release:

“The acquisition of CVPS represents the initial entry by Fortis into the U.S. regulated electric utility marketplace and establishes a foundation for Fortis to grow our utility business in the United States,” says Stan Marshall, President and Chief Executive Officer, Fortis Inc.  

“CVPS is a well-run utility whose operations are very similar to those of our Canadian regulated  utilities, allowing us to use our collective competencies to further enhance service to customers and returns to our shareholders,” explains Marshall.  
 
Based on financial information as at March 31, 2011, following the Acquisition, the total assets  of Fortis will increase by approximately 7% to approximately $13.9 billion.  The Corporation’s  regulated electric and gas utility operations  will account for approximately 55% and 37%, respectively, of the total assets of Fortis.  Regulated utility assets in Canada and the United States will account for approximately 85% of the total assets of Fortis.

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11 April 2011

Province settles expropriation with Enel, Sun Life and others

Compensating a group of companies involved in the Star Lake affected by the Abitibi expropriation will wind up costing the taxpayers of this province more than the original project cost to build a decade ago.

Natural resources minister Shawn Skinner announced on Monday that provincial government will pay $32.8 million to Enel while Nalcor will assume responsibility for a $40 million loan from Sun Life and other companies.

That’s $72.8 million for a project that originally cost $51 million to build in 1998 according to Enel’s website:

The Star Lake Hydroelectric Project is an 18 MW remotely operated hydroelectric facility with a 173 million cubic meter capacity storage reservoir. The project provides electricity to Newfoundland’s integrated grid, which is sold to Newfoundland & Labrador Hydro.

Construction of Star Lake began in May 1997 and was completed in October 1998 for a total cost of $51 million (CAN).

From the earliest stages of the project, environmental considerations were considered in its development and have been instrumental in the technical design. The facility was conceived using environmentally friendly materials and equipment such as biodegradable hydraulic oil for its intake gate system and an oil-free hydrostatic bearing for the turbine unit. An underground penstock was also designed and implemented in order to avoid obstructing migration routes of the Buchans Plateau caribou herd.

An artificial brook trout incubation and rearing facility is also onsite. It is designed to produce up to 100,000 fingerlings (young fish). These fingerlings are intended for annual introduction to Star Lake to ensure that the lake's brook trout population is maintained.

Skinner is quoted in the news release as saying that this is a “a fair settlement and the most appropriate action for the province to take.”

The provincial government is still in talks with Fortis on compensation for that company on another project affected by the 2008 expropriation bill.

Nalcor has already assumed responsibility for a $59 million loan related to Fortis’ former hydro interests.

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13 December 2010

Dunderdale confirms Bond story on Fortis and Enel

As you read here on Friday, the provincial government is handing back property seized in December 2008 to Fortis and Enel.

NTV ran the story on Sunday complete with a quote from Premier Kathy Dunderdale.

Dunderdale’s comments give some credence to the idea this expropriation wasn’t about any supposed broken promises by AbitibiBowater.

Maybe it was all about a spurned bid for Abitibi shares in Star Lake.

Maybe it was something else.

Slowly but surely the whole story is emerging.

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20 May 2010

Fortis and Enel getting special treatment from Williams gov under expropriation bill

At least two of companies whose long-term power purchase agreements were ripped up under the December 2008 expropriation bill will still get all their cash under long-term power purchase arrangements, according to natural resources minister Kathy Dunderdale.

Abitibi is not included in the arrangements, apparently.

Dunderdale told the House of Assembly on Thursday that:

…we made a commitment to both of those companies [Fortis and ENEL] that regardless of what happened with Abitibi, at the end of this process we would ensure that they were kept whole, that they were properly compensated for fair market value for the assets. The PPAs that they have with Abitibi would also be honoured, Mr. Speaker.

Dunderdale said that the provincial government’s energy corporation  - NALCOR  - is still discussing arrangements with the two companies. The power purchase arrangements date from 1997 and 2001. The exact duration is currently unknown to your humble e-scribbler but would typically be in the range of 20 to 30 years.

ENEL partnered with Abitibi on the Star Lake project to supply electricity to Newfoundland and Labrador Hydro. Bill 75 seized all the generating and transmission assets of the Star Lake partnership and revoked all the agreement related to it, as listed at Annex E of Bill 75

Dunderdale made no reference to the other companies also affected by the seizure:

  • Clarica
  • Sun Life Assurance
  • Mutual Life Assurance
  • Standard Life Assurance, and
  • Industrial Life Assurance.

