An Open Letter to Premier Dunderdale and NALCOR’s Ed Martin

An Open Letter to Premier Dunderdale and NALCOR’s Ed Martin

Let me begin by saying that I am completely non-partisan. In fact I would go as far as to say that I find any political party or candidate who would politicize something as important to the public as development of the Lower Churchill utterly reprehensible.

I write this letter as a concerned citizen of Newfoundland and Labrador and for no other reason.

I’ve noticed that since the release of the Lower Churchill environmental assessment the response from official circles have been rife with adjectives such as “Shocked”, “Surprised” and “Disappointed”. I’m confident that after all the hard work having been put into this project these words likely reflect the honest reaction of those involved. In reality however the concerns of the public are not with the feelings of those involved in the project nor are those concerns being addressed through such personal commentary.

What people want are unvarnished facts and details in response to the questions raised by the panel and by the public at large.

In many ways communication is an art form and while government and NALCOR have already expended a great deal of effort and energy in responding to countless questions it’s clear that the answers provided have not been enough to satisfy the population.

In the end it is the public who will pay the cost of development through a combination of their taxes and power rates. They are also on the hook for the social and historical costs if the project is ultimately unsuccessful.

The stakes are extremely high and everyone in the province realizes this, not just the proponents of the project. That’s why, when questions are asked, those posing the queries expect and deserve clear, detailed and comprehensive answers. Responding to the general “gist” of a question or supplying the “broad strokes” isn’t going to alleviate concerns and may in fact amplify them. On this particular project the sharing of as much information as possible must be the order of the day.

Regardless of whether or not it may seem fair to those working on the project, the Lower Churchill is by its very nature tainted by the legacy of the Upper Churchill. They are inextricably bound to one another in the psyche of the population.

The people of Newfoundland and Labrador were led into that particular project by a government bent on a chosen direction and all of us have borne the cultural scars ever since. Make no mistake, this time the people of the province are demanding, and will continue to demand, answers. If those answers are considered inadequate then the project simply will not go ahead, regardless of what anyone says to the contrary.

It may be difficult for those directly involved to understand the broad level of concern being expressed by so many, especially with the quantity of information that has no doubt been gathered, analyzed and modeled internally, but remember that the public is not directly connected to the nuts and bolts of the project and as such require clarity, and perhaps even a little comforting, when it comes to many of the issues.

Those involved should always remember that it isn’t the job of government or NALCOR to sell this project to the public. It was exactly that sort of misguided approach which led to the ouster of the Liberal government in New Brunswick when it tried to market NB Power to Hydro-Quebec. The job at hand is to ensure that the people of the province have all the information necessary to make an informed decision about their collective future.

As an example, when concerns are raised about the viability of the project if Gull Island does not proceed on schedule, or at all, it isn’t good enough to simply say that Gull Island will proceed or that Muskrat Falls can stand on its own.

A more complete answer should include an explanation of the financials and rate projections involved in both scenarios and must identify a plan B for Gull Island, if one exists, should Quebec remain unwilling to allow access to its grid.

It doesn’t cut it when someone like Mr. Martin responds to questions about wheeling Gull Island power through Quebec by saying, "Quebec is bound by the regulatory body in the United States to provide the same open access they enjoy there to others who wish to enjoy it”.

With all due respect, it may not have been the intention but based on our past history with Hydro-Quebec I personally find that sort of response either totally naive or summarily dismissive.

When the Upper Churchill was developed Newfoundland and Labrador was denied access to the Quebec grid. The end result was one of the most lopsided contracts in history. Regulations may exist today requiring Hydro-Quebec to allow access but that same access was recently blocked for this very project. What is the likelihood that Quebec will suddenly decide to open its borders on schedule for the start of the Gull Island development and what if they don’t?

What if we still can’t access the Quebec grid when and if Gull Island is ready to proceed? Is there a backup plan to ensure that the Gull Island project can still be completed? If so, what is plan B and what are the financial implications for the province, NALCOR and rate payers?

