NB Power expertise

One of the things out of the NB Power process that I was most confused by was how people with absolutely no expertise in electricity, electricity markets, capital cost assessment, risk assessment, etc. all of a sudden became instant – and seemingly credible experts – on all of these issues.

For example, one of the best asset valuation companies Macquarie was asked with coming up with a valuation of NB Power’s assets.  Yet an academic with not a whiff of training in asset valuation and that as far as I know couldn’t even explain a balance sheet was given equal time and considered a serious expert on the issues.

And Lisa Keenan today with her rather snarky rub-it-in editorial in the TJ pulling a quote from Vermont about their upcoming power deal with HQ.  All of a sudden Lisa Keenan is an expert in power pricing, asset valuation and electricity markets.

Some may not have noticed but I have tried to base my analysis on th expert opinion.  I put serious stock in Bill Marshall’s comments.  I saw value in the NERA report.   I had at least some faith in the Macquarie asset valuation. 

I also took the negative comments from experts seriously.  The guy from Maine made interesting points although he seemed to be more interested in the impact on Maine than on New Brunswick (from his comments in the Maine media). 

But, quite frankly, I can’t get my head around accepting as fact the musings of pundits, academics and journalists that have no formal expertise or knowledge of these issues.  I resisted this temptation – even though some of the criticism made some ‘intuitive’ sense.

Just a final point on Keenan’s column.  She is giddy and puffed up about this.  I think that is short sighted.  As rates go up,  if companies exit the province – there will be a lot of fingers pointed her way.  I realize this stuff doesn’t stick.  It’s all polemics and academics.  I will likely be able to afford my power bill as will Keenan.  The personal impact on both her and I will be minimal.  And that’s unfortunate in a way.  The people (like myself and Keenan) that spilled so much ink over this deal really have no skin in the game – although a lot of my clients were dead set against this deal. I hope they will agree we had a good faith disagreement on this one.

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13 Responses to NB Power expertