The Privatization of CFLCo 2.0

These days, the number of arguments and issues relating to the first step of the Lower Churchill development (the Muskrat Falls dam) are so numerous that it's easy to become lost in the maze for the casual observer. There is the politically mangled agreement between Emera and Nalcor that is starting to resemble the same desperation of the ill-fated Hydro-Quebec renewal clause in the 1969 Power Contract. The issues hear are primarily political, but legally could effect the federal loan guarantee. There is the North Spur controversy which questions the physical integrity of the project, with the certain possibility of a massive concrete blanket worth billions being wrapped around the Spur. There are the environmental issues. There are the five lawsuits which place the loan guarantee expiry date of December 31, 2013 out of reach. There is all of this. But there is one factor that gives this article its title - the poison pill: the Reversion Act decision by the Supreme Court of Canada in 1984.

I touched on this issue in a previous article regarding the recent Hydro-Quebec court challenge of Nalcor's decision to take more power than it's entitled to under the Power Contract. That issue is currently before the Court. That article has had a huge readership internationally, and nationally, including: every major Canadian bank; the largest US investment firms; multiple governments (including Quebec); and multinational companies from Germany to the US. In other words, it's a big concern, and so it should be to anyone doing any serious due diligence of this project.

Nalcor admitted, in its pre-filed evidence before the Public Utilities Board (PUB) in 2009, that a water management agreement was necessary in order for the Lower Churchill project to be viable (both proposed dams: Muskrat Falls and Gull Island). That part is true, and frankly just common sense. Without it, the projected cost of power delivered to the Island from Labrador would go from 25 cents a kilowatt hour (kwh), already the most expensive power in the world, to a staggering 75 cents a kwh (at a minimum). This of course would immediately put the finances, and therefore ability to survive, of all but the wealthy in the province. So, the water management agreement is the life blood of the Lower Churchill project, without which it dies.

Premier Dunderdale has, in the last two months, stated several times that the position of the government, and Nalcor (or is that the other way around), is that when the Power Contract renews in 2016 our province does not owe Hydro-Quebec the same obligations as the first term of the contract.
Their legal position is that after 2016, Hydro-Quebec is subject to an "energy allowance", which means that it has only a block of power each month, and the rest is available for Nalcor to take at the same cost Hydro-Quebec would have gotten for it (by 2016 that will be an incredibly cheap $0.0020 per kwh). Nalcor estimates, according to Vice-President Gilbert Bennett, that extra energy would be about 1500 MW per year, which would generate about $600 million in profit for Nalcor once sold. That is where any and all the "revenue" is in the Muskrat Falls dam project. That's the plan anyway.

Here's the killer:
The Supreme Court of Canada, 1984, decision on the Reversion Act, as proposed by the province's government of the day:

"the company (CFLCo) signed a contract (the Power Contract) with Hydro-Quebec whereby it agreed to supply and Hydro-Quebec agreed to purchase virtually all of the hydro-electric power produced at Churchill Falls for 65 years."

The Court then goes on to qualify what Hydro-Quebec is not entitled to:

"It is against this background that the Power Contract between CFLCo and Hydro-Quebec was signed on May 15, 1969. It is a lengthy and detailed document. Under the contract CFLCo agreed to supply and Hydro-Quebec agreed to purchase virtually all of the power produced at Churchill Falls for a term of forty years, which was renewable at the option of Hydro-Quebec for a further term of twenty-five years. The price to be paid for the electricity was to be based on the final capital cost of the project. Provision was made for CFLCo to retain a fixed amount of power for use within Labrador by its subsidiary Twin Falls Power Corporation. In addition CFLCo could recall on three years’ minimum notice up to 300 megawatts (MW) to meet the needs of the Province of Newfoundland."

The Supreme Court of Canada, the highest Court of the land, unanimously agreed that Hydro-Quebec had the right to all the power produced at the Upper Churchill until 2041 (65 years) except 300 MW of recall the province could request, and the 225 MW for Twinco. Given that the issue was decided in 1984, the question remains: How can Danny Williams as Premier, and then Kathy Dunderdale as his successor, possibly think our province can take any of the power from the Upper Churchill dam other than the 525 MW already committed to by recall and Twinco?

It is a hard question to ignore, yet our media in the province has done just that - completely ignored it. The provincial CBC has been particularly negligent given it's role as a public broadcaster paid for by the public. While the CBC as a corporation is a strong advocate, normally, of the public interest, CBC Newfoundland and Labrador seems bedeviled by personality and spin. But I digress. Bottom line is, other than the radio shows, this fundamental issue is being completely ignored, and the media is not holding these politicians, and Nalcor, to account on our behalf.

The Williams/Dunderdale approach does beg one very specific question: Is the intent of the Lower Churchill project to undermine the province, and specifically CFLCo, with the end result being a deliberate bankruptcy of CFLCo, resulting in it's privatization and/or sale? I ask this question for several reasons. First off, it's not as if privatization of CFLCo is something new. Former Premier Clyde Wells, along with his Chief of Staff Ed Hollett (now a blogger writing under "Sir Robert Bond Papers"), attempted to privatize CFLCo in the 1990's, but had to back off after huge public opposition - then headed by Sue Kelland-Dwyer (now blogging under "Sue's Blog"). 

This approach would be almost too far fetched to consider if it weren't for a few facts. One is Danny Williams. He is a lawyer. It's quite obvious to even the untrained eye that this water management agreement is not constitutional - let alone a lawyer of some experience. Secondly, the province has an entire legal department, just in case William's dropped the ball. What remains far fetched is that somehow between them the obvious flaws of their deal were not apparent. 

There is also the 1998 Shareholder's Agreement, drawn up by then Liberal Premier Brian Tobin and Dean MacDonald, which essentially gave Hydro-Quebec a veto over CFLCo's business operations, and equal rights to any shares of CFLCo if/when they become available. 

Then there is this little tidbit from the 2008 New Dawn Agreement, signed with the Innu of Labrador, to authorize building the dam. In particular, an entire section of which details how a sale of CFLCo shares would affect the Innu Nation's income:

"  2. (c) In the event that the parent company of CFLCo (Nalcor) sells any of its common shares, the Innu Nation shall be entitled to receive three percent (3%) of the proceeds received from the sale of its common shares. If a sale takes place prior to September 1, 2041, the total proceeds shall be reduced by the present value of the expected free cash flow from the common dividends from the date of sale up to and including August 31, 2041.

       (d) If CFLCo issues a new class of shares with the purpose of diluting the value of the dividends on common shares referred to in section 2(b), above, the Innu Nation's share of common dividends is to be calculated as if the new class of shares had not been issued."

It begs the question: What exactly did the Williams' government, and its then Minister of Natural Resources, and now Premier, Dunderdale, have in mind with these provisions. They are clearly forward looking and anticipate a sale of CFLCo shares. Is this in anticipation that CFLCo may have to be sold? Is it in anticipation of the bankruptcy of CFLCo as detailed in the Department of Natural Resources Report of 2012? These are questions right now without answers. You either have to believe Williams and company were so foolish as to stumble into catastrophe, or you have to think it was planned to be so. One friend of Danny Williams said to me once: "People like you and I plan on where we are going to go for lunch today. Williams plans where he will be having lunch two years from now." If that's the case, it leans to the answer being a deliberate, planned catastrophe. If it's planned then there has to be a reason.

Newfoundland and Labrador Liberals, Leadership and the Race

Being a Liberal these days is easier than in the past. For one thing, people don't look at you as though you have two heads by being one. That's a major hurdle crossed here. That's a good thing. It means people have gotten over the ghosts of Liberals past, and are more infuriated with the zombies of PCs present. As it should be.

However, there is still a residue there of caution among people. The Liberal rise, and the PC fall are dependent on two things. The first, and foremost cause of the Liberal rise provincially has been the rise of the federal Liberals and the promise many see in Justin Trudeau. Frankly, Canadians are desperately hoping he is a chip off the block of his father, and so far he has been able to harness that hope into success in the polls. People here see that, and there is a natural inclination here to be aligned with the federal party in charge of the purse strings - some habits die hard. In Newfoundland and Labrador, where roads are a political issue and not an expected public service, pragmatism still trumps idealism.

