Nalcor's Stan Marshall is Lying

Stan Marshall, the newly appointed CEO of Nalcor Energy is lying to the people of Newfoundland and Labrador. He is deliberately misleading the people of the province about the ramifications the Quebec Superior Court decision has on the Muskrat Falls dam. It's as plain and simple as that, and it needs to be exposed. Our provincial media have attempted to get unfettered interviews with both Marshall and Premier Dwight Ball on the matter, but have been completely rebuffed. The only commentary made by Marshall was made during his quarterly report to shareholders (us) via teleconference, and he only answered certain questions before the live feed of the teleconference suddenly discontinued leaving media and citizens alike shaking their collective heads. However, what he did say is simply not true.

"That court case will have no major impact on Muskrat Falls whatsoever" Stan Marshall.

That is just a blatant lie to the people of the province. A deliberate attempt to mislead. Here's why:

The Quebec Court:

[1151] The Court declares that the rights granted to Hydro-Quebec under section 4.1.1. of the renewed contract, including its right to programming and planning of power and energy, are in no way limited, circumscribed or restricted, on a monthly basis, for the purchase of blocks of power subject to a ceiling the amount would be established on the basis of the concept of 'Continuous Energy' laid down in the renewed contract, and they can be exercised in relation to any of the available power and all the energy produced at the plant, excluding power and energy associated with the block of 300 MW and the Twinco block."

What does that mean?

Well this is what Section 4.1.1. of the Power Contract requires:

Operational flexibility the parties hereto acknowledge that it is desirable for Hydro-Quebec to have the benefit of operational flexibility of CFLCo's facilities in relation to the Hydro-Quebec system. Accordingly:

i)  Hydro-Quebec may request CFLCO to operate the Plant so as to supply Hydro-Quebec's         schedule of power requirements; and

ii)  Hydro-Quebec may require deliveries which have the effect of varying the amount of water to be carried in storage at any time, providing that, in so doing, sufficient water is left in storage so the Minimum Capacity can always be maintained.

Translation? Hydro-Quebec has the right to force CFLCO to run the Upper Churchill dam for its needs - free of any restriction (ie: Water Management Agreement) : " (Hydro-Quebec's) right to programming and planning of power and energy are in no way limited, circumscribed or restricted". It's very plain English.

Here is what the Water Management Agreement states is the purpose of the WMA:

"The objective of this Agreement shall be the coordination of the Power generation and Energy production in the aggregate for all Production Facilities on the Churchill River to satisfy the Delivery Requirements for all Suppliers, in a manner that provides for the maximization of the long term Energy - generating potential of the Churchill River, while ensuring that the provisions of any Prior Power Contracts are not adversely affected."

So the WMA "requires" the "coordination" of power and energy producers on the Churchill River for the "maximization" of the power potential for Muskrat Falls. Later on in the document the WMA requires that "all production facilities run at full capacity". In other words, Nalcor and the government are trying to take away the right Hydro-Quebec has to determine the production scheduling at the Upper Churchill so they can run enough water down river to keep Muskrat Falls producing power. Unfortunately for them, the Power Contract states that is NOT allowed, and the Quebec superior Court just found that as well as noted above. They didn't find like that because they are a "Quebec Court". They found that based on being able to read the English written in the Power Contract, which apparently Nalxcor and this government cannot.

A further illustration of that exact same point comes from the illustrious VP of Nalcor Gilbert Bennett (October 22, 2012):

“The water management agreement between Nalcor Energy and Churchill Falls defines how the two companies manage the flow of water on the upper and lower Churchill River to optimize and maximize output of the river,” said Gilbert Bennett, Vice President, Lower Churchill Project. “No agreement or consent by Hydro-Quebec is required to provide water management certainty for the lower Churchill developments.” The full press release is here .

Unfortunately for Nalcor, and this province, Quebec does have to give consent, because it just had that right reaffirmed in the latest court decision. The WMA also allows the government through its controlling interests in both Nalcor and CFLCO, to appoint a Water Management Committee, who then in turn appoint an "Independent Coordinator". Here is the duty of that so-called Independent Coordinator as per the WMA:

"The Independent Coordinator shall, based on the information provided by the Suppliers, and in the exercise of reasonable judgment, establish short and long term Production Schedules for all Production Facilities on the Churchill River, through the coordination of production scheduling of the Suppliers based upon the use of the aggregate generating Capability, storage and transmission facilities of any Supplier on the Churchill River, in accordance with the objectives set out at Section 3(1) of the Regulations and with this Agreement"

There you have it. The government of this province was trying to wrestle away control of the Upper Churchill from Hydro-Quebec by installing an "Independent Coordinator" to take over production scheduling - essentially from Hydro-Quebec. As you can see from the Court's declaration above, that in itself is a violation of the Power Contract.