Fortis – the other company Dunderdale discussed – was a partner in the Exploits Hydro Partnership.  Under a long-term power-purchase agreement, Exploits partnership sold power to Newfoundland and Labrador Hydro.

Dunderdale also admitted what Bond Papers readers already knew:  the provincial government is paying for a long-term loan for the Exploits partnership.  The outstanding balance on the loan is $59 million.  The provincial government paid the 2009 instalment.

The hydro-electric assets are likely the only ones seized in 2008 that could generate any reliable revenue to offset the costs of environmental clean-up at former Abitibi sites in the province.  Payment of loans and royalties to the companies other than Abitibi as if the expropriation never happened would significantly reduce any revenue NALCOR could gain from the assets.

Dunderdale’s admission today could also further undermine any legal cases the provincial government is pursuing.  One of the problems government faced in recent Quebec court decisions on the Abitibi bankruptcy protection proceedings is that its environmental clean-up actions appeared to be aimed solely at Abitibi and were not part of the routine administration of provincial environmental laws.

Dunderdale’s admission makes it pretty clear that the government is treating some of the companies affected by the expropriation very differently from Abitibi.

Colouring the expropriation as aimed solely against Abitibi could also colour the move and undermine any defence of Abitibi’s NAFTA challenge.

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02 May 2010

NALCOR takes on Fortis loan payments

NALCOR, the provincial government’s energy corporation, is paying a loan on behalf of the Exploits Partnership, one of the entities affected by the expropriation fiasco in December 2008.

In its 2010 first quarter financial statements (2010 Q1) released on Friday, Fortis, one of the partners in Exploits River Hydro Partnership, said that NALCOR  is making the “scheduled repayments” under the terms of the loan. 

As of March 31, 2010, $59 million remained outstanding on the loan. The statement reads in part:

As the hydroelectric assets and water rights of the Exploits Partnership had been provided as security for the Exploits Partnership term loan, the expropriation of such assets and rights by the Government of
Newfoundland and Labrador constituted an event of default under the loan. The term loan is without recourse to Fortis and was approximately $59 million as at March 31, 2010 (December 31, 2009 - $59 million). The lenders of the term loan have not demanded accelerated repayment. The scheduled repayments
under the term loan are being made by Nalcor, a Crown corporation, acting as agent for the Government of Newfoundland and Labrador with respect to the expropriation matters.
[Emphasis added]

Newfoundland and Labrador-based Fortis noted in 2009 first quarter financial statements that the unidentified lender had not sought “accelerated repayment” following government’s expropriation.  The Exploits Partnership (51% Fortis/49% Abitibi) made the scheduled term loan payment in 2009.

The expropriation bill passed by the House of Assembly in December 2008 seized all the generating assets and transmission assets of the partnership and cancelled all leases and contracts related to it.  The assets were used to secure the loan. 

Under a contract with Newfoundland and Labrador Hydro, the Exploits partnership sold surplus power not needed for the Grand Falls mill to Hydro for sale to its other commercial and residential clients.  The 30 year power purchase agreement would have expired in 2033.

There is no indication in the 2010 Q1 statement that NALCOR and Exploits Partnership reached an agreement on all issues related to the expropriation.

The loss of income from the the Exploits Partnership as well as the expiration of a water rights contract in Ontario on another project combined to reduce gross revenue for Fortis Generation 73% from $19 million in 2008 Q1 to $5.0 million in 2010 Q1.  Fortis Generation is the subsidiary through which Fortis partnered in the Exploits project with Abitibi.

Contacted by Bond Papers in early 2009 to clear up confusion created by comments by the Premier and the text of the expropriation bill on the Fortis aspects of the expropriation, a spokesperson for the province’s natural resources department refused any comment on the process as there was a process in place to discuss the expropriation and any compensation.

In answer to questions in the House of Assembly last month about negotiations with Fortis and ENEL - another company affected by the expropriation - natural resources minister Kathy Dunderdale said only that talks were continuing and that “a number of arrangements had been made” in the meantime.

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23 April 2010

Dunderdale on Abitibi/Fortis/ENEL expropriation: Oops!

An obviously stressed natural resources minister Kathy Dunderdale admitted to the House of Assembly yesterday that there were problems with the provincial government’s hasty seizure of  assets belong to AbitibiBowater, Fortis and ENEL.

The paper mill itself – originally supposed to be left out of the deal – wound up being left in.  As a result, taxpayers are stuck with a potentially major environmental liability.

CBC puts the Premier’s reaction to the shag-up this way:

Outside the legislature, Premier Danny Williams told reporters he's embarrassed by the turn of events, but he can live with them.

"It was something I wasn't happy with when it happened, but it was an innocent mistake that was made by an official in the department," Williams said. "As simple as that."

That’s bad enough, except adding the mill when you explicitly wanted to leave it out isn’t the only shag up in the whole confiscation.

According to a court decision in Quebec where Abitibi is working through a bankruptcy protection proceeding with its creditors, the Williams administration also forgot to pick up a few of the Abitibi assets in the province that should have been seized as well in the Chavez-esque sweep.

The Legal Genius(es) behind the whole fiasco left out the port facilities at Botwood and the former mill site in Stephenville.

Abitibi closed the mill at Stephenville closed in 2005 after a prolonged battle with the provincial government that included threats by the Premier to expropriate Abitibi’s assets:

"If there's an interested party that can have that mill up and running, we'd be interested in talking to them," Williams said Monday.

"If that requires expropriation, then that's something we'd certainly consider."

In the end no other buyers emerged and the mill closed despite the Premier’s 2003 election commitment that the mill would not shut down on his watch.

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28 December 2009

The fly in the soup clinging to the hair

Writing in the Globe on Christmas Eve, Fabrice Taylor noted the strong performance of Labrador iron ore in the market place, bouyed by increased global demand.

Then he notes the relatively high value of the Canadian dollar against its American counterpart. 

The hair in the soup is the Canadian dollar. Part of the drop in Labrador's financials, mentioned above, is because of volumes and pricing, but a good part is also from foreign exchange. Some pundits see the dollar going to par with the greenback. That's only another nickel or so but it would hurt.

He’s right.

But the exchange rate isn’t the only thing in the soup threatening the fine meal. There’s a fly in the soup, as well, namely the medium to long term cost of operating the mines in western Labrador.

That’s not a labour problem or a dollar problem or a market problem or an ore problem.

It’s an energy problem.

Or more specifically the threat by the provincial government back in 2006 that it would expect the mines in western Labrador to start paying commercial rates for power come 2014. 

And if commercial rates weren’t in the cards, well, the mining companies expect to be paying considerably more than they are currently

Never mind that the companies own two thirds of Twin Falls Power Company, built near Churchill Falls when it was still called Hamilton Falls.  And never mind either that the companies agreed to shutter their power station so BRINCO could push more water through its new plant at Churchill Falls.  In exchange the companies got a block of power for about half a cent a kilowatt hour and anything beyond that for about a quarter of a cent per. 

Either way, the prospect of higher power costs will play a role in the future of Labrador west.  Low cost power will be crucial to sustaining the mines, especially in a high dollar world, so when threats get tossed around companies tend to take notice. 

That threat is till out there.

Plus the threat’s been reinforced by the seizure last Christmas of hydro assets belonging to three companies, one locally owned and the other running a project not connected at all to the paper mill at Grand Falls.  Longstanding agreements were brushed aside by a simple vote in the legislature.  Agreements entered into in good faith and executed in good faith were crushed overnight, forcing at least one of the companies involved to default on loans.  A court case was extinguished without compensation.  Any company with any sort of operation in the province would have been insane not to revisit all their legal options.

And in Labrador west, it would be at all surprising to find out that the companies operating mines there are keeping a wary eye on what happens in St. John’s.  That power contract issue hasn’t been resolved yet and it’s much more a looming crisis than anything connected to the Churchill Falls renewal in 2016 could ever be.

Hair in the soup?

Try a fly.

And a geezly big blue bottle one at that.

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11 December 2009

Fortis/ENEL Expropriation, one year later

Outside the legislature on Wednesday, Premier Danny Williams had this to say about the legal and financial problems that are still hanging around after last December’s seizure of assets by the government under a hastily compiled expropriation bill.

