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.