If there isn’t a plan B what happens? Could we find ourselves with another Upper Churchill on our hands? Is it possible we might end up with Gull Island nearing completion and still waiting on a commitment from Quebec? If so might the outcome be the same as it was decades ago: bankruptcy or another lopsided agreement.

On the subject of whether or not this truly is the lowest cost solution for our province’s energy needs, again the panel raises some good questions the public deserves to have answered.

Why isn’t lower cost power from Gull Island being developed up front? If it was, would that result in lower rates for rate payers? If not, why not?

Why did the information provided to the review panel suggest that NALCOR simply looked at one side of the equation when it comes to future demand - finding new sources of energy - instead of also considering ways to reduce that demand?

If a cost effective means can be found to stabilize current demand or slow its growth through energy efficiency programs would that allow one of the other power options previously dismissed by NALCOR to satisfy our needs at a lower cost than Muskrat Falls?

Perhaps the analysis has already been done internally on these issues but that information was never put before the panel. If so then it should be made public now. If not then the analysis should be completed as the panel recommended.

One of the power source options noted by the panel is the Upper Churchill itself. NALCOR’s projections go out well past 2060 but appear to completely ignore power from the Upper Churchill. Some of that energy may be available now through recall and all of it is expected to be available in 2041, just over 20 years after the Lower Churchill’s planned completion. Yes there would be costs involved in linking the power to the island portion of the province but why was this, essentially free power, not identified as a potential source to meet future demand?

Perhaps consideration was indeed given to the Upper Churchill but dismissed for some reason. If so what was the reason and if it wasn’t considered why wasn’t it and shouldn’t it be?

Is there some reason we will not be able to access that power in 2041? If so, that’s something everybody absolutely, without question, deserves to know.

As you can see questions abound and with our history of power development in this province, no matter how outlandish any particular question may seem, it deserves a complete answer.

There may be legitimate responses to all of these questions and the many others being asked. I’m sure everyone hopes there are, but it simply isn’t good enough for government or NALCOR to provide cursory or limited responses and say that the project is proceeding regardless of what the panel or public has to say.

As Naive as Mr. Martin’s comments on Quebec registered with me I can’t help sensing a tone of arrogance in the Premier’s position that the project is going forward regardless. That may not have been the intended spirit of the words chosen but it is surely the impression left behind for me.

The public doesn’t simply have a right to ask questions but the historic obligation to demand clear and complete answers.

If additional reviews, beyond those already underway, are necessary then they should happen. Whatever it takes to give the public a comfort level with this development must be done before any project is given final approval.

This is not to say, as the opposition parties have suggested, that all efforts should immediately halt pending those answers.

Politics needs to be removed from the equation completely and I firmly believe any party that plays politics with this issue during the upcoming campaign will pay the ultimate price for taking such a callous approach.

I’m sure the public understands that there are likely hundreds of resources working full speed to gather information, analyze findings, develop project plans and answer thousands of questions. Stopping such a monumental effort isn’t like flipping a switch. Once it’s halted it may be very difficult if not impossible to get it moving forward again. I don’t believe that is what the public wants. As previously stated, I believe what we want are clear, detailed, comprehensive answers.

They say that those who forget the past are doomed to repeat it. It’s an adage Newfoundlanders and Labradorians take very seriously and with good reason. Thankfully, in this respect at least, the legacy of the Upper Churchill is still there to ensure that we remember all too clearly.

While the public as a whole should not condemn the Lower Churchill project out of hand we also shouldn’t let anyone ram the project through unless and until the taxpayers, rate payers and voters of the province - each and every one of us - are comfortable that it is indeed the right thing to do.

I truly believe that all of our elected officials and the head of our Crown Corporation, NALCOR, should expect no less from each of us and that they owe it to the people of Newfoundland and Labrador to show their respect for our concerns by responding fully to each and every one of them.

Vision - A Casualty of Drive by Politics

The most common definitions of “Vision” include:


1. The faculty of sight;
2. Intelligent foresight;
3. The manner in which one sees or conceives of something;
4. A mental image produced by the imagination.