The expropriation will come with a purchase price, but Williams said he now plans to deduct the cost of severance and environmental cleanup from the final amount.

"So, if the possible environmental exposure and, or, the severance were X amount, and the amount that the assets were valued at were substantially less, well, then obviously there would be no payments of cash from the government," Williams said.

One of the great unreported facts of this expropriation – unreported by the conventional media, that is – is that the expropriation didn’t just affect AbitibiBowater.

Nope.

Included in the seizure were assets of Newfoundland and Labrador-based Fortis Inc and an Italian company called ENEL. 

The former was involved in a hydro project that supplied power to the former Abitibi mill at Grand Falls-Windsor and sold the rest to the provincial energy corporation.

The latter was involved in a hydro project at Star Lake that had absolutely nothing to do with supplying anything to the mill.  The Star Lake generating plant was built in response to a call for proposals by the province’s energy corporation about a decade ago. The plant supplied power to the grid to reduce emissions from the diesel plant at Holyrood.

Now if you take the Premier’s comments at face value you get a truly amazing thing and one that is unlikely to be swallowed that easily by the companies involved.

If there are any environmental liabilities related to the Abitibi mill, it would be quite a stretch to suggest that ENEL and Fortis somehow have any responsibility for them given that their operations were not for running the mill.  ENEL has got a real case in this respect, one would suppose.

By the Premier’s construction a company like ENEL could undertake legitimate business activities based on a government contract entered into in good faith by all parties only to find itself, in less than a decade, not only without the assets it paid for but without any compensation whatsoever for the government seizure.

And the excuse for stiffing them is that they somehow gained a liability for something they had no responsibility for in the first place.

This is one of those moments where you’d wonder if the Premier would be quite so calm about it all if someone were trying to pull the same stunt on him.

Meanwhile, one wonders if the rapprochement between the provincial Conservatives and their federal cousins might possibly have something to do with trying to get Ottawa to protect the Newfoundland and Labrador treasury from the fall-out of last year’s seizure.  The federal government has to deal with the international repercussions – like the NAFTA challenge Abitibi filed – but there doesn’t seem to be anything stopping the feds from recovering their costs once the international bits are settled.

Of course, all of this really makes a mockery of recent efforts by the provincial government to win sympathy for its case against Hydro-Quebec.

If the Americans really started to care about it all anyway, might those same New York financiers who supposedly listened sympathetically to the luncheon speech a couple of weeks ago feel quite so favourably disposed to the Premier’s cause if they got the full story on how Fortis and ENEL got screwed over by the Premier’s seizure?

This expropriation business is a long way from settled and the bills are a long way from being paid.  Something says some of the bills won’t be settled in cash, either. 

Payback will be a mother.

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30 October 2009

No word on Fortis expropriation talks

While other power utilities in Atlantic Canada are up for grabs, there’s no word on the status of compensation talks between the Government of Newfoundland and Labrador and Fortis, Inc. resulting from the provincial government’s surprise seizure last winter of hydro-electricity assets in central Newfoundland.

Fortis-owned Newfoundland Properties  was one of three companies – including ENEL and Abitibi – generating capacity in the unexpected, and thus far unexplained, seizure.

Newfoundland and Labrador Premier Danny Williams announced the measures.  Williams introduced a bill in the provincial legislature in December 2008 that also quashed active court cases and stripped the companies of any legal recourse to the seizure.

The seizure of assets caused a loan default among other financial consequences.

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22 June 2009

Chamber concerned seized central hydro assets gain for provincial government, loss for region

The Exploits Regional Chamber of Commerce is very concerned about the benefits from seized hydroelectric assets going somewhere other than the region of the province in which they are located, according to the Grand Falls-Windsor Advertiser.

The chamber estimates that based on electricity used by AbitibiBowater (54 megawatts), savings to Newfoundland and Labrador Hydro in excess of $70 million annually are being realized.

The chamber wrote the CEO of Nalcor in May to try and meet to discuss how the Exploits region could benefit from being adjacent to the source of the power. While the letter was copied to local MHAs and members of the provincial Ministerial Task Force set up to deal with the closure of the mill, Nalcor has not responded.

NALCOR is the provincial government energy company which took control of the assets earlier this year.  They were seized by the government from three companies:  AbitibiBowater, ENEL and St. John’s-based Fortis.