So, the number one pillar of the Water Management Agreement has fallen. Hydro-Quebec, not the provincial government's "Independent Coordinator" has the absolute right to set its production requirements at the Upper Churchill. There never was a question about this if you had read the Power Contract (and its renewal). Now it's been reinforced in a Declaratory Order by the Quebec Superior Court. So it is enshrined in a court order. So to do otherwise would be too deliberately breach an order of the Court.



"What we were hoping for is we'd get more power for ourselves, and that will not be the case under this decision." Stan Marshall.

That's an understatement that frankly an attempt to mislead the public. In fact, if you recall Cathy Bennett's statement the there was a "a complex interweaving of multiple business cases" then you are closer to the truth. (Here's the story on that). Perhaps the best way to illustrate their plan was a conversation Gilbert Bennett had with John Samms back in 2012 when these arguments were flying about:

Bennett:  I agree with this – the GWAC is effective during the winter months. However, section 2.1 of the Renewed Power Contract entitles HQ to take the Continuous Energy in each month, including during the winter. Referring to Volume 1 of our application to the PUB for the water management hearing, the average production at CF is about 34 TWh. If we deduct the 2.36 TWh and 1.97 Twh for recall and Twin Co respectively, we’re left with approximately 29.7 TWh for HQ, or approximately 2.5 TWh per month. Interestingly enough, this means the plant will deliver on average just over 3470 MW for HQ + 525 for NLH/Twinco (or 3995 MW out of 5428 MW) over the course of a month, meaning that HQ can have “additional capacity”, they cannot have it all of the time, as they will exceed their energy allowance. This point ensures there will be lots of opportunities to withdraw stored energy from CF, even in the winter. (The math above is 2,500,000 MWh/mo [30 days/mo]/[24 hr/day] = 3472 MW

So, doing the math, Bennett was stating that Nalcor could take approximately 1500 MW of power/energy from the Upper Churchill, and that Hydro-Quebec would have no right to it, because the "Energy Allowance" imposed on Hydro-Quebec by the WMA would deny Hydro-Quebec the right to that power. Of course, that was an absolute farce from the get go. The Power Contract, and its renewal, clearly states Hydro-Quebec has the right to all power produced at the Upper Churchill - other than 300 MW recall and the Twinco Block. There was never any dream in hell that this province could get 1500 MW from the Upper Churchill.

In fact, here is what the recent Quebec Court decision stated:

" [1154] The Court declares that until August 31, 2041, CF{(L)Co will have no right to any amount of power and energy produced at the plant (Upper Churchill), with the exception of the power and energy associated with the block of 300 MW and the Twinco block."

Plain and simple, and exactly what the Supreme Court of Canada found in its 1984 decision in the Water Reversion Rights reference case. What don't they understand about only 300 MW of recall and the Twinco block? It was ruled on by the highest court in the land 36 years ago...

In any case what does it mean? Well, right off the top it means the people of the province were obviously manipulated right from the beginning. It is just so evident to be utterly, blatantly obvious. But, what does it mean for the Muskrat Falls dam? Well, it's the death nail.

First of all, Nalcor can no longer take "banked power" or "banked energy" from the Upper Churchill - a key component of the agreement. Essentially, the "banked" refers to Nalcor taking power from the Upper Churchill, and at some point down the road returning it so their would be "no adverse" affect on the Power Contract. One problem. Hydro-Quebec is and was, and will be until 2041 entitled to that power and energy period. That means that if Nalcor wants it, or needs it to make Muskrat Falls operational, then Nalcor will have to pay Hydro-Quebec for it. So instead of getting that "banked power" from the Upper Churchill at the same price Hydro-Quebec gets it at (.0020 of a cent a kwh) Nalcor will have to negotiate a market price for a power purchase agreement with Quebec - which could range from 5-10 cents a kwh. A massive cost increase to operate Muskrat Falls. Or worse case scenario, Hydro-Quebec may not agree to a power purchase agreement at all - which would mean Muskrat Falls could only operate at about 29% firm capacity (look at your bill tripling at a minimum if that happens).