Secondly, there is the death throws of the reigning PC party. Like a wretched beast it twists in the bed of its making. Corruption, patronage, dishonesty, arrogance, and fiscal immaturity have left an odious taste in the people's mouths. Despite the fact that this state of affairs was formed strictly by then Premier Williams, Dunderdale (his flak jacket) has taken all the bullets of his policies and actions. Be that as it may, it is what it is, and Kathy Dunderdale is it. Try as she may to steady her shrill of a voice, the dye is set. Many argue now that she is the worst premier ever, while I would contend that mantle belongs to Danny Williams. Public perception, however, is what is important, and in their eyes the Dunderdale PCs are an abstract failure and need to go.

So the dramatic rise of provincial Liberal fortunes here is tied to these two events and in the order stated above.

Amongst this realignment of popularity is the Liberal leadership contest. With the departure of hugely unpopular Yvonne Jones as provincial leader, mere weeks before the last election (she now sits as the federal replacement for disgraced Peter Penashue), the party was able to slowly transition. No longer was the party saddled with its own disrespected leader. However, with mere weeks before an election, a makeshift leader was put in place by the provincial executive (I was a candidate in that process).

Now, like the phoenix, the provincial Liberals are rising from the ashes. A permanent (such as it is) leader is being selected, and the thought is a future premier as well. The promise of electoral success in 2015, or perhaps sooner, has drawn some interesting folks to the race: Paul Antle; Dwight Ball; Jim Bennett; Cathy Bennett; and Danny Dumeresque (in alphabetical order). Each has their own qualifications, and each has their own baggage.

Paul Antle is a successful business man, and perhaps more importantly, well educated in economics from Harvard University. He has humble attitude about him, and truly loves and cherishes his wife and young family - all traits that are indicators of a really grounded person. This I like. I like it a lot. His business attitude seems to be very well formed, focused and confident. I like that too. His empathy for the disadvantaged, and those left behind from the "buddy boom" here is very refreshing, and perhaps more needed than anything else. Paul is an excellent candidate for leader. Not because he is "credible", that term flogged to death here, but because he is very real. If you don't think that's important, check the history of the cab driver from Calgary that became one of the most successful and respected premiers of Alberta - Ralph Klien. Paul started off very weakly on Muskrat Falls, but now appears to hitting his stride on the issue. His original answer that he didn't know enough about the deal to have an opinion was, for a leader, not acceptable. However, he seems to have gotten that education on the issue now, and realizes it is of central importance to the people as he goes from community to community. Paul has what it takes.

Dwight Ball is also a successful business man. He does not have the ivy league education of Antle, but is educated and well spoken. He has a calm demeanor, and has been a steady hand in the wheel house of the provincial Liberals since being appointed interim-leader two years ago. The one issue I have with that is, under the British parliamentary tradition we follow, an interim-leader is not supposed to run for permanent leader - it gives them an unfair advantage. However, to give Dwight his due, he made it clear from the beginning that he would only take the job on the condition that he would be allowed to run for permanent leader. Dwight is also a humble man. He has the ability to connect with people - not in a saviour-type way , but rather in a neighbor-type way. He is the "every man". Politically though, Dwight has showed the skills necessary to hold his team together, and he has their respect ( all but one MHA, Jim Bennett, have thrown their support behind him). He has been tested under fire during the Bill 29 and Muskrat Falls issues in particular, and gained respect for his conduct. What sold me on Dwight was, during the first leadership debate in Gander, he replied to Cathy Bennett's challenge of whether or not Muskrat Falls should be shut down with an "all options are on the table". Given the legal and financial circumstances that seems the wisest answer possible. Dwight has what it takes.

Cathy Bennett is a successful business woman, with little education. Her claim to fame is starting on the floor and now being an owner of eight McDonald's franchises. Her other claim to "fame" is being an ardent supporter of the PC party agenda over the last ten years - including being a major financier of the party. Her loyalty and support was rewarded by Danny Williams with appointments to Nalcor's board of directors, and its Chairmanship. Although she claims otherwise, she is in no way a Liberal. Her adamant defence of the Muskrat Falls project has elicited cat calls, laughter, and shouting down by the Liberal crowds at every debate. Her support is from the Tobin crowd of the party. The Williams side of the business community. She is strong on spending money marketing herself, but weak on getting any results. Her vision is no different than that of the PC party. Her recent public comment that she has to hire foreign workers for her McDonald's franchises, because Newfoundlanders don't have the skills to work there, was eerily reminiscent of Dunderdale's infamous statement that Newfoundlanders were too stunned to understand Muskrat Falls. Cathy Bennett should have run to replace Dunderdale in the PC party, because that is what she is - a PC. Her attempt to capture the Liberal leadership appears as a crass, and obvious, attempt by the Tobin-Williams crowd to control another party. Cathy Bennett does not have what it takes.

Jim Bennett is a lawyer, former leader of the party, and a long-time Liberal. Jim is very well educated on many of the issues of the day, and makes an obvious effort to have a well rounded opinion. This comes through at debates and during interviews. It is what initially drew me to him, and why I initially supported him. However, suddenly Jim's take on the Muskrat Falls project changed. He went from being a strong opponent of it, to now saying its a fiat a compli . The only issue left now is how we can shield taxpayers from the damage according to Jim. For me that was a deal breaker. Jim lost my support altogether. Not because the issue was Muskrat Falls necessarily (although it is near and dear to my heart), but rather its the questions that change in attitude raises. For instance, as a lawyer, he should understand the five lawsuits now filed against Muskrat Falls, and the material affect they will have on the project going further ahead. That's just one example. Yet he chooses to ignore this, and when asked, will ignore the question too. It's very odd to be sure, and unlike his approach to all other issues. At first I had a hard time reconciling the two. However, now as time grows closer to the vote it appears Jim is snuggling up with the other Bennett - Cathy. Perhaps he sees no chance for himself. Perhaps it was always his intention to get his people to support Cathy on the second ballot. It's hard to say, but very disappointing none-the-less. Jim has what it takes to be a Minister in a Liberal government, but that is it.

Danny Dumeresque is the glove that does not fit the hand. He is on the one hand a successful business man and on the other a well educated political scientist with deep Liberal roots. Yet, he is haunted. Many in the party see his leadership as a dividing force that would split the party as it did in the Grimes/Efford days. To be sure, Danny is an intelligent, well-spoken, well-researched, solid as a rock kind of guy. His strong family loyalty and truly admirable fathering skills can not be debated. He is a furious defender of the province, and in particular Labrador. Yet, ironically enough, his failing in this leadership contest is his flip-flopping on Muskrat Falls. Danny has been an out spoken opponent of the dam project since day one. He railed against the idea of using the tax payers to subsidize cheap power for mining companies. He bemoaned the lack of any economic case for the project. Yet, suddenly during this contest, he has become a champion of those very things. His latest take on it is all the power should be kept in Labrador to develop mines. That is by far the largest flip-flop of any of the candidates, and even rivals the senseless candidacy of Cathy Bennett. It is akin to the Pope becoming Jewish. Now Danny has wrapped himself in the Labrador tunnel idea, and so be it. He has taken the "I'm Mr. Labrador" role, and so be that too. The truth about Danny is he is a sincere man with a history in the party, but sounds like a man from history. His strong oral skills are reminiscent of the bluster of yester year. His industrialize or disappear strategy is of the same ilk. I like Danny, but he does not have it.

The final sign up numbers are in. About 35,000 have signed up to vote in the contest. That is a huge success considering not more than a year ago the party was at 14% and could hold a meeting in a fairly large telephone booth. Clearly, the Liberal Party is coming into its own. Dwight Ball claims to have signed up some 15,000 people. Paul Antle has about 10,500. Danny Dumeresque claims 8500-9500. Jim Bennett hasn't claimed any I'm aware of. Cathy Bennett, true to her Nalcor roots, refuses to disclose how many she has signed up. Interesting math. The numbers wouldn't seem to add up in some ways. I feel Dwight and Paul's numbers are solid. That's 25,500 of the 35,000. That leaves 9500. Danny is claiming those 9500. That would mean the Bennett's collectively have zip. So who is not telling the truth here? Somebody isn't. Is it realistic that Danny has more signed up voters than Cathy Bennett given her vast organizing. I guess that is possible. What isn't possible is that she has nothing. Same goes for Jim. 

I see this leadership coming down to this: an old fashioned convention without the convention. Sure it is ranked first preference through five, and sure you can include, or not include all the candidates on your ballot. However, that is where the whole open vote ends. I see this more as a partnership. For instance candidate A says to candidate B: "spread the word to your people to vote for me in second place, and leave everyone else off the ballot, and I'll make you a Minister". That kind of thing. Nothing wrong with that. Smart in fact, and likely politically necessary. The question is who is working with who? Clearly Dwight has a commanding lead on the first ballot. I see Paul being a natural fit with Dwight, and I even sensed some deference shown between the two at the Gander debate. So I would say Paul is with Dwight. I would say Jim is with Kathy Bennett. And I would say Danny is running solo aiming to establish himself as "Mr. Labrador", to be appointed as the Minister for Labrador by whomever wins. That's just my take on it. 

Whatever happens, as long as either Dwight or Paul win, the party is in great shape to go forward. If, by some chance any of the other three win, the party is headed for disaster. The numbers, however, speak for themselves and it's going to be either Dwight (most likely) or Paul. I know that is how I'm voting: first Dwight; second Paul; third blank; fourth blank; fifth blank. Dis is it.  

Did Prime Minister Harper Obstruct Justice?

The Senate scandal story, or maybe better put the PMO scandal, has rocked Canadian politics to the core. It is the real, previously unpublished, under belly of Canadian politics as it's really practiced. Forget the regal Canada Day celebrations on the Hill. The Mounties in their scarlet promenading about on horse. The Governor General's tea parties and all that sort of thing. That's simply window dressing. This is the what real politics is done in Ottawa, and also in the provinces - especially this province.

There is a caveat however on the practice of exercising power in these devilish houses - don't get caught. This week the Conservative government, and more specifically the Prime Minister himself got caught. Senator Duffy, among others, is being "investigated" and has not been "convicted" of any crimes as yet regarding office expenses. But here is where the real story starts. Duffy, during his defence in the Senate, indicted the Prime Minister as actually having a direct hand in a financial deal with Harper's then Chief of Staff Nigel Wright.

How is that significant? Firstly, Duffy says he has hundreds of emails, memos, etc. that prove what he is saying is true. Given his experience one can likely take that to the bank. So let's say it's true. Also involved in this whole "fixing" of audit issues is Senator Tkachuk. He suddenly took medical leave just after it all hit the fan months ago for "preemptive" cancer treatment. Tkachuk was put in the Senate by Mulroney, nominated by then Saskatchewan Premier Grant Devine, to be a political fixer. That was his job, and he did his job - a very experienced political operative and experienced in the dark arts of politics.

So, as the story goes, Tkachuk becomes aware that the auditors have found issues with Duffy's and others expenses. He works with Wright and Duffy to make the controversy go away. Duffy doesn't disagree all this happened, but says Harper was actually present and had his hands all over the issue. Harper is known to be a control freak, hands on manager, personally vindictive, and political strategist - not necessarily in that order. This little exchange of dollars for expedient political solutions is common place, and the Prime Minister has a private fund worth over a million dollars that can be used for any such thing.

However, the real question is: Is this a legal issue before it is a political issue. I suggest it is. Often those lines get blurred, but here the lines are becoming quite obvious. An ex- Liberal Senator today had affidavits sworn out against him by the RCMP for breach of trust and misuse of public funds. He was trapped up in similar-type practices of abuse that some are leveling against the three Conservative senators. So, if those senators are all charged along similar lines, crimes, did the current and previous Chief of Staffs for Harper commit the criminal offence of Obstruction of Justice? If Harper did, as Duffy states he did, promise to make the audit go away if Duffy took the loan and paid the bill was that an attempt to obstruct an audit of a public office holder with the sole purpose of avoiding unlawful findings against the senator?

The Criminal Code of Canada defines the offence of Obstruction of Justice as:

"(2) everyone who willfully attempts in any manner other then a matter described in subsection (1) to obstruct, pervert or defeat the course of justice is guilty of an indictable offence and liable to  imprisonment for a term not exceeding ten years."

So did the Prime Minister and his Chiefs of Staff attempt to pervert or obstruct the course of justice? If what Duffy says to be true the answer is yes. Duffy says he has the documented evidence. He may be holding that evidence over Harper's head until its decided if he is suspended from the Senate without pay for two years. I would consider that likely. However, perhaps Duffy could do all of his fellow Canadians one big last service and despite the outcome of the Senate vote on his future, release to us all the evidence so we can have the tools to clean our government up. Be the bigger man for the bigger reason. Make history by doing the right thing. Put us before yourself, your party or your institution. If this Prime Minister broke the law, as it appears, give us the evidence of it - we will look after the rest.

Muskrat Falls is a Done Deal

Those were the words I heard many times in the past from our former morning radio star, and current Mayor of Mount Pearl, Randy Simms. It's a done deal. Imagine, then, the surprise I felt when Randy, who also writes for the Telegram, came up with a story this weekend that Muskrat Falls is not a done deal. To be fair to Randy, many people around the province said the same thing. Half the time it was hard to decide if they were trying to convince you that further struggle was futile, or that they really believed nothing could stop it.

People who fought, and continue to fight, to stop the Muskrat Falls project were called "nay-sayers" or "known critics" by the government, and its mouth pieces. We were constantly referred to as "people without credibility". In Newfoundland "credibility" is code for the boy's club (the business/political backroom of the province) nod of approval. People who are "not credible" are not sanctioned and, therefore, akin to loose lipped fools - too stunned to understand the vision.

However, my education and experience gives me a whole different definition of "credible". Firstly, I try not to use the word, because it is judgmental and personal. Just because someone else has a different vision or understanding does not mean they are "not credible". To me, a person's ability to synthesize all aspects of the Muskrat Falls project, for instance, is necessary to have a "credible" opinion on the entire project - that doesn't mean they aren't a credible person.

Factors that need to be sorted through, and integrated with each other, are things like: international financial and energy trends; environmental impacts; proven science; domestic and inter-boundary demographics; Canadian and International law; provincial and corporate debt/capacities; sub sea line technology; overland line capacities; dam capacities; geology; previously existing contracts; and the list goes on. In the military we used to call it "factors that limit the objective". In other words, we have an idea, but what stands in our way from achieving it?

For two and a half years now I have been fighting the Muskrat Falls project: not out of spite as some have said; not because of personal vendettas; not to meddle; and not to be political. These are things I never evaluate anything on. They are small minded and petty. I have been fighting Muskrat Falls because from the beginning it struck me as not making sense.

The many reasons why it doesn't make sense can not all be listed here - that would take a book. The bottom line is it doesn't - albeit for different reasons than those that flagged the project to me in the beginning. So where does that leave the government - started as we are?

Well, where this government finds itself is exactly where the man whose brainchild this is left it on course to be when he scuttled out the door. Yes, this is all Danny Williams. It concerns me that frankly he put the gullible Kathy Dunderdale to take the fall for the inevitable failure while he smells like roses as the hero manager of a temporary hockey team. It may be his plan to escape the blame, but we are just as determined to remind people where the blame really lies. It's not personal. It's called responsibility to the public, that as premier, he screwed.

Now the proverbial rubber has hit the wall - the wall of reality. The PC government, Williams team, is stuck in guerrilla warfare. Dunderdale recently stated publicly that the PCs had planned for every contingency. Sorry, but that's simply not true. The legislation and laws put in place, like the Water Management Agreement are about to be blown apart. The coveted federal loan guarantee, necessary for financially downgraded Emera to raise capital is similarly doomed. It must be free of lawsuits and have all aboriginal issues settled before the feds will give the green light. Expiry date on that is December 31 - or about 2 1/2 months away. Law suits pending to date: five. Chance of settling any of them in one year: zero.

