 really at the helm of this monstrous boondoggle!
Would that not be a good question to pose to the principles, Stan and Dwight and that guy that wants a free roundabout, every time they appear in public?
Which one of these jokers is premier? The one that won't show the confidential employees contracts? The one that engineered the whole affair with a reign of terror? Surely not the one that refuses to look under the Nalcor hood and will not honour the agreement with the Labrador indigenous leaders on water levels on the Churchill.
I see Stan's appointment as strategic in the sense of his background with Fortis. Upon completion of Muskrat, the plan will probably be to transfer the "Asset" at minimal cost, (Remember Atomic Energy transfer to SNC Lavelin?), to a consortium, including Fortis, Hydro Quebec, Emera, etc. This usually is how Goverments make themselves clean and whole, ready to solicit votes for the the next century boondoggle of mega projects. By the way how many workers actually have jobs at Churchill Falls?
Great story Robert, thanks. The age of the remote mega project for energy is over. The infrastructure costs to produce and deliver the energy make MF and Site C obsolete.
In 2013 The Edison Institute an energy industry think tank warned utilities not to build new capacity because of the disruption in production, storage and generation of renewable energy.
Unfortunately these "monstrous hybrids" as Jane Jacobs calls them them, loot the public treasury to meet short term political agendas and no longer have providing a service as their goal. MF and Site C result. I bet there are still politicians with a gleam in their eye wanting to promote Gull Island as the salvation of NL.
NL ratepayers cannot bear this burden. It is far too much on the shoulders of far too few. A levy may be the only solution, in my opinion. A hydro levy deducted from the income of every working person in the province, if not every PERSON in this province (sorry parents, you'll have to pay for your kids share), but it would amount to a few hundred dollars a month instead of 1000+ for the ratepayer. 13 billion, divided amongst approx. 500K people, over 50 years - this is not including the corporate contributions. I'm not an economist and these are rough numbers, but the 60 or 70 thousand current ratepayers simply cannot do it on their own. We all use the electricity, so we should all pay - unless the whole project/province collapses - I'll hightail it out of this province with my young family WAY before by power bill gets to 1500 a month, which is what it would roughly be by the time is 30 - 35 cents/KWH.
I don't dispute the fact that Muskrat Falls will have serious economic consequences but there seems to be some double counting here. How can a project costing 13-15 billion generate a present value of debt of $50B? Last time I checked, the present value of $15B in debt is... $15B. What am I missing?
You are missing the 57 year operating loss outlined above. Miss that or are you trolling us Bernard?
Beginning in 2021, absent dividend income, Government will have to continue paying the ongoing annual interest on its failed $4.5B equity investment. As in recent years, a complacent Government will simply borrow more money to meet these interest costs. Using a net present value formula to compute this series of escalating payments as a one-time cost (just like the total value of a loan), the public debt is threatened to grow by $15B.
the present value of $4B in debt is $15B - call that Trolling Bruno. Also, the $400 M is not operating cost, it is what the author calls an annual subsidy - in any event the present value of a 50 year annuity of $400M starting in 2021 is about $20B. And of course the author seems to assume that the project will not generate any revenue over 50 years. Whatever...
the present value of $4B in debt is $15B - sorry that was meant as a question, as in, how could that possibly be?
Is the "revenue" you mention the LOSS for 57 years on ALL the power produced. If it costs 60 to produce a KwH and you sell it for 17, or 23 or 4 to NS, how much "revenue" do you generate?
Would you call this negative income a (de)generat(e) plan?
It must be moi who simply has trouble understanding this. My bad. I don't understand how the present value of $4B in debt can total $15B. Also, the future value of $400 M over 50 years is $20B so I don't understand how the present value can total over $30B. But hey, I must be missing something.
Suppose the final cost of MF is $15B and suppose NL makes Emera whole by paying the $2B for the Maritime Link.. I would assume that NL would not continue operating if revenue does not exceed variable costs - à pretty basic assumption. That would represent an a increase in net debt of $17B. It seems to me that represents a disastrous outcome: but a far cry from $50 B. Moreover, surely the transmission assets have some value - at least to the extent that it would provide access to recall power from Churchill and, heaven forbid, allow the purchase of additional power from Churchill and pave the way for an integrated grid in 2041.
Bernard, does your idea of an integrated grid provide for an East/West/South feed of Muskrat power to the North American grid? This makes sense to me. It provides for a better resolution of past acrimonius dealings, plus opportunity to better revenue flow. Would this not be a better overall solution to the NL debt laid on the people on the island?
No I am not referring to anything like that. I am trying to make a very very simple point. I can't possibly understand how the author's calculations. Maybe it's my arteries that are hardening. But how does the present value of $4B in debt become $15B? How does the present value of a 50y annuity of $400 M become over $30B? In other words, how does a project that will cost, you tell me, 15B? $20B? Become a present value burden of $50B? This projects a disaster that will squeeze the budget for a generation but I don't know where the $50B figure comes from. $50B amounts to almost 150% of NL GDP - add that to current net debt of about 50% of GDP and one should conclude that the Province is already insolvent. Like I said, just cuz I don't get it, doesnt make it untrue.
Fear mongering does not require a proper accurate analysis but rather half truths etc.
Using Cost Engineering principles; the writer is factoring in very large operating deficits over say 50 years, discounted a say 10%, Present Worth calculations. Order of magnitude of $20B PW suggests about $500M annualized estimated deficit. This becomes the challenge for the operator, (HQ/Fortis/Emera consortium). Similar to the landlocked bitumin in Alberta, Muskrat power will have to find a lucrative market, hence my comments that the existing HQ grid connection from Churchill represents an option. The Northern Peninsula Grid seems to me to be a higher risk; (Storm outages, etc.).
Agree with Bernard, if someone is asking a legimate question that they do not understand then the onus is on Planetnl or someone else in the know to respond for clarification, if not then the blog contributors become the same as NALCOR and the government, DOES NOT REQUIREA PROPER ACCURATE ANALYSIS BUT RATHER LIES AND HALF TRUTHS ETC...that NALCOR is famous for. As 12:40 might be alluding to.....
Robert, the Quebec feed has no capacity. A new line would be required.
Bernard, your "basic assumption" is wrong. NL will HAVE to operate MF at a loss for 57 years. Back loaded I might add to make the late victims of this 57 year fraud pay a disproportionate amount of the bill. This was another SNC Lavalin accounting "novelty" that helped justify the 5.2 billion cost. Imagine the economics at 15 billion.
So the Muskrat is a stranded asset so to speak, on completion Bruno.
Better find an industrial complex for Goose Bay to utilize the surplus power.
Robert, it isn't clear to me that he is talking about annual operating costs. He refers to an annual subsidy of $400M per year for 50 years. The total sum of those payments equals "only" $20B so how could the present value be $30B. What can I say the numbers don't add up in my humble opinion. This project is still a disaster at a total cost of $13B but I don't understand how this project could result in an increase in net debt of $50B.
Yes Robert local demand is the only way to offset the losses. If they offer mining interests (like ones connected to past premiers) at bargain basement prices more will have to be squeezed from rate/taxpayers. The discount rate for Labrador domestic consumers will be jacked up. It will be the final insult to Labrador.
Bernard, the author stated the figures included "adjusting for borrowing costs". If you don't keep adding borrowing costs every year, then you are appear quite right on the simpler straight line sums. But if the government goes on to borrow more and more to cover interest costs,