Province should expect feds to push cuts: Vardy
Former chair of N.L. energy regulator says difficult negotiations ahead
David Vardy, a former chair of the Public Utilities Board and a volunteer with the Muskrat Falls Concerned Citizens Coalition, says days like Monday — with a biting cold wind in the provincial capital — set the perfect stage for talk of electricity.
He agreed to sit down with The Telegram after his public presentation last week, focused on the immense cost of the Muskrat Falls hydroelectric project. He has made a public call for the negotiation of a federal equity stake in the now $12.7-billion project, to aid ratepayers and the province in managing the cost.
Vardy has also argued strongly against any negotiating away of provincial control of legacy assets, including the profit potential that sits in the Churchill Falls hydroelectric facility, upstream from the dam at Muskrat Falls.
The Liberals suggest a review of the Atlantic Accord, governing offshore oil revenue, could be a mechanism to start addressing the Muskrat Falls problem. Nothing has been confirmed in that respect.
“It depends on what the quid pro quo is,” Vardy said. “What are we giving? And what are they giving?”
He said he expects the federal government to take a tough stance in any negotiations relating to the bill on Muskrat Falls, given existing loan guarantees and the risk of political pains in any suggestion of provincial favouritism.
He said the province will have to show it’s willing to participate fully in a solution.
“The problem is there’s no real way around this other than to tighten our belts. We’ve got to tighten our belts,” Vardy said, reiterating at multiple points that he expects the provincial government will be pushed to cut spending.
For the feds to agree to negotiate, to tackle the political pain associated with even more support, this province will have to inflict some pain upon itself, he said.
And apart from his suggestion of a federal equity stake, he said he believes the province should dismantle Nalcor Energy and open the local energy market to outside players.
It would all require boardroom negotiation with financiers and rating agencies in addition to government, and time in the House — cracking open multiple legal agreements, changing legislation, swallowing penalties.
“When I hear (former Nalcor Energy CEO) Ed Martin talking about dividends, that’s totally preposterous,” Vardy said.
And he cautioned against looking too long term when it comes to power rates.
“When you go out 20, 30 years, the numbers are meaningless anyway,” he said.
Vardy has been a regular fixture at the ongoing public inquiry into the Muskrat Falls project, investigating how its costs have ballooned.
“It’s not going to end at $12.7 billion. It’s going to be considerably above that,” he predicted.