And so it goes. The nay-sayers, that small crowd of loud, non-credible, known critics have the boys club's pet project on the ropes. The boys club aren't admitting it yet, but here is one big clue: we are negotiating with Hydro-Quebec. Yep, the same folks who not more than a month or so ago Dunderdale and company were popping veins in their heads whilst they screamed such things as: revenge of the French.. well you get the idea. Necessity is the mother of invention, and a politician, and more importantly an entire boys club, will do almost anything, and talk to almost anyone, to avoid eating that much crow. Watch for Dunderdale and company to trade in some part the Old Harry oilfield to Quebec for some political accommodation on the Lower Churchill.

Here's the thing. What bothers me, poisons me to use a Newfoundland word, is how our so called "credible" group in St. John's can be so easily and obviously out flanked at every turn by Quebec and the feds - yet they refuse to listen to people who may know how to deal with these types. They are not just a danger to themselves, but to all of us present, and all of us in the future. They are so reckless, and clueless that they should have never passed the gate keepers watching the halls of power. Perhaps the gatekeepers are equally endowed.

In any case, here we are, checkmate. The new Hydro-Quebec loving premier in Nova Scotia will no doubt reopen the issue of the Maritime link, claiming the public good, and seeking "competitive" bids from Hydro-Quebec. Hydro-Quebec will likely offer Nova Scotia the complete package - a Power Purchase Agreement for all Nova Scotia's power needs - which Newfoundland and Labrador can not match. That will leave us with no market, a partially built project, and a void water management agreement ( without which Muskrat Falls dam can not run at more than 20% capacity on average). We will be in an even more disastrous place if we continue building the dam.

Of course, that's going to be kind of hard to do. It's hard to raise funds in a bond market or what have you while all those lawsuits sit there. That $2.5 billion we have sitting in short term investments has been waiting along time now for the rest of the money to show up. The lack of a federal loan guarantee will also create extreme difficulty in raising cash - hence the warning this month from the markets that our provincial government is on the verge of a downgrade in its credit rating.

When I started my lawsuit against this project one year ago, I wanted to out Hydro-Quebec now. Stop them from sitting back and waiting for us to cut our own throat over one man's ego, and then swoop in to take the pickings at pennies on the dollar. I know how they work, and this is how they work. With the Quebec government you need to understand but one thing - they don't care about you - they only care about themselves - period. To believe otherwise is foolish. To act otherwise is unforgivable.

So yes Randy, Muskrat Falls is not a done deal. It never was. If all the "credible" people in the St. John's boys club listened to those "not credible" types, perhaps you wouldn't be in the nightmare your mother warned you about. Perhaps you would have out flanked Quebec first. However, that would require knowing where your flank is.

The War of the Pipelines: Russia vs US

The escalation of the Syrian conflict is about many things, but chemical warfare is not one of them. Primarily, the "proxy war" in Syria is about geo-economic control. Those that have, those that want to keep it, and those that want it. It's pretty much the same game that has played out through out history. The only real difference is the capacity of many sides to end humanity in the process - which makes the responsible use of the game's rules essential.

The Russians have the natural gas monopoly over Europe. They have a strategic and economic advantage they want to keep. It allows them to exercise extreme influence over countries that used to belong to the USSR or the Eastern Bloc - like Poland, the Ukraine and others. It gives them a strong hand in negotiating with other western European countries like Germany in particular. The Americans are in a different situation. Their geo-political interests are in weakening Russia and China's economic strength thereby maintaining their own international influence and control. They regularly "duke it out" in minor conflicts all over the world - most recently in Africa and of long standing the Middle East. Critically, in this international game of chess, they never make it between themselves - until now.

The region encompassing Syria, Iraq, and Turkey has historically been the land bridge between West and the East. That makes it strategically important to control, or at least deny to the other side. Qatar has a giant reserve of natural gas (at least 30 trillion cubic feet) that it wants to export by pipeline to Europe. The Saudi's want to do the same. In 2009 President Assad of Syria refused to sign a pipeline agreement to build a pipeline from Qatar to Turkey. Turkey's established goal is to be the centre of all pipelines between Europe and the Saudi area. Assad's established goal is the same for Syria. Assad is in control of Syria. Russia is in control of Assad. Russia doesn't want to lose control of the European gas market. It's using Assad to make sure any such proposal remains just that - a proposal. Instead, Assad signed onto an Iran, Iraq, Syria pipeline proposal. Iran is a minor natural gas producer and imports most of its gas from Russia. Such a pipeline then tends to be a regional pipeline that doesn't threaten Russia's position in Europe.

However, using that old slogan, it is not in the "national interests" of the US, or its Saudi allies, or even its Israeli allies, to allow this to happen. It’s also not in the interests of Russia, or its Iranian allies, or its Syrian allies to allow the Saudi-US challenge to be successful.

In fact it is so crucial to both the US, and some of its European and middle-eastern allies that an insurgency was propagated on Syria - to replace Assad's government. Here, so far, it has been Saudi Arabia vs. Iran as each camp’s local powers use their pawns to duke it out. Iran using its Shia alliances including the Alawites of Syria, Hezbollah of Lebanon, and Iranian forces. Saudi using its Sunni allies in Syria, Iraq, Jordan, and even Lebanon. In addition, Saudi has brought in Al-Qaeda forces and even Chechens that it finances. To underscore that point, Saudi Intelligence Chief Prince Bandar bin Sultan met with President Putin. He used a carrot/stick approach with him. On the one hand he was willing to offer Russia $15 billion in military contracts, and a new partnership in natural gas exports. On the other hand he made it clear that the "new Syrian" government would be under Saudi control and he controlled the Chechens meaning he could create peace for the Russian Olympics – or presumably the reverse. Putin was naturally infuriated by the stick approach, and the challenge to Russian influence and control in Syria and the European market. He turned it down.

Now we are left with the inevitable result of this poke in the chest game - war or humiliation. There is no more middle ground. One superpower or the other is going to lose and the result will effect the world. Already we have seen the US bring massive naval and air assets into the region. Today it was reported the US Sixth Fleet carrier task force is moving in to join the five to six ships already there, not including subs. Britain and France also have large air and naval presences there. Now we learn Russia is sending 12 ships into the region to join the fleet already there, and today a spy ship was added to the number. That does not include the air assets of Saudi or Israel, nor does it include the ballistic missile forces of Iran or Syria.

The US build makes a mockery of the US position that they are simply going to launch 100-200 cruise missiles into Syria. Their missile frigates already in place could manage that. No, it appears the US is going in to take control of the situation by destroying Syria's air defence forces, bombing Syrian military units, imposing a no-fly zone, and changing the regime just like Libya. No question. Nowhere near the force built up is required for a limited strike. In the last several months the US has also placed Patriot anti-missile batteries surrounding Syria in Jordan, Israel, and Turkey. The mission, obviously pre-planned, is to control Syrian airspace and destroy the regime militarily. As the Saudi prince said, Saudi Arabia will control the new government in Syria, and it looks as though the Saudi armed and funded militants on the ground in Syria are meant to be that force.

All this may just make most in the West roll their eyes and say "oh the US is thumping out another dictator, and who cares?" This time is different though. This time Russia sees its vital interests not just being threatened, but actually in danger of being destroyed. That us why Russia's navy are stepping in, and that is why things have never been more dangerous. The proxy war has had its mask removed; the players are now facing each other in a fight that could be disastrous for the world. Neither is prepared to back down for the same reason - national interest. It's fashionable to say religions cause wars, but in reality it is "national interests" as defined by those that define. In this case the national interests are pipelines and control. The suffering of the Syrian people has absolutely nothing to do with it.

Hydro Quebec's Court date with Nalcor

On the 28th of August, a little over a week from today, sudden death should be coming to the Lower Churchill project. Hydro-Quebec has filed for a declaratory judgement in Quebec Superior Court against CFLCo. According to Hydro-Quebec, CFLCo has been selling power over the 300 MW recall limit to Newfounland and Labrador Hydro in contravention of the Power Contract (1969), and have been doing so since June, 2012 -which is also when construction began on the Muskrat Falls project.

