Monday, September 5, 2016

FROM REALLY BAD TO MUCH WORSE



"The facts are that Smallwood was not party to the contract's negotiation and, more specifically, was not told of the huge concession on the renewal clause until the day it was announced."

 - James Feehan and Melvin Baker



Pretty much most of my engagement with partisan politics in Newfoundland and Labrador can find it's roots in the year 2016. 

It was with a sigh of revulsion and tacit acceptance that following right on the backs of two recent lost court decisions,  Quebec Hydro, as of September 1st, began receiving our power at a rate that is cheaper than buying a cup of joe!

Provincial nationalism has always played a significant role in the development of my core political views. In the early 1980's when former Brian Brian Peckford's called for a day of mourning following the federal decision over offshore oil jurisdiction, I wore a black arm band to school.  

How Newfoundland and Labrador and Labrador has been governed, exploited, looted and failed on so many occasions to be the prime beneficiary of it's own resources is disturbing. There is plenty of blame to go around from external players to our own forefathers. Short term gains in employment have been the root of many poor political decisions and resource give-aways.

The one "give-away" that has haunted our collective consciousness for three generations is the lopsided 1969 Churchill Falls contract with Hydro-Quebec.

Historical revisionism often purposefully distorts the historical record using distortion and misrepresentation to advance a cause, to make history fit an ideological narrative.  

In most peoples eyes, Joey Smallwood not only sold us up the river but sold the river as well. The context for the flawed arrangement, the pre-OPEC energy realities of the time and the fact that it was negotiated by the British Newfoundland Corporaton/Churchill Falls Development Corporation is glossed over.

The project hit significant financial difficulties during the construction phase mainly due to meeting timelines imposed by Hydro Quebec.  Between the 1966 Letter of Intent and the final 1969 agreement CFLCO had no choice but to make significant concessions in project financing and ownership.  Newfoundland and Labrador was over a financial barrel  - due to shrewd negotiations by Hydro Quebec and the decision to begin construction without a final contract.

The original contract providing 31 billion kilowatt hours for 40 years with an automatic renewal clause beginning on Sept 01, 2016 for another 25 years. The lack of an escalation clause was compounded by the fact that Quebec Hydro only had to pay 3 mills per kilowatt-hour for the first five years with the price declining  to 2.5 mills for the last decade and a half of the original agreement. 

The kick in the guts was agreeing to an automatic renewal for 25 years at a price of just 2 mills. In fact, while Hydro Quebec will make billions and billions, CFLCo will be fortunate to pay the cost of operating without subsidies. Diplomatic, political and legal attempts to re-negotiate the terms of the 1969 contract have failed.

My need to understand the mechanics of how this province's negotiators could have put us in a situation where Hydro Quebec would be paying less for a KW/h than I pay for a coffee led me to Phillip Smith's book BRINCO: The Story of Churchill Falls.  The 1975 text opened my eyes to the injustice of the Hydro Quebec's skillful manipulation in delaying signing a final agreement until it could suck unconscionable ownership and financial concessions out of CFLCo/BRINCO. 

The infamous renewal clause, while decades off, began to resonate. If generations of our people were angry about the first 40 years - the 2 mill 25-year renewal, was unpalatable. For the most part the renewal has not dominated the public agenda. I am not all that sure it even came up in the 2015 provincial election.

A few scholars, notably James Feehan and Melvin Baker, have published and given public lectures in the hopes of both educating the public and fermenting public policy to address the impacts of the renewal clause.  The Dalhousie Law Journal published The Origins of a Coming Crisis: Renewal of the Churchill Falls Contract. Policy Options published and article in 6 years ago entitled The Churchill Falls contract and why Newfoudlanders can's get over it which focussed on the renewal clause.

Enter Muskrat Falls - another avoidable boondoggle, lost opportunity and albatross round the neck of our province.  

How does this keep happening? While the ratepayers of the province will be on the hook, engineering and law firms have been making off like bandits. 

Far from being remembered as "the greatest of our premier's", I think future generations may be lining up to piss on the grave of former Premier Danny Williams who once said "the future we are working to build is not limited by the constraints of the past". As Edmund Burke so famously said, "Those who don't know history are doomed to repeat it." We obviously have not learned from our past struggles and history.

Surely anti-depressants sales per capita in our little province must be up there with Maple Leaf Bologna, Carnation Milk and Lambs Rum.

Where is all the self-confidence, pride and determination now? How are those stars lining up Mr. Martin?

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