Muskrat Spin

Even in the dog days of summer our PC government, and their proxies, continue to try and spin the Muskrat Falls deal. It appears their strategy is to fill the airwaves with so many convoluted numbers and benefits that Newfoundlanders and Labradorians simply give up trying to understand the deal and slowly fade away. Recently the Vice President of Nalcor has been taking to the province-wide radio shows to extol it`s virtues. This coming Tuesday the President of Nalcor has booked a complete hour on Randy Simms' OpenLine show to do the same. We also have the ministers, most notably Finance Minister Tom Marshall, doing the same sort of daily radio appearances. Apparently this deal is not quite good enough to sell itself.

If you have been watching and listening since this deal came out you will have caught on to the many different angles used to try and sell this deal to the public. The first and biggest spin of course was the angle that it would cut Hydro Quebec out of the picture. The problem with this strategy is the province already has an excess of power that it can't use - so it wheels it through Quebec. The deal to wheel that power through Quebec is losing millions per quarter. It is losing so much money that Minister Skinner won't fulfill his promise to disclose publicly the amount it is losing each quarter. So like it or not Quebec is still in the picture.

Of course Quebec could be cut out of the picture if the sub-sea power cables could hold large amount of power capacity, and therefore sell more directly into the US or maritime market. The problem with that is they will only be able to transmit 500 MW of power, and Emera gets about 200 MW off the top in free power. Speaking of limits to the sub-sea cable transmission - remember the argument that should their be a massive power outage in Newfoundland we would be saved by our new found power link to the mainland? Instead of exporting power we could use those same lines to bring power in was the spin. Just one problem: Emera has the rights to that line for 16 hours of the day - so that leaves us 8 hours to import power (also during the middle of the night). The old "we will be saved  by being on the intercontinental grid " is just another silly spin in other words.

Then there was the "Green Option" argument. Remember hearing how Muskrat will make us 98% green. Well, the truth is if scrubbers were placed on Holyrood, for a mere $600 million, they would remove 95% of the pollution from Holyrood. That would be more environmentally friendly than damming a river and flooding large portions of forests. Of course they would say that Muskrat Falls would replace dirty oil with clean electric power, but are we really that upset with dirty oil. Holyrood uses about 1.3 million barrels of oil a year. We produce 100 million barrels of oil a year in the offshore. Seems to me that if we were so upset by using oil, to the point we would almost double our debt to stop it, we could just suspend offshore oil production for 4.5 days a year and that would cover all the oil we use at Holyrood for a complete year.

Then there is the price of oil at Holyrood. They argue it will continue to go higher, and the cost will continue to drive rates up. Question is though: is the cost of using oil at Holyrood the primary determining factor in rate increases? Finance Minister Marshall stated on VOCM Open line that it was. One problem with that greatest of spins: oil was $149 a barrel in 2009, and it is now less than $100. If the cost of oil was the primary determining factor in rate increase, as Marshall stated, should we not have seen a reduction in power rates of at least 30% in the last two years? Shortly after his call, another caller came up with the real reasons for the rate increases: wage increases; expanding work force; and pension contributions. His assertion was the cost of oil represented only 1% of the overall need for increases. Shortly thereafter, a woman working for Nalcor phoned in to say that the previous caller was wrong and it was actually closer to 7%. Bottom-line, the cost of oil used at Holyrood is an insignificant factor in rate increases. Despite the spin from the Finance Minister to use it as a crutch for Muskrat Falls.

Then there is the cry for more power. Nalcor and the government continue to insist we will run out of power by 2019 if more generation is not found. Nalcor`s own consumption graphs show a steep demand for power starting next year and continuing on until at least 2035. Randy Simms of VOCM often refers to this need for an increase in generation when he states "consumption has increased on average 2% per year". He started using this terminology after his personal meeting with Nalcor`s President. Problem with that line are the words "on average". Power consumption actually peaked in 2003 and is now at roughly the same point it was in 1992. To get that average Randy Simms speaks of you would have to go back to the 1970`s and factor in all those numbers to the present. It is just a disinformation campaign by the government to justify that which is in all other ways unjustifiable.

One last spin. Kathy Dunderdale maintains that should the federal government not give her a loan guarantee for the project, that she will go to the markets and have it financed solely through the province. Nothing could be further from the truth. Newfoundland and Labrador is already the most indebted political entity in Canada per capita. The province, by building this project, will add at least 50% more to that debt. The international finance community is already in a state of near panic over the levels of sovereign debt. In Newfoundland and Labrador it has a prospective client that has the highest debt per capita, spends every cent it gets from oil without significantly reducing its debt, has the lowest birth rate, has a declining population, and has virtually no government owned assets of any note to leverage that debt on. That doesn`t include the fact that Muskrat Falls, even by the government`s own admission, won`t make money. Just have a glance south of the border, at the current deficit and debt meltdown there, to understand we are in the days of a new fiscal responsibility - not fiscal insanity. Bottom-line, only the mafia would finance this deal without a federal loan guarantee.

There is only one man, sitting somewhere in Ottawa, that can end this spinfest. He has no political capital to gain from saying yes. He can stop all the other provinces from knocking on his door for the same. He can actually make a positive difference in the lives of the working people of Newfoundland and Labrador just by saying no. In the future people won`t look at him and wonder why he didn`t step in to stop the madness - say like the Upper Churchill contract. Prime Minister Harper, just say no, and stop the spin...please.