Couple problems with this. The most obvious one is of course it breaks the Power Contract which means, among other things, we will be responsible for damages to Hydro Quebec. However, the bigger by far problem is a ruling against this province means the Water Management Agreement is effectively gutted.

Nalcor's publicly stated plan is two fold. Firstly, Nalcor asserts it can take power from the Upper Churchill as "banked power". However, the Power Contract does not allow any taking of power other than the 300 MW of recall we already get, and the 225 MW that was Twinco's share that now belongs to CFLCo under the Shareholder's Agreement. Second, Nalcor and the Premier have stated Hydro-Quebec is only entitled to a fixed block of power once the agreement renews in 2016, and the remainder belongs to Nalcor. Under that scenario Gilbert Bennett of Nalcor has publicly stated the province could take 1500 MW of power. That power would be purchased from CFLCo at the same price Hydro-Quebec pays and be resold for a profit of about $600 million a year.

However, it's just pure fantasy. The Supreme Court of Canada ruled unanimously in 1984: " the company signed a contract (the Power Contract) with Hydro-Quebec whereby it agreed to supply and Hydro-Quebec agreed to purchase virtually all of the hydro-electric power produced at Churchill Falls for a term of 65 years." That means CFLCo or Nalcor or whomever is not entitled to any power from the Upper Churchill, other than the recall power, until 2041. Period. End of story. It's plain English.

The second right Hydro-Quebec wants declared is its right to operate the plant to its benefit. The aim of course is to stop Nalcor, and the government's Water Management Committee, from taking operational control of the facility that the Water Management Agreement allows them to do. The Power Contract again clearly states that both CFLCo and Hydro-Quebec recognize and agree to operating the plant for Hydro-Quebec's interests.

The point is that on August 28, 2013 Quebec is going to win. What does that mean in reality? It means that the two pillars the government's Water Management Agreement are built on will be destroyed. Considering that CFLCo could only argue in court it was taking this power based on provisions of the Water Management Agreement, the Superior Court may find as well that this agreement is unconstitutional. It might go that far, or it might not. Either way, it guts the Water Management Agreement. Both Nalcor and Hydro-Quebec publicly say the court action is not about the Water Management Agreement, but it is quite obviously so. Even Dunderdale, firing from the lips as usual, stated in a moment of fury that it was meant to stop Muskrat Falls. She added that there were measures to "mitigate" such a ruling though.

Here is what she meant: " Force Majeure event means... (iv) action of any government, legislature, court...and despite all reasonable efforts...adversely affects the performance by such Party of its obligations under this agreement." In other words, Dunderdale was tipping her hand, by way of her mouth, that despite a court decision on the Power Contract rights she intends to proceed with construction of the dam, and taking the power, etc under the Force Majeure terms in the Water Management Agreement.

So, on the one hand, the Superior Court decision in Quebec should stop the project in it's tracks, it won't. Hydro-Quebec will then sit back and watch us build the dam knowing full well it has its rights secured, and that it made our government fully aware of those rights. In that way it can go for damages so large as to bankrupt CFLCo. That's why my lawsuit to get an injunction is crucial. Hydro-Quebec won't stop us from cutting our own throats. Why would they? They have the total Upper Churchill facility to gain. It's up to us to stop the government and Nalcor from doing this damage to us. So, in a week you can expect Hydro-Quebec to win in the courts and our government/Nalcor to continue the Muskrat Falls project. Meanwhile, its been almost three weeks since my leave for appeal was filed here, and Nalcor has been delaying the setting of a date for its hearing.

Egypt-into the Heart of Darkness

The slaughter of lives and the ideal that is democracy is reverberating from the narrow streets of Cairo to the hearts and minds of free men and women throughout the world. The fact that it is Muslim blood now, or Christian or whatever later is irrelevant to the unfolding tragedy. Death does not know nationality or religion.

In the West we must face the very real stain that we watched while an infantile democracy was cut down by a military obsessed with control. As an Orwellian travesty unfolded in the overthrow of the unpopular Morsi government, democratically elected as it was, the great western powers sat on their hands of self-interest, and gazed at the dethroning of the foundations of their very own societies - democracy.

Democracy. The moral authority to go govern. Given by the people. Not all the people mind. It never is. There are always oppositions. That is part of democracy to. Sometimes the governing party loses the support of the majority, and even its base. When Mulroney left power his party's popularity was about 25%. He brought in free trade, the GST, Meech Lake, etc. None of which was supported by a majority. People protested. They protested for a long time. They were not slaughtered in the street. They were not wounded in the thousands. And, despite the probable fantasies of many, the military did not remove him from power and replace his government. Nor did they unilaterally amend or suspend the Constitution.

Why? We know better. We know that politicians are going to put their friends in high places. We know they are going to represent and defend their interests. We understand that, as repugnant as it is, the pure ideals of democracy are often stained by the dirty hands of men and women of greed and ambition. Yet, at a deeper level, we know that to betray our end of the democratic deal is to defile it as much as those who do so at the highest levels. That if we let go of the sanctity our society is built on, at least in our hearts, that all that remains is anarchy - rule of the mob. We understand that is where our society evolved from, and not where it is meant to return to.

That is our great legacy to the world. Our example of living in peace with ourselves and others. That the rule of law governs us all, the mighty and the citizen, and to be any other way would be to fall back into the law of the jungle. That is where Egypt has now gone, and we, to our absolute discredit, have turned our backs on the very principles our own society is based upon.

We have given the extremists, whatever their bent, their war cry: democracy means nothing unless it is convenient; the rule of law means nothing unless it is convenient; the dignity of men and women can only be defended by the rifle barrel; respect and tolerance are for the weak; and solace can only be found in the tightly bound confines of our beliefs - whatever they may be.

Quietly watching the Egyptian army destroy everything we believe in, simply because it suits our immediate tastes, is a lesson that is only bound to come back to us many times multiplied. The world watches, and as it watches, the wrong lessons are learned.  The bar is set. The rule of the mob over the rule of democratically enacted law is a terrible precedent. Why would anyone think that precedent would only be confined to Egypt or the Middle East, or wherever? Who’s to say that as citizens become disenchanted with high unemployment in Spain, or wherever that they would not see this as a legitimate means for change there? Same goes for Greece, or Ireland, perhaps even here. This is the danger of washing our hands like Pontius Pilate. It is our sin above all others because we know better.

The Canadian government, and the US government for that matter, are being beyond irresponsible to offer the resistance of Neville Chamberlain "peace in our time" to the atrocities of the Egyptian military. To accept that the Egyptian military had a right to overthrow an elected government because it was not representing all its citizens is beyond irresponsible actually. It is akin to watching the rape of democracy, and doing nothing. Doing nothing while Egypt descends into the heart of darkness - and takes our great ideals with it.

The End of Feudal Politics in Newfoundland and Labrador

Friends say to me often that others approach them, and ask them "You know him, what is Cabana's agenda." I suppose it's a fair question. People don't always have an agenda when they do things they believe in, but in this case, to be honest, I do have an agenda as well.

Shortly after being railroaded by the fixed leadership race for the PC Party I gave an interview with the Telegram, January 24, 2011 to be exact. I was shocked that such a violation of fundamental democratic principles could happen in my country. I made a promise to myself and the people of Newfoundland and Labrador that I would end the "feudal politics" of this province. A tall order to be sure, and not something you can ever hope to do by yourself, but an honourable goal none the less. I made the following statement to that paper, which holds true today:

"They're in for a fight if they want to fight."

Apparently, the political establishment, small as it is in this province, never took that promise very seriously. They instead resorted to defiling my family name, insulting me on the airwaves of the province, blackballing me in the halls of power. In other words, the usual treatment for anyone who dares to challenge the established order and their plans for the province and its people. What they did not bank on, frankly, is the power of the human spirit. Of course that can be said of many dictatorships new and old around the world. What can also be said is that "an idea is more powerful than any army."