So recall if you will the often made statements by the provincial government and Nalcor that Muskrat Falls would have profits of $500 million a year. Guess what. That was based on getting that free 1500 MW of power a year they planned on illegally taking from the Upper Churchill (see Gilbert Bennett's comments above). Now, they have zero free MW to sell, so the first and most obvious impact of the court decision is there will be no profit from Muskrat Falls, and no $500 million to create "revenue" for the provincial government or to subsidize your power bills (as they promised they would). The next big effect is that Nalcor's ability to pay for the project will be disastrously crippled with Muskrat Falls running at 20% capacity. In fact Nalcor admitted the planned Gull Island dam would be in the same straights. Here is an excerpt from their pre-filed evidence to the PUB when they sought the WMA in 2009:

" Under average conditions, the resulting production at Gull Island would be 1,519 MW for the first 20 days and 443 MW during the last 11 days of March. During a dry period, this scenario would require production levels of 1,471 MW during the first 20 days of March, and 395 MW during the last 11 days. Consequently, without a water management agreement, Nalcor would be limited to approximately 400 MW of continuous delivery in a power purchase agreement for Gull Island. Such an arbitrary constraint on lower Churchill delivery schedules is unnecessary and is incompatible with the concept of the efficient use of the resource."

In other words, the Power Contract is an arbitrary barrier to the Lower Churchill dams. Yet, that is what the Court's decision just found - the Power Contract guarantees Quebec that right.

The same Nalcor evidence stated:

"In the absence of a water management agreement, Nalcor would not even have advance knowledge of expected flows from the Churchill Falls facility to enable it to take steps to
mitigate spillage through advance drawdown of the lower Churchill reservoirs In the absence of a water management agreement, Nalcor would be required to utilize the  water as it became available.  Given the limited storage capacity in the Gull Island reservoir  (approximately three to four days of maximum flow from the upper Churchill facilities),

Nalcor would have to turbine the water and produce energy at the time that it was 

available; it would be required to “chase the flows” from the upper Churchill."  

There you go, Nalcor's own words as evidence. The court's decision makes it clear that Nalcor will now have to be "chasing the flows".

So without the ability to take over the operations of the Upper Churchill, Nalcor cannot control the flows of water or power. It also cannot control the reservoir levels at the Upper Churchill. It cannot take banked power or energy from the Upper Churchill to sell on the US market and then return that power back at some later time for free. It cannot take 1500 MW of power from the Upper Churchill and sell it to the US or any other market and make $500 million a year in additional profit. In fact it can't do one single thing the Water Management Agreement attempted to do. In fact, the Water Management Agreement itself breaches the Power Contract as it was obviously, and admittedly created to manage the Upper Churchill and Lower Churchill as if it ever had the right to do so with the Upper Churchill. It never did after 1969, and we knew that back in 1984.

So is Stan Marshall lying and misleading the public about the effect of the Quebec Court decision on the Muskrat Falls dam? Yes he is. No different than the man that preceded him with the exception he was trotted out as being the "straight shooter". Does the Quebec court decision kill the Water Management Agreement? In enforceability yes. The government can leave it on the books, cover its ears, and continue with the dam construction if it wants, but that doesn't change the inevitable. When the dam is ready it won't be able to operate past 20% capacity - except in a month or two around spring runoff. When the bills come through, and there is no way to pay them, that reality will be there for all to see. Apparently it takes that hear before people act to save their own hides. In any case, yes Stan Marshall, you are lying and misleading the people of this province on what that Quebec Court decision really means for Muskrat Falls - and of course that's all of us.

The NL Liberals Vietnam

There are no good options within the Liberal Party in this province. That is the basic truth. Now that is becoming more and more obvious by the day. Newfoundland and Labrador was sick and tired of the secrecy and shady dealings of the PC Party, and in the last election the people turned to the Liberals to put an end to that kind of politics. Just like the Liberal leadership process that saw a lackluster, even boring, Dwight Ball selected as the party leader, so the electorate settled for a lackluster but seemingly less dangerous option when they voted in the Liberals. Surely the Liberal would have gotten the message that the sleazy, corrupt, secret type of politics practised by the PCs would no longer be accepted here. Now, it is very obvious they didn't get the memo.

