Muskrat Madness Will Undermine Sovereignty of Newfoundland and Labrador

I was a guest on VOCM Radio “Back Talk” with host Pete Soucy on January 11 discussing the implications of Muskrat Falls for the sovereignty of NL. That interview is available here. What follows is a summary of that discussion with time stamps.

24:10-26:10 Pete mentions an email I sent to him expressing concern that the consequences of the Muskrat Falls development are likely to include some impairment of the province’s sovereignty.

39:00 Introduction for my call.

39:40 Notice that I momentarily confused the host Pete Soucy with his predecessor hosting this show, Paddy Daly. Embarrassing.

40:15 My concerns about Muskrat started in 2012. Given the existing contractual situation with the Upper Churchill generation resources, Muskrat can’t deliver winter power capacity as the Crown energy utility developing Muskrat, Nalcor, has planned from the beginning. NL requires some kind of a financial and operational deal with HQ in order to operate Muskrat Falls as planned. The consequences of such a deal will make the situation of electricity consumers in NL even worse than the government now acknowledges. Nova Scotia consumers are protected. NL consumers do not have the capacity to absorb the cost of Muskrat. Even if Nalcor can live within the existing estimated $11.7 billion cost and schedule for the project — which I doubt — consumers will face unbearable rate increases. Muskrat is about to cause energy poverty. Falling usage of power means that costs are spread over declining units of sales, which further increases rates.

46:50 Unless there is a sustained recovery of oil prices at prices far above those today, the combination of NL government dollars plus ratepayer dollars will be insufficient to cover the costs of Muskrat. Reshuffling costs from ratepayers to provincial taxpayers doesn’t solve the Muskrat problem. The federal government cannot allow NL to sink because of Muskrat Falls.

48:10 The federal government, through the Harper and Trudeau loan guarantees, created the conditions for Muskrat to start and continue. They gave Newfoundland the rope. A federal government bailout will be necessary. I support recent comments of Professor Ian Lee to CBC in NL that a federal bailout for the province will be required. Bailouts come with strings attached.

49:50 A future federal bailout might impose some austerity measures on the province.

50:50 There’s a lot of blame for the federal politicians in the Muskrat saga but that doesn’t get the provincial politicians off the hook. All three major political parties endorsed the Muskrat Falls development.

52:00 NL is not alone in making grave errors with your power system. Many provinces are applying green thinking to make electricity much less affordable.

53:15 With the benefit of hindsight, Joey Smallwood’s deal around the Upper Churchill development are likely to be understood as wise nation building and economic development as compared to Danny Williams’ legacy around Muskrat Falls.

6 Comments

  1. Tom
    In my opinion, you are absolutely correct. Those who were put in charge of our future ( In this case Williams and Dunderdale) have for all intents and purposes, put the future of our children and grandchildren in a position of absolute futility. We are in a position where we have no choice but to have the Feds step in and show leadership. Ball has shown absoluutely no leadership whatsoever. I have no faith that his “leadership“ will help NL get to where we should be. Why do we keep putting idiots like these in a position to properly lead us??? We are our own worst enemies.
    Without a Federal subsidy to subsidize the enormous electricity bills which will come, we are doomed.

    Damn you Danny and Kathy and “reservidly” Dwight!

  2. Thank-you for taking the time to time stamp the interview.

    A question that many in Newfoundland and Labrador have right now: what would the economic consequences (both positive and negative) be if the government decided to bring the project to a complete halt at this point?

    I realize this is not politically possible, but I think insight on this question would help us more clearly evaluate the options that are politically possible.

    Thanks,
    John

  3. Even if $10 billion has been sunk into Muskrat Falls it’s not worth the last 5. That’s how crazy it is.

  4. The only good that will come of this is that people will be forced to become more self-sufficient. Better and smaller homes with wood heat, minimal electric use and growing more local food out of necessity. I have been trying to get people interested in all sorts of good things like solar passive homes, electric demand destruction, Mondragon style worker owned cooperatives, land reform etc. but virtually nobody cares. In general, they are just too comfortable with the status quo and afraid of change. That will change when after paying rent/utilities/bank payments there isn’t enough left for food. Electric baseboard heat with MF rates will be the straw that breaks many home owners.

    NL will be taken over. Quebec might end up with Labrador. Something like commission of government will force austerity. Provincial assets will be raided. Maybe Fortis will get Bay d’Espoir and some investment fund can turn the highways into toll roads. St. John’s can sell the water and sewer supply. MCP will have monthly premiums. Fees will be everywhere. We can watch Greece and Puerto Rico to see how things might go.

  5. Surprise, surpise… at the end of the interview this Peter Soucy individual patheically plays the Quebec card re: ongoing bitterness over the Upper Churchill contract. Typical Newfie, looking to blame anyone but themselves for their wretched plight. Meanwhile, the folly of this horrendously expensive attempt to salvage the pride of a duped generation of NLers by going it alone on MRF has become lamentably apparent.

    • In my opinion, Hydro Quebec has demonstrated fairness in its commercial dealings with NL. One example that I think even the critics of HQ should consider before slamming the utility is to consider the wheeling arrangement HQ agreed to with respect to recall power. My read is that the wheeling allowance HQ provides today for recall power is more generous to Nalcor than the original contract. I would welcome any corrections to this view.

      I ask again that people with something to say on this site grace the rest of us with their real names. Accountability please.

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