However, change requires leadership. It has always been that case since the beginning of time and it remains true today. What people have in their hearts may remain just there if there is no leadership to bring that change to life. And as I learned as a young military officer, you can only lead from the front. As I also learned: "Who dares Wins".

So, over the last two years, I've taken that training to heart. I've placed myself, as one local radio commentator noted, "in the centre" of the battle over Muskrat Falls. The same commentator at one time referred to me publicly as a "dangerous zealot". Another local blogger, Edward Hollett, referred to me as a "martyr on a zealot's cross."
Apart from the inflamatory nature of their words, both have some points in common: to stand up for what you believe in is futile; to advocate against the wishes of the political class is dangerous; and to be the one that leads that change is self-serving. All the hallmarks of people who have bought into the political cast system.

Canada is not, however, India. We do not believe in cast systems. They are a relic of a different age long since relegated to the history books. Yet, in this province the political and business cliques have decided this system suits them well, and they have no intention to change it. They perceive such threats to their dominance as revolution, when in fact it is evolution. And this is their great sin.

Muskrat Falls, in fact the Lower Churchill project, is the battle ground that this conflict will be decided. Many of the people have been deeply offended by Bill 29, which stripped the public of essentially any right to access to information that the government possesses. Aboriginal people's have been denied the ability to stop their lands and waters from being poisoned by mercury. Citizens have been lied to about the very legality of the water management agreement that allows the project to go ahead. The project has been pushed ahead. Not by the PC party, but by all members of the political establishment's elite. There is as much silence or support amongst some of the Liberal party back room as well. The "boys" in St. John's have had their way, and the rest have had to fall in line. Those days are over.

The provincial political establishment is now facing its very own armageddon - one of its own making. The Lower Churchill project they so desperately imposed on the people of our province is mere weeks from imploding. An implosion that will shake the very foundations of the political establishment, and forever change the way Newfoundlanders and Labradorians view their political masters and themselves. A long over due destruction of the political class that has kept them in servitude for hundreds of years.

A new political and business reality is about to be born on the Rock. The era of feudal politics is dead. For the people of this province it couldn't come soon enough.

Is Newfoundland and Labrador Ready to Lose the Upper Churchill?

Is Newfoundland and Labrador ready to lose the Upper Churchill hydro-electric dam and facilities? Every single Newfoundlander and Labradorian would say a resounding "No". However, we are getting very close to that position, and here's how.

Just say for a moment that Hydro-Quebec or I are successful in the challenges on Muskrat Falls in Court, but Nalcor keeps building the dam and taking power from the Upper Churchill as it apparently is now (according to Hydro-Quebec's Statement of Claim). Where does that leave us? According to the legal opinion given by lawyers at the province's Natural Resources department it leaves us with billions in penalties and costs to Hydro-Quebec  which, according to the opinion, would bankrupt CFLCo unless the provincial government dumped money in to pay the costs off. However, it's not that simple.

When Dean MacDonald and Brian Tobin agreed to sign the Shareholder's Agreement of 1998, they gave Quebec some powers over that scenario. The Agreement gives Hydro-Quebec a veto over the following as it pertains to CFLCo's finances:

3.3.2 Any sale, assignment, transfer, lease or exchange of all or substantially all of the property of CFLCo or any Subsidiary of CFLCo.

3.4.2 The adoption of the annual operating budget and the annual capital expenditure budgets of CFLCo and any variations thereto which would result in the increase or decrease of any such budget by $10 million in the aggregate or $5 million for any particular budget item.

3.4.4 The issue of any Shares or any Rights, except for Rights attaching to subordinated debt obligations, or the issue of any shares or any debt obligations of any Subsidiary of CFLCo.

3.4.5. Any loan or borrowing on the credit of, or any issue, reissue, sale or pledge of debt obligations of, or the grant of any financial assistance, guarantee or security by CFLCo or any Subsidiary of CFLCo in each case having an aggregate principal amount of $25 million or more (whether it be one or more trenches), except for subordinated debt obligations.

8.1 Pre-emptive rights. Subject to Sections 8.3 and 8.4, no shares or rights may be issued by CFLCo to any shareholders or to any other Person (the "New Issue Securities") unless CFLCo shall have first offered it to N&LH and any permitted transferee of N&LH and to HQ and any permitted transferee for the same pro rata to their respective Pro Rata Shares, at the same price and on the same terms and conditions as those offered in respect of the New Issue Securities.

In other words, Hydro-Quebec could veto CFLCo from going into bankruptcy. Or, more dangerously, it could veto the acceptance of any financial assistance by the provincial government to keep CFLCo from going under.

If CFLCo is without funds to pay Hydro-Quebec the court awarded costs it would be unable to operate the dam. It would frankly be unable to meet its payroll. Should that happen, the Power Contract states:

             Should CFLCo, not being prevented by any event of Force Majuere, be unwilling at any time to operate the Plant, and should the plant then be operable, Hydro-Quebec, if not then in default here-under, shall have the right to cause the plant to be operated for the account of CFLCo in accordance with sound utility practises until CFLCo itself resumes such operations.

So, in other words, Hydro-Quebec can force CFLCo not to accept financial assistance from the province, and it can refuse to let CFLCO go bankrupt, and simply take over the operations of the plant while the bill for damages to CFLCo keeps rising to the point of being impossible to pay.

If the provincial government tried to sell some or all of its shares Hydro-Quebec gets first rights to them. If the provincial government tries to issue bonds Hydro-Quebec gets first rights to them as well. And that's only if Hydro-Quebec doesn't use its veto to stop that from happening in the first place.

Consider though that the province wants the Muskrat Falls dam operational by 2016, and consider damages start from that point, Hydro-Quebec can sit on those damages year over year until 2041. By 2041 those damages would be, or could well be, in the vicinity of $25 billion, not including interest. At that point Newfoundland and Labrador would have no choice, but to surrender the dam in its entirety to Quebec.

Is this what we really want? Are we ready to lose the Upper Churchill to Quebec?

Nalcor's Grand Larceny Over $100 Million

Grand Larceny means the unlawful acquisition of another's property on a big scale. That's what we have with the Water Management Agreement Nalcor had the Public Utilities Board here impose on CFLCo. It appears to be a large plan from the get go of former Premier Danny Williams while in office. You see, although the WMA says it must respect previous power contracts there is a catch - Force Majeure.

Force Majeure is a legal term in all contracts, which loosely means an act occurring that let's both parties to a contract out of its binding commitments. Normally a Force Majeure event would be an act of God like weather, or war, or insurrection, that kind of thing. In the case of the WMA it is given a whole new meaning. Here is its definition and application in the WMA:

" Force Majeure Event means an event, condition or circumstance or combination of events, conditions or circumstances beyond the reasonable control and arising without the fault or negligence of the party making a claim pursuant to section 14.4 of this agreement (the Affected Party) including without limitation:

(iv)  action of any government, legislature, court or other governmental

authority, compliance with applicable law, regulation or order of a govermental authority.

And which, despite all reasonable efforts of the Affected Party to prevent it or mitigate its effects, adversely affects the performance by such Party of its obligations under this agreement;

Okay, so that's a mouthful, but it essentially means if the government owned companies Nalcor or CFLCo are prevented by government imposed law or conditions from respecting the Power Contract with Hydro-Quebec, well, its not their fault. Even though the two companies are Crown corps, well, you get the idea. It’s a "wish we could do it b'ys but our hands are tied by this government who is a whole seperate entity from us" kinda thing (sarcasm intended).

Then there is this on the same issue:

" An Affected Party shall be excused from the performance of its obligations hereunder or liability for Damages to the other party, if and to the extent it shall be delayed in or prevented from performing or carrying out any of the provisions of this Agreement, except the   obligation to pay any amount when due, by reason of a Force Majuere         Event, provided that an Affected Party claiming a Force Majuere Event shall notify the other party of such Force Majeure Event, and shall use reasonable efforts, at its own cost, to mitigate the effects of the relevant Force Majuere Event and to remove the condition that prevents the Affected Party's performance, and shall perform its obligation as soon as possible and to as full extent as possible."