The truth is that behind the scenes within the Liberal Party powerful elements of the old guard and backroom boys were not supporting Dwight Ball as leader, but rather their sweetheart was Cathy Bennett. In fact, she was not even considered a Liberal until she threw her name in the race claiming to have always been there, and that her "coming out of the closet" was simply a coincidence as it coincided with the leadership race. A strange place to be for a woman who wrote cheques every year to the PC Party, and not the Liberals. An odd place for a woman running in a party that was at that time anti-Muskrat Falls considering her Chairmanship of the Board of Nalcor Energy. The woman who hired Nancy O'Connor to come to Newfoundland from Nova Scotia to set up the pro-business lobby group for Muskrat Falls - including paying for the websites etc of that group.

As Bennett money poured into her leadership campaign instant Bennett fans started appearing out of the wood work. Many "young Liberals" suddenly appeared lobbying for her on social media, and organizing for her on the ground. Yes, the darling of the likes of Danny Williams was about to take the party by storm. Just one problem: older Liberals didn't trust her. They didn't accept her pro-Muskrat Falls business position. So despite her money, Bennett lost to the compromise candidate Dwight Ball. Bennett and her powerful friends in the business community weren't prepared to accept that, and a covert movement began to overthrow Ball from the leadership. They had a problem though. The election was too close at hand, so the plan was scheduled for once the Liberals were in power - sort of. In reality Bennett and her minions became very involved in district association nomination meetings trying to get pro-Bennett/business types in as Liberal candidates and thus Liberal MHAs.

I was approached myself by such a person a month and a half before the election, and during a nomination race in one district. This old time Liberal had a serious issue in over throwing a Liberal candidate who had managed to get nominated, but wasn't marching to Bennett's pro-fracking band wagon. A local wealthy businessman was putting up the funds to beat the candidate during the election. As part of their approach to me the person emphasized that Bennett was going to take over the leadership after the election. That she had all the cards already in place. He also mentioned that Paul Antle and Siobhan Coady may be involved as well. If this person hadn't been a long time Liberal with deep roots I may have dismissed it out of hand, However, they were. They also had invested in shares of Shoal Point and the goal was to get Bennett in so that fracking would be approved in the province, and of course those shares would become very valuable. So, as you can see, the sleaze and secrecy was oozing from the seams of the Liberal Party even before the election had officially begun.

Fast forward to today, and it becomes even more obvious - albeit much more public. Ball struck a deal for Martin to leave Nalcor, and put in place Stan Marshall. Marshall's plan will be to privatise NL Hydro - which includes the 65% of CFLCo that NL Hydro owns (and that also necessarily means the Upper Churchill which CFLCo owns). Bennett and her St. John's business boys are all for selling it too, but they want it to go to Emera. That's what the big business boys bet on, and that's what they want. Those are the dividing lines within the Liberal Party today. I say Liberal Party, but it's more like the Chameleon Party - elements of the old Liberal party controlled by the boys and girls of the St. John's business community that are suddenly Liberals having just been PCs.

In any case, that is the war. Not whether or not to sell NL Hydro, but to who. The peoples' interest in all this... you're kidding right? So now Ball has put forward his plan. He gave  Ed Martin an "offer he couldn't refuse": leave or be fired. He also promised to give Martin his full severance and $160,000 in bonuses - or just under $1.6 million dollars. Designated fall guy in all this? The Nalcor board. Pass the resolution to fire him without cause so he can get his bonus and severance, and then resign yourself. No loose ends. Nice and tidy for Marshall to come in. Emera is out, Fortis is in. Not surprisingly, just days after Marshall was named as President of Nalcor he returned to his home in Belize with a number of senior officials of Fortis who stayed with him at his house for a week. Then came the nuke from David Vardy's access to information request that saw Ed Martin's employment contract released - which in itself is bizarre - and "highly suspect". An employment contract is a privileged document. Those kind of documents aren't released ever. Go figure, this time it was. It just so happened to prove Ball was lying. In other words, the ambush of Ball was on.

Despite the roll that Finance and Justice would have to play in these contracts, and severance negotiations, suddenly Cathy Bennett has disappeared from the scene. Ditto Siobhan Coady. Their two Deputy Ministers sit on the newly appointed Board of Nalcor. Both Bennett and Andrew Parsons have a direct ear into the Nalcor transition and on what happened with the severance negotiations, etc. Yet they've two stepped back from the limelight on this affair, just as Coady has. Coady was in the US until May 5 and claimed she knew nothing. Apparently she can't be reached by telephone or email or skype or what have you. Apparently Texas is now the third world without any such services. The lies are palpable, disingenuous, but meant to do one thing - leave Ball on the gallows by himself. Just as the plan before the election promised to do - get rid of him. That doesn't mean Ball didn't lie. It just means he thought everyone had his back in the deal, and found out that they were gunning for his back instead. As Minister Gamble-Walsh said to me two days ago: "Ball will very likely fall, but caucus is united". United for what you may ask? Good question. She never filled in that blank, but given the moves before the election was even called, it could well be said that the caucus is united in knifing their own leader, falling into line with Bennett, Coady, and possibly Antle, and all those business boys and girls sitting in the shadows and watching the game unfold.