That’s something every Newfoundlander and Labradorian would be within their rights to jot down, seal in an envelope (or place in an email) and send directly to every candidate running in October’s provincial election.

History tells us the world’s most respected leaders aren’t remembered for their ability to win office or hang onto power but for being visionaries and for their ability to engage the public in making their dream a reality.

Where are the visionaries in Newfoundland and Labrador today?

Talk to the average politician and you’ll discover most can’t see past the next poll, next election or next fiscal year. Vision, true vision, extends beyond those false parameters. It reaches far into the future, perhaps to the next generation, the generation after that, or even beyond.

Visionaries recognize the present for what it is, the future for what it can be and are capable of laying the building blocks that inspire others.

As a people why are we so easily accepting of announcements about “slightly lower” unemployment rates or achieving an “average” Canadian wage? Instead we ought to aspire to having the lowest unemployment and the highest wages in the Country.

It goes without saying that we won’t reach such lofty heights overnight, in fact we may never get there, but if we don’t aim for the target we’ll never come close to hitting it.

Take our natural resource, the province, regardless of which party is in power, has always developed those resources in exchange for the direct revenues (royalties / taxes) they produce and for the limited number of jobs extracting them creates. Why?

Why hasn’t government ensured that every ounce of benefit is squeezed from the resources around us and why haven’t our leaders, past and present, been able to understand that those resources are a diverse package of interrelated opportunities rather than a series of independent revenue streams?

Maximizing benefits doesn’t have to involve a heavy handed approach that might scare investment away and the benefits reaped don’t have to flow directly from selling the resource itself.

Legislation forcing industry into a position where profitability is unduly limited or which unfairly places social obligations on them isn’t the answer either. A far better approach is to create an environment where industry itself can see the economic advantages of increasing its presence in the province. This would require a government that understands how the different pieces of the puzzle are interconnected and can be leveraged.

As an example, based on public statements by NALCOR it would seem that rising oil prices will continue to drive up power rates until such time as Muskrat Falls energy is available. At that time rates will stabilize. They won’t fall mind you, but stabilize.

Based on this it appears higher rates charged (due to the cost of oil) will remain in effect even after the oil is no longer needed, ultimately providing additional revenues to NALCOR when Holyrood closes. After all, when those costly oil purchases are no longer necessary the revenue has to go somewhere.

Likely those hundreds of millions of dollars, along with earnings from selling power outside the province, will be used to repay the development costs of the project and provide a healthy return for NALCOR and the province.

This might seem reasonable enough from a traditional business perspective but NALCOR isn’t an independent business and the power they sell is directly linked to the local economy and to every individual and business in the province.

Newfoundland and Labrador, compared with other Canadian jurisdictions, is somewhere in the middle of the pack when it comes to power rates. According to NALCOR our province isn’t the only place rates are rising and after Muskrat is complete, even with the higher rates, we will continue to sit somewhere in the middle of that pack. This makes me wonder, why is that good enough?

Why are we willing to settle for being “average”?

As part of a longer term view, considering the size of the investment - and its associated risks - perhaps a more visionary approach to Churchill power should be considered.

There’s a difference between thinking inside the box and thinking outside it. In fact it’s been said visionaries don’t even recognize a box exists.

Might the province be better served by cutting power rates as much as possible once the expense of Holyrood oil disappears? This is not to say taxpayers should subsidize power rates, that NALCOR shouldn’t make a profit, or that the loans shouldn’t be repaid, the question is how high those profits need to be and what the plan is for paying down the debt.
We may have a unique opportunity here since NALCOR isn’t developing the project as a privately owned company or publicly traded corporation. As such it shouldn’t have the sole goal of maximizing profits. Its owners are the taxpayers of the province. Ultimately any corporation is responsible for achieving the long term objectives of its shareholders, in this case the citizens of Newfoundland and Labrador.

When it comes to the Lower Churchill, perhaps we should ask ourselves if our primary intent, beyond keeping the lights on, is to reduce debt quickly, increase profits for NALCOR and government, grow the economy and related employment or pursue some combination of the above.