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30 April 2009

Expropriation has financial impacts on NL-based Fortis

From Fortis Inc’s first quarter financial statements, issued Thursday comes an indication of the wider impact Bill 75 has had.

Bear in mind the bill expropriated the assets of several companies besides Abitibi, including the Exploits Partnership which was owned 51% by Fortis Properties.

From the Critical Accounting Estimates section:
Exploits Partnership

Following the announcement by Abitibi of its intention to close its Grand Falls-Windsor newsprint mill on March 31, 2009, the Government of Newfoundland and Labrador expropriated most of the Newfoundland-based assets of Abitibi. The expropriated assets included the hydroelectric generating facility assets of the Exploits Partnership. The Exploits Partnership is owned 51 per cent by Fortis Properties and 49 per cent by Abitibi.

The Exploits Partnership had previously incurred a term loan from several lenders to finance its assets. As at December 31, 2008, approximately $61 million remained outstanding under this term loan. The term loan is withoutrecourse to Fortis or Abitibi, as partners of the Exploits Partnership, and is secured by both the hydroelectric generating assets and related agreements regarding rights to operate and sell power to Newfoundland Hydro during the term of the loan. Although the expropriation has caused the Exploits Partnership to default on the term loan, to date the lenders have not demanded accelerated repayment of the term loan. The Exploits Partnership made the scheduled term loan payment for the quarter ended March 31, 2009. As at March 31, 2009, the balance outstanding under the term loan was approximately $60 million. [bold added]

The generation and sale of electricity by the Exploits Partnership continued in the normal course until the newsprint mill closed on February 12, 2009, up to which point Newfoundland Hydro paid the Exploits Partnership for the energy produced on the same basis as the pre-expropriation power purchase agreement. Payment for all energy delivered since February 13, 2009 is currently outstanding from the Government of Newfoundland and Labrador pending resolution of expropriation matters. The day-to-day operations of the hydroelectric generating facilities have been assumed by Nalcor Energy, a crown corporation, as the agent for the Government of Newfoundland and Labrador with respect to this matter.

On March 24, 2009, the Government of Newfoundland and Labrador announced that Abitibi had discontinued discussions with Nalcor Energy regarding compensation for the expropriated assets. Abitibi, which was incorporated in the US, has also indicated that it intends to challenge the expropriation of its assets and seek compensation through the North American Free Trade Agreement.

Historically, the financial statements of the Exploits Partnership were consolidated in the financial statements of Fortis. Pending resolution of the above matters, deferred financing costs of $2 million and utility capital assets of $61 million related to the Exploits Partnership were reclassified to other assets and the $61 million term loan was reclassified as current on the consolidated balance sheet of Fortis as at December 31, 2008.

During the quarter, the combination of uncertainty created by the expropriation and the loss of control over cash flows of the Exploits Partnership has required Fortis to commence reporting its investment in theExploits Partnership using the equity method of accounting, effective February 13, 2009. Consequently, the assets and liabilities of the Exploits Partnership are no longer consolidated in the accounts of Fortis. Equity earnings recognized during the first quarter of 2009 were equivalent to the amount that would have been recognized in the absence of the expropriation. This approach is consistent with the public statement of the Government of Newfoundland and Labrador that it is not its intention to adversely affect the business interests of lenders or independent partners of Abitibi.
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23 December 2008

Missing bits

From a CBC story in which, among other things, Danny Williams brushes off the NAFTA issue in the Abitibi repo job:

The Newfoundland and Labrador's expropriation does not include the mill itself, although the government will take over a hydroelectric power plant at Star Lake, which sells power to the provincial grid. The government has said it will compensate AbitibiBowater for the Star Lake plant.

People should read more.

The expropriation bill seized all hydro assets AbitibiBowater held in central Newfoundland but they went beyond that.

They seized hydro assets  - way more than Star Lake - belonging to other companies and those companies are named in the expropriation bill:

  • Fortis (Exploits River Hydro Partnership involves Central Newfoundland Energy, a subsidiary of Fortis Generation)
  • Clarica Life Insurance (now owned by Sun Life)
  • Enel North America

All have likely lawyered up pretty tight.  An e-mail inquiry by your humble e-scribbler to Sun Life netted a nil response.  The company’s public affairs department wouldn’t even confirm what involvement the company had in the hydro project in the first place.  As dumb as that kind of response is, that’s how you can tell the lawyers are on the job and bums are really tight:  a company won’t even confirm information that is currently in the public domain. 

There was no hope they’d offer any remarks on the substance of the dispute.

But seriously, people should read more and maybe pursue a bit more of these stories.

Like how does Beth Marshall’s husband Stan, Stan the Fortis Man feel about Danny frigging over his investments? Stan’s been known to have a blunt opinion or two.

Like is Enel – or any other company partnered with Newfoundland and Labrador Hydro – reconsidering its investment based on the expropriation? 

Or has anything been expropriated beyond the Abitibi bits, which would be contrary to the law, and which would have the effect of strengthening Abitibi’s case that the expropriation was discriminatory?

Or have they really all lawyered up, which is a sign of a much bigger dispute and much bigger problem than you’d think if you got all your news from, say voice of the cabinet minister.

Maybe if Lorraine Michael and others hadn’t been so flattered that Danny had deigned to let them in on such historic action – “socialist” action, as Lorraine proudly declared it in the legislature – that they turned off their brains, they might have noticed the sweeping nature of the expropriation bits of the bill. 

Nope.  If people paid attention to some of the details other stories might emerge, one’s that have more to do with the current issue than the pap being spewed from all manner of organs and orifices.

Like for instance, they might have found the inadvertent humour in this comment from the Premier:

"You know I'm a lawyer of over 30 years, so blowhard, five-page letters that get sent to everybody in the country mean nothing to me. I know the law."

Sometimes the five page blows only get sent to one party, but the point is still the same.  Knowing the law is something else though.

And that’s where people might want to separate the bluster from the evidence.  You see, for all the praise he gives himself, Danny Williams record in court  - with decisions rendered by judges  - isn’t that good.  Well, not if the two prominent cases that have been adjudicated in the past five years are to be considered. 

In Henley v. Cable Atlantic, the Premier lost badly in a case he didn’t have to even fight.  He elected to dispute a contract with a guy hired to help with the sale of his old cable company to Rogers. The guy  eventually got paid in full but not until Danny Williams shelled out for expensive lawyers to fight the case  - in a losing cause – through two Ontario courts. The bill at the end must have been double what it would have been if Williams hadn’t been so bloody minded at the start.  SO if the guy is will to waste his own cash on a loser, imagine what he’d do when he was playing with other peoples’ money.

Enter Ruelokke v. Newfoundland and Labrador, in which the provincial government – in a brief that surely was approved by the province’s top legal beagle if not written by him – argued that a clause that said the final decision by an appeal tribunal was binding on the parties actually meant that none of it could be reviewed by a court.

That got laughed out of court just on the English comprehension alone.  The rest of the evidence was an unflattering portrait of an administration that was all over the map when it came to the whole business of finding a boss to run the offshore regulatory board.

Then there’s the 2005 offshore deal in which the government started out looking for a federal transfer that doubled offshore revenues forever.

They settled for $2.0 billion in cash.

Then there’s the Hebron deal.  it could be worth $10, $20 or $28 billion depending on which hyper-inflated estimate you wanted to take at the announcement. (Yes, they settled for two billion in cash on the other one)   Guaranteed flat 1% royalties up front for the companies, a higher royalty rate tied to the price of oil (above an amount it flows;  below – nothing),  a give away of historic proportions on the construction side, a deal in which the companies  - alone - have a decade to decide whether or not to build the project.

You get the point.

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31 May 2007

Fortis to build new Belize hydro project

From the company's news release on Wednesday:
BECOL, an indirect wholly owned subsidiary of Fortis Inc. (TSX:FTS), announced today that the Company has received all major approvals for construction of a US$52.5 million 18-megawatt ("MW") hydroelectric generating facility at Vaca on the Macal River in Belize. BECOL has signed a 50-year agreement with Belize Electricity Limited for the sale of the energy generated by the Vaca facility, commencing late in 2009.

"The Vaca facility represents the final phase of a three-phase development on the Macal River to maximize its hydroelectric potential," explains Stan Marshall, President and Chief Executive Officer, Fortis Inc. "The existing upstream Chalillo and Mollejon hydroelectric facilities have benefited the customers of Belize Electricity and the country of Belize by helping to stabilize electricity rates and by increasing reliability of energy supply," he says.

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