As the Russian army found out in Afghanistan, and the US army found in Vietnam, it's easy to get into a war, but hard to get out. In the last 5 years Newfoundland and Labrador has had 5 Premiers or Premier designates fall. Soon to be 6. The place has become a frenzied feeding zone. It's become a guerrilla war here in a sense. The establishment vs. the people. Social media vs main stream media (sometimes holding hands when it suits the backroom boys). In this frenzy, for the lust and race for power and wealth, very few bases have been covered well. Political and business bodies keep piling up everywhere you look. Social media has morphed into the people's voice. The political "establishment" finds itself largely talking to ... well itself. Nobody else is believing or listening. Easy to get in, hard to get out. Welcome to the jungle baby.

Is Stan the Man?

Ed is out and Stan is in. The bell rings. The King is dead, long live the King. No one ever learns here. There was the blind faith placed in Danny Williams. "If Danny says it's so it must be so". Years of it. Now the province languishes on the door steps of insolvency. The caucus all rallies around Dunderdale as Leader and Premier. No one must challenge. We are on the same path. Push forward, and ask no questions thy nay-sayers. Vote Liberal! Dwight Ball will lead us to a stronger tomorrow. Look at his team. Look at its IQ. These are wondrous business people. Dwight and his team will sort it all out. It's a landslide. No point in opposing. We need an opposition - just not in my district. On and on it goes.

Now it's Stan Marshall's turn. Time to be the saviour and absolve us of our sins Stan. We can see you are so concerned about your fellow Newfoundlanders and Labradorians being buried in the Muskrat Falls mess, and the overwhelming financial crisis that you sacrificed a short period of your retirement for a mere $650K a year. It doesn't matter that you are one of the wealthiest people in the province, we'll gladly bend at the waste to pay you the same as the last guy. We know your intentions are as pure as the driven snow - right?

Now you see, there's a problem here. Good old Stan is the largest shareholder in Fortis. He may be retired, but he has a significant interest in seeing his old corporation, that he created, is taken care of. Looking across the pond he can see his old arch rival Emera challenging his beloved Fortis in the vast US electric market. On the other hand, he can see that the Nova Scotia Liberals are deregulating Nova Scotia's market - allowing his other arch foe into the fray - Hydro Quebec. How to stop Emera?  How about deregulating their cash pot market Nova Scotia, and then stripping them of all that free power they're meant to get from this province - after Emera's full in on the link of course. Wouldn't it be ironic if Emera took a bite too much and became a takeover target, for, let's say, Fortis?

Bottom line, there isn't one bone in my body that thinks Stan suddenly burst upon the scene at the pathetic begging of our illustrious Premier. There isn't one bit of me that believes Stan is not in a conflict of interest - a very obvious one. Hence the Premier of Nova Scotia's phone call to our Dwight.

But hey, let's not leave the new Board of Directors at Nalcor out of the fun. John Green, our new Chairman, was also Fortis's corporate go to guy lawyer up until at least 4 weeks ago. Yep, good old John supervised the last two major US takeovers Fortis completed. Kind of gives you the creeps thinking the Fortis take over lawyer is now the Chairman of the Board at Nalcor doesn't it? Sounds like a Fortis takeover of Nalcor almost - doesn't it? I'm sure Stan and John are as pure as the driven snow, and the fact they could destroy one of  their main competitors in the US market never crossed their minds - surely not.

As one who opposes the Muskrat Falls project I hope it is put on immediate ice, but does that mean I'll give Stan and John a free pass from scrutiny? Not likely. Liberal governments have a habit of jumping into bed with Hydro Quebec. Just look at who will enter the Nova Scotia market that Emera had a monopoly on. The big question is will the Liberal government here try and ink a deal with Hydro-Quebec that sorts out the Lower Churchill? Is it perhaps a case of the enemy of my enemy is my friend. Fortis takes out Emera and takes it over, Hydro-Quebec get's Labrador, and Newfoundland get's to shake its collective head and ask "what the hell happened". We'll have to keep a very close watch on our new saviour Stan. I don't believe in lilly white saviours anymore.