Loosely translated: " It's a get out of jail free card for Nalcor and CFLCo."  It means that Hydro-Quebec can not sue CFLCo or Nalcor if the government, through regulation, or say interpretation of the Power Contract, decides to take power from the Upper Churchill by using the WMA to do it. It's plain and obvious this is unconstitutional, and a violation of extra-provincial civil rights, but let's forget that for a moment. Let's look at the why.

Both Williams' grand Energy Plan 2007 and government policy require "full use" of the Churchill River's waters for power generation. Nalcor and CFLCo are required by law to follow that policy. That is their "Force Majuere Event". Out of their hands they will say. Just following government policy and regulation they will say. We would like to obey the Power Contract, but the government has our hands tied they will say. And so it goes. But what is the government of Newfoundland and Labrador aiming for?

How about in the vicinity of 1500 almost free megawatts of power from the Upper Churchill? Gilbert Bennett is on the public record, just once mind you, saying Hydro-Quebec is only entitled to about 3500 MW when the Power Contract renews in 2016. He says that once you account for that and 525 MWs of recall and Twinco power, there is a juicy bundle of about 1500 MW left over that Hydro-Quebec is not entitled to. His implication is that this power can be taken by Nalcor. Forget the fact the Supreme Court of Canada already found that concept to be illegal for a moment.

What is the big deal about 1500 MW of power you ask? Well that is about 28% of the power the plant could generate if it ran at full capacity. Yes you say, but Hydro-Quebec won't allow the plant to run at full capacity. They will just hold the juice back and produce what they need. They have the power to do that under the Power Contract, and have been doing it for almost 40 years you say. Well, that's all true, but the new WMA changes all that. Under the WMA all plants operating on the Churchill River must operate at 100% capacity. That would mean that extra 1500 MW will be there, by law.

So you ask, what is the big deal of having 1500 MW available for us? Well here is the kicker. All Nalcor has to do is pay the paltry price that Hydro-Quebec pays for the Upper Churchill power .002 cents per kwh starting in 2016. Nalcor can then sell the power and will make about $560-600 million per year in profit. Holy shit you say! That is the motherload considering Nalcor is only making less than a hundred million now, and is subsidized to do that by the government. What's wrong with that you say? Are you trying to give comfort to the enemy you say?

Well, it's like this, it would be a great plan...if it were legal. You see, the Supreme Court of Canada already ruled, in 1984, that Hydro Quebec owned all the rights to the power produced at the Upper Churchill til 2041, except that 525 MW of recall and Twinco power. Therefore, taking that power and "recalling" it is illegal. It means that we are stealing power we gave away until 2041.

Big deal you say, what are they going to do about it? Well, the what is a lawsuit I would imagine, along with an injunction no doubt. But what's the damage? Here I'll quote from the Department of Natural Resources legal opinion. It's on Section 92 rights to the water, but the result of a wrong approach is the same:

" In previuos litigation in Quebec relating to the recall case, also described earlier in more detail, the Quebec Courts found that CFLCo would be in breach of the Power Contract if it failed to deliver, even in response to a demand for Power from the Province.

If a court followed this reasoning, CFLCo would be in breach of the Power Contract once it started diverting water to Newfoundland and Labrador from Hydro-Quebec. In these circumstances, Hydro-Quebec would pursue monetary damages from CFLCo. The amount of such damages cannot be accurately predicted, but would be significant. This is because the purpose of such damages will be to place Hydro-Quebec in the position they would have been in had CFLCo not breached the contract.

Any damages would then raise another issue - whether CFLCo would be able to pay such damages. Any level of damages would be expected to drive CFLCo into insolvency and likely bankruptcy, unless 1) CFLCo was paid sufficient amounts for its redirected power in the province to meet Hydro-Quebec's damages demands or 2) Hydro-Quebec or the Province injected sufficient funds into CFLCo to keep it solvent...while the exact amount of compensation is unknown it can be reasonably    expected to be in the billions of dollars." Legal Options: S92A, Good Faith and Regulatory Proceedings in Quebec, November, 2012, Department of Natural Resources.”

So there you go folks. The big plan was to steal 1500 MW, use that profit to subsidize below cost sales to Emera in Nova Scotia, and put the rest in the bank. The results: Quebec lawsuits, invalid WMA, no water to run the dam at more than 20% capacity, billions in damages to Hydro-Quebec, and a bankrupt CFLCo. Grand Larceny of $500-600 million per year may have seemed like a good idea to our former premier, but somebody should have told him: " Crime doesn't pay."

On Mainlanders, CFAs and the like

This post is personal to me. It's not about cold, abstract politics. Nor is it about personalities, graft or corruption. No, this post is what it means to be degraded. Degraded not for who you are as a person, as a father, as a husband, as a son. Not for what you have accomplished in life or the people you have touched along the way. No, this degradation is solely based on your place of birth.

While Newfoundlanders like to be seen as friendly and hospitable, there is an ugly side. People born outside the province, who move to the province, are referred to as "mainlanders" or "come from aways" (CFAs is the common term used). I have even heard the term "foreigners" used. The terms are not meant as playful labels. They are meant to separate the newcomers from those born in the province, and the implication is these newcomers are somehow inferior.

My first experience with this prejudice occurred during a political convention of the PC party in St. John's. Sitting in the audience, and taking in my first political convention here, it was a time of real excitement. Joining me was my wife who, along with me and my family, had uprooted our lives out west to return to my roots (more of that later). On the stage was a gentlemen named John Dinn. I didn't know him from Adam, but he was a MHA and I was eager to take in what he had to say. He began talking about Canadians and then he said the words that struck my heart: "but we are better than them". The crowd roared with approval.

In one short moment I was instantly alienated from the people of my forefathers. In that one instant I realized that there was a poison in the water. A need to look down on others for a sense of superiority. A deep routed, commonly cherished place to retreat where at least among ourselves there were those beneath us. I have come to believe, through life experience, that those that look down upon others are compensating for something lacking in their own soul. A sense that without that common arrogance we might just vanish as a people. The opposite of pride. A great inferiority complex. That to make ourselves strong we must keep others down.

I was shocked, and remain so, that the Newfoundland I was brought up with in family stories was so tragically different. You see, my people come from here. In 1820 my great-great grandfather emigrated to Newfoundland from Tipperary, Ireland, along with many others at that time. His name was Micheal O'Meagre. He settled in Bonavista Bay, and had three sons. Two sons, Catholics, married Protestant women in Greenspond, and were banished from the family - such was the religious intolerance of the day. The third son, my great grandfather, married a Hollohan from Summerville, settled on Burnt Island, and fathered a large family.

Times were hard then, and the two eldest boys went to Montreal to work in construction.  In 1907, while returning from Summerville to Burnt Island, my great grandfather William Maher (as the name had been changed to) and a Kelly were struck by the boom of his schooner, knocked over board, and their bodies were never found. My great grandmother struggled to feed her daughters after that, and they all moved to Montreal to join her sons - my grandmother being the youngest. They struggled, and yet they persevered.

I never knew my grandmother to ever look down her nose at another. She was a strong woman who spent her life looking after her family. She was quiet, wise and kind. The tragedies of her life, including losing her father at a young age, never broke her spirit or poisoned her temperment. Her stories of Newfoundland, and the family were always tempered with humility. Her pride came from deep within, and never at the expense of another.

It was with her spirit in mind that I moved to Newfoundland - in my mind returning to my roots, my ancestral home. Nothing prepared me to be seen as somehow unfit or inferior. Nothing prepared me to hear the anguish of my children as they suffered daily ridicule at school for being "dumb mainlanders" or "CFAs". Nothing can really prepare you for that kind of society-sanctioned hatred. Even in my own harbour. A local had asked to tie off his boat to my dock, which of course I agreed to. As is the case, we struck up our usual conversation. The topic switched to my children who had finally had enough degrading and moved back west with their mother. I explained to him why, and to my shock he began laughing. It was funny in his mind, as he explained, that Newfoundlanders were the butt of "Newfie" jokes, as he put it, and now the shoe was on the other foot. In disbelief I untied his boat. The sickness of deep hatred and contempt weighing heavy on my soul. Somehow, a victory could be stolen from the suffering of children?

