The NEP lives. Here is a wonderful piece of reporting by Drew Hasselback of the National Post on how the federal government is subsidizing the financing for Muskrat Madness.
The most powerful line: “’The benefit of the guarantee was that no one had to look at the merits of the underlying project,’ says Steve Halliday, managing director and head of global credit trading and distribution at TD.”
Shame on Harper and Flaherty. Muskrat Madness is likely to foment terrible interprovincial conflict when HQ presses its contractual rights to Upper Churchill. Nalcor’s Muskrat production plan relies on seizing a large chunk of winter power production from Upper Churchill. Hydro Quebec’s tight supply this winter highlights to value to HQ of its contractual rights in Upper Churchill.
In a story broken by researcher, blogger, and activist Brad Cabana, HQ is allowing its litigation with Newfoundland over the Upper Churchill to stretch out over time. Cabana showed up a whole bus load of professional journalist with this one. HQ has created a litigation version of an option agreement. Nalcor is only too willing to let the dispute slide off into the future, achieving short term pressure relief the for embattled NL PC government. Meanwhile, HQ will probably commercially advantaged if the whole matter comes to a head at a time when power prices are not quite so miserable. The upshot of Cabana’s discovery is that Nalcor keeps coming up with new ways to back-end load Muskrat Madness.
I notice that the NL Auditor General’s January 2014 report found total spending + commitments for Muskrat summed to $1.8 billion at the end of last fall. Official NL’s Muskrat Madness strategy is obviously to spend first and figure out the fundamentals later.