Perhaps the answer is to eliminate the debt quickly and then drop power rates as low as possible while ensuring the future viability of the corporation. Perhaps not. Who knows, but if we examine all our options, including the eventual repatriation of the Upper Churchill , might we be able to focus our efforts on one day making Newfoundland and Labrador the lowest cost jurisdiction in Canada, hell why not in all of North America, for access to clean power?

If we could eventually reach that target what might it mean?

Clearly it would be a welcome reprieve for rate payers in the province and would go a long way toward easing the burden of the less fortunate among us, but what about the bigger picture?

Low rates would obviously reduce the cost of doing business here. If the costs were low enough that alone would increase the profitability of existing enterprises and improve their ability to expand, hire new employees and even increase wages.

With less focus placed on direct profit from our energy reserves and more on offering the lowest possible rates, major industrial players now content to harvest resources and ship them elsewhere for processing might find themselves able to do that processing here at a lower cost and for increased profit thus creating more employment and provincial tax revenue.

It’s often been said that our remote location and distance from world markets is a barrier to developing a manufacturing based economy. There may be some merit in that but with the Northwest Passage, the most sought after shipping route in the world, beginning to open up could our location at its Eastern gateway actually benefit to us in the future? When it does open up, if the infrastructure necessary to take full advantage of low cost renewable energy were put in place, including for the use of Upper Churchill power, what might it mean to the province 30 years from now?

Secondary processors who use our iron, copper, oil or other valuable resources to produce consumer goods around the world might eventually come to recognize the province as a unique location with abundant resources and cheaper power than they can find elsewhere. How many jobs would that create?

Perhaps stimulating industry and employment in this way would generate provincial revenues far beyond existing levels. This broadening of the provincial tax base might even enable a visionary government to lower personal and business taxes. It might result in us becoming one of the lowest cost places to live in Canada while ensuring we are even more attractive to business, guaranteeing the cycle of growth continues to expand.

In the long run such an approach has the potential to be far more lucrative for the people of the province and for government coffers than the status quo.

Picture a future where Newfoundland and Labrador is recognized as a strategically situated treasure trove of raw materials that has the lowest cost power in North America and perhaps even the lowest tax regime. A place with a diversified economy where well paying jobs are abundant and the provincial treasury is flush with cash.

Of course this might sound like a pipe dream and in reality the entire idea is nothing more than rambling on my part. I wouldn’t pretend to know if such a scenario is viable or not but at least it’s a concept, the germ of a direction, the seeds of a vision that extend beyond the next few months or years or even my own lifetime and certainly beyond the next election. In other words it’s far more than any of the parties are putting forward.

With an election on the way we should all question where the long term vision is for our province. What about the fishery or the forestry sector. Where do we want to see our health care system and our schools a generation or two from now and how do we plan to get there? All of these components are intertwined and need to be part of an overall vision.

We may have a small population in Newfoundland and Labrador but we are also blessed with a vast array of renewable and non-renewable resources and a population that I truly believe is willing to work for a brighter future. In fact I’d argue that any government unable to satisfy the needs of our small population, while surrounded by such vast wealth, doesn’t deserve to hold office.

At this point in our history what we need is a visionary leader bold enough to set aside political expediency and take the reins firmly in hand. Unfortunately the closest thing to vision we’ve seen from any of the political parties are promises likely to expire the morning after the polls close. Hardly inspirational.

The Politics of Arctic Sovereignty

It’s time Canadians demand to know how long Stephen Harper plans to continue playing the Arctic sovereignty card without actually doing anything to ensure that sovereignty.

Stump speeches, campaign rhetoric and photo-ops serve the imperative of rallying Canadians around the flag while scoring political points but they do nothing to ensure the protection of Canada’s Northern region.

During the 2006 election campaign the Harper Conservatives promised to increase Canada’s military presence in the Arctic by deploying icebreakers and installing a remote sensing network in Northern waters.