My point in writing this blog is to shed a light. That hatred and false pride produce nothing but poison. Poison to the personal and collective soul. That Newfoundlanders can be proud of who they are without demeaning those that, by choice, become Newfoundlanders themselves. That there is no magic being born on these shores, but rather what is contributed while we live on them. That no society is of a pure blood strain, and emigration has always been a fact of life throughout Newfoundland's 500 year history. Without it there would be but a place. The pride and place that Newfoundlanders seem preoccupied with comes from lifting people up, and not tearing them down. A truly proud people are not disdainful of others, but welcome them as equals. This is the Newfoundland I hope to see. I say this as a Newfoundlander.

Back Stabbing the People of Newfoundland and Labrador

Financial crunch, requiring deep cuts and discipline, is the state of our provincial government's finances according to our PC government. On the radio waves, on the tv, all we hear is the necessity for cuts and lay-offs, but is it true? Well, frankly no, it isn't.

Despite all the foreboding of impending doom, oil revenues for 2012, $ 2.8 billion, were the highest ever. The province recorded a whopping $883 million budget surplus for the year. Just another in a line of offshore oil fuelled surpluses. It is strangely odd then that the province would lay-off 1200 employees, affecting all those families as well, and cancel numerous programs - including the West Coast Training Centre today. The mantra is austerity. The tool is responsible care taking of the treasury, but is that real? No, not even close.

Consider this: between 2005 and 2012 the province received $12.25 billion in offshore oil revenue - that's an average of $1.3 billion a year since 2005. Now consider this: the gross debt of the province is actually larger today than it was back in 2003, before oil income bloated the coffers. Specifically, the gross debt in 2003 when the PCs took over was $12.8 billion. Today, as of March 31, 2012, our gross debt $13.4 billion. In other words, despite bringing in over a $12 billion in oil revenue since 2003, the province is over a billion dollars further in debt. How can that be possible? It's called poor decision making.

The gross debt is made up of primarily three things: borrowings; unfunded pension liabilities; and group health and life insurance retirement benefits for public employee and politicians. In 2003 net borrowing was $6.5 billion, unfunded pension liabilities stood at $3.56 billion, and group health and life was $1.05 billion. Nine years later, and $12.25 billion richer in oil money, the same categories looked like this: unfunded pension liability $3.09 billion; and group health and life $2.09 billion.

So, if all that oil money came in over the last while where did it go? Clearly the oil profits were not used to really reduce these retirement liabilities. Back in 2003, the provincial government had a total of cash saved and invested of $441,855 million. Today, that same bank account is almost $2.5 billion ($2,442,963,000 as of March 31, 2012 to be exact).

The revenue went way up. The spending went way up. The bills of the future went unpaid, and the difference was left in the bank. It begs the question: Why the austerity program with so much money squirrelled away? There is only one answer to that: Muskrat Falls. Before you roll your eyes and say here we go, take a moment. The memorandum of understanding regarding the federal loan guarantee for Muskrat Falls requires the province to have a down payment of 35% down before it will guarantee any loans.

The province's estimate of its share of the project is about $6.5 billion. Projects this size never come in on budget, and normally have a contingency fund of 25%. Given that, the province is looking at raising at least $8.25 billion. That means the federal loan guarantee would require them to raise about $2.9 billion for their down payment. They had $2.4 billion in the bank as of March 31, 2012.

Bottom line, the province is laying people off, cancelling programs, not expending department budgets in a desperate effort to bank their down payment for Muskrat Falls. Simple as that. We are expendable in the name of a dam. Ask the people who lost their jobs, or the groups that lost their funding or their schools. Ask those desperately waiting for the construction of hospitals, or road paving, or a number of any other services. It's a real point of curiosity that the issue of the funds in the bank is not a bone of contention in our media or for our opposition groups for that matter. It seems that the knife never stops striking the people of this province in the back.

Doing the Right Thing at the Right Time-Liberal Leaders

Disappointing. That sums it up. The recent Telegram article on the position of all five Liberal leadership candidates on Muskrat Falls was recently aired for public consumption. The reporter, James MacLeod, noted that the Liberals official position, including a vote against the project in the House of Assembly, has been solidly against the project. In his article MacLeod illustrated the readily apparent conflict between what the leadership candidates are saying now, and the position the Party has taken. Conflicted indeed.

There was the predictable: Cathy Bennett cheerleader full stop; Danny Dumaresque opposed full stop; Dwight Ball and Jim Bennett arguing the deal is done so make the best of it. The one most bizarre response came from Paul Antle.

I had very high hopes for Antle. A well educated man now a resident of Ontario, he seemed to bring some very needed business counter-balance to Cathy Bennett's blinders-firmly-on point of view on Muskrat Falls. Yet, after MacLeod's article, that hope seems fully dashed. Consider this quote attributed to Antle in the article:
"No one is going to stop a hydro development that is half-constructed. No one would do that in their right mind, but we can revisit how this thing is financially engineered." Think that quote through for a moment.

First thing that jumps to mind is that Muskrat Falls is nowhere close to being half built. The transmission lines, one third of the project haven't even cleared all the aboriginal and environmental hoops yet, let alone constructed. The Labrador-Island sub-sea cable system and conversion sites are not constructed at all, ditto for the maritime link, same goes for the powerhouse and dam at Muskrat Falls or the much debated reinforcement of the quick clay plagued North Spur. In fact, the only real work that has been half completed is the site clearing at Muskrat Falls.

There is the obvious political critique of this position. Within the last month the largest poll ever conducted on Muskrat Falls showed support for the development free-falling. A project that once enjoyed a solid 70% support by the public was now reduced to 49%. In effect, Antle's position may be alienating the majority of the electorate (when I say Antle you can include the majority of the candidates in that one). Then consider the positions of the other two parties. The NDP is becoming the only Party opposing the project, and the Liberals are being portrayed as essentially of the same mind as the terminally ill PC party. Not a position most would conclude is enviable. Does the Liberal Party really want to frame itself in the public mind as PC lite? Or perhaps even more damning: Liberal Tory, same old story? These are dangerous political waters to be in, and already one toe has been dipped in the water to check the temperature. As MacLeod said: "scrambled eggs".

Then there is Antle's statement that nobody in their right mind would halt a half built project. Really? Hmm. Don't tell the Ontario Liberal government that. They just did that very thing by cancelling two partially built natural gas plants designed to produce electricity. He should know that - he's a Liberal and he lives there in an Ottawa mansion. The cost to the Ontario taxpayers is $800 million plus, but they stopped throwing good money after bad - apparently. There are also cases like the hydro-dam being built in Brazil that have been halted half built. Some may argue that cancelling the contract with SNC Lavalin would create too much cost, yet Hydro-Quebec and a number of private corporations have done just that.

Apparently, these governments and corporations are not in their right mind? Or are they? Does the responsible person realize when they have made a mistake? Do they have the courage to stop the damage before it becomes financially fatal? The answer is yes they do, and they do it all the time. Antle, and the other Liberal leadership hopefuls have seemingly lost sight of the number one essential ingredient of all great leaders - courage of conviction. If you accept that Muskrat Falls is flawed then you must advocate it be halted until those flaws are corrected. It may be the case that those flaws cannot be corrected in a financially viable way. If that is the case then it must be halted permanently. No corporation would do any differently. The Board of Directors would be sanctioned by the shareholders if they acted in such a way. They would even be legally responsible for such a decision.

So what does all this boil down to? Well, frankly, a lack of judgement. If you portray yourself as a responsible guardian of the public purse, one that would treat that budget as if it were your own, then you must make that your position in all things relating to how you intend to govern. To paint all those who want to see this project stopped as not in their "right mind" is to disrespect us all. Frankly, we get a lot of that from the existing PC government. We certainly are not looking for that in the replacement government. Food for thought gents.