Mak­ing us pay

The Southern Gazette - - Editorial -

Bet you didn’t know you were part of a pipe­line. The very start of a pipe­line, in fact - a pipe­line from your wal­let to the fi­nanciers who lent money to build Muskrat Falls.

At least, that’s the way it’s spelled out in writ­ten doc­u­ments ob­tained by the Muskrat Falls In­quiry.

And what those doc­u­ments - in this case, a cabi­net doc­u­ment ti­tled “Leg­isla­tive Amend­ments Re­quired to Ad­vance the Im­ple­men­ta­tion of the Muskrat Falls Project” from 2012 - ably point out is that, when it came to the project, it was more im­por­tant to give iron-clad pro­tec­tion to the lenders than it was to pro­tect the peo­ple who will have to pay elec­tri­cal bills.

“Essen­tially, cus­tomers for the power will have to be locked in; that is, they will not have the abil­ity to make al­ter­nate ar­range­ments to ob­tain power, but in­stead will be fixed as part of the rev­enue pipe­line nec­es­sary to en­sure the cer­tainty of de­liv­ery of the rev­enue stream re­quired for lenders,” the doc­u­ment says.

“For ex­am­ple, once con­struc­tion is com­plete and the project is com­mis­sioned there will be an ab­so­lute re­quire­ment for New­found­land and Labrador Hy­dro (NLH) to pay the Muskrat Falls and Labrador Is­land Link (LIL) en­ti­ties, even in ex­treme events where fail­ures could re­sult in no power be­ing gen­er­ated or de­liv­ered (if that was to oc­cur).”

Yes, you heard right: we pay even if there’s no power. The doc­u­ments even point that out again: “these con­tracts will con­tain pro­vi­sions re­lat­ing to the need to en­sure the rev­enue pipe­line is pro­tected. This will in­clude, for ex­am­ple, pro­vi­sions re­quir­ing payment by NLH, even in the event of power or trans­mis­sion dis­rup­tions.”

But that’s not the only thing that was be­ing done to pro­tect the “rev­enue pipe­line.” The govern­ment rec­og­nized that the Pub­lic Util­i­ties Board could refuse to in­crease rates un­der ex­ist­ing law if the project wasn’t the most eco­nom­i­cal source of power; the law was changed, once again to pro­tect in­vestors and the pipe­line.

And there’s more. The provin­cial govern­ment had to make that good old cash pipe­line the only game in town.

“The con­struc­tion of the Mar­itime Link and LIL may present op­por­tu­ni­ties for New­found­land Power (NP) to ob­tain some or all of its power from im­ported sources. In ad­di­tion, there could be leak­age from the rev­enue pipe­line if NP were to ex­pand their own power gen­er­a­tion or if NP or in­dus­trial cus­tomers were to pur­chase power from gen­er­a­tion on the is­land other than from NLH. Ei­ther case would com­pro­mise the rev­enue pipe­line from is­land ratepay­ers,” the doc­u­ment says.

You can un­der­stand what the provin­cial govern­ment was do­ing: mak­ing the project a no-risk deal for in­vestors.

But it doesn’t make it any eas­ier to take that our own govern­ment de­signed a sys­tem where the lenders are mar­velously pro­tected, and the cus­tomers are not.

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