In 2007 Stephen Harper announced that he would build eight Polar Class 5 Offshore Patrol Ships and establish deep water port facilities in the far North. Construction of those vessels, which are in fact a major downsizing from ships already on the drawing board prior to the Conservatives taking office, has yet to begin and where’s the port facility? Apparently it’s still contained in a cabinet briefing document stuffed into some filing cabinet on Parliament Hill.

During that much publicized announcement, at Canadian Forces Base Esquimalt, Harper said, “Canada has a choice when it comes to our sovereignty over the Arctic. We either use it or lose it and make no mistake this government intends to use it because Canada’s Arctic is central to our national identity and our future”.

Perhaps closer to the truth is liklihood that talking about Arctic sovereignty has been central to his campaign success and he plans to use it for what it’s worth as long as possible.

We’ve all heard media reports about Arctic exercises by the Canadian military, in fact one is underway as I write this, but a week or two of patrols, once a year (during summer months only) isn’t going scare away any nation bent on claiming part of the Canadian Arctic.

If local police in your community staged a parade, no matter how impressive, before high tailing it out of town for the rest of the year just how protected would you feel knowing you’re completely on your own for the next 11+ months?

With the Arctic opening up more and more to shipping traffic, with multiple nations scrambling to stake a claim to its borders and riches, and with nations around the world far more unstable today than most of us can remember in recent years, national security is not a subject to be taken lightly. Nor is it something that should be used for political gain and then quickly tossed aside until the next election.

A perfect example of the low regard the federal government has for Arctic sovereignty is the Canadian Forces air base at Happy Valley – Goose Bay.

For years advocates have done everything in their limited power to convince Ottawa that the base needs to once again become an integral part of Canada’s military defences.

Situated in Labrador, 5-Wing Goose Bay is ideally positioned at the gateway to the Eastern Arctic. In fact Canadian Forces aircraft are using it to stage this year’s Arctic exercises. Unfortunately, as with Arctic sovereignty, once those exercises are complete the base will again be forgotten until it serves somebody’s political ambitions.
The Conservative government promised three elections ago to re-activate the base, which was a key component in North America’s defences during WWII. They spoke of making it an “operational requirement”, of stationing a 650 person rapid response battalion there and of using it as a base for a long-range unmanned aerial squadron.

As with other commitments to Arctic sovereignty nothing has happened during the years since those promises were made other than to restate them during each election cycle.

Just last week the Minister of Defence, Peter MacKay, and Minister of Intergovernmental Affairs, Peter Penashue, who hails from Labrador and was a long time supporter of 5-Wing Goose Bay prior to joining  the Conservative caucus, cancelled a planned trip to the base. Their visit was to have provided them with a photo-op regarding the remediation of some long standing environmental issues. The visit has now been rescheduled for early September however there is no expectation of any announcements regarding the future of the base.

Stephen Harper may talk the talk but when it comes to Arctic sovereignty there’s precious little evidence he ever actually intends to walk the walk.

At the PMO political expediency, not territorial security, appear to be the driving force behind Arctic sovereignty.

No new patrol vessels have yet to materialize. The promise of a Northern deepwater port exists on paper only and 5-Wing Goose Bay, Canada’s closest airbase to the Arctic’s Eastern approaches, continues to collect dust except for rare occasion when an Arctic exercise is staged or when some unidentified aircraft unexpectedly enters Canadian airspace. When that happens CF-18s fighters are scrambled from the nearest operational base in Bagotville Quebec but, due to the vast distance between Bagotville and the coast, those jets are forced to land at the neglected Goose Bay facility in order to refuel before continuing with their Intercept mission.

Apparently it’s a defence system that works well on the political stage but I’m not so sure it would do much for Canada’s security should anything faster than a box kite made an approach.

When it comes to Arctic sovereignty the Harper government may not have done anything to protect our Northern border but at least we can all stop wondering if some foreign nation will try to encroach on our territory there. It’s all but guaranteed. In fact with the current level of security available we’ll be lucky if a rogue Boy Scout troop brandishing Swiss army knives doesn’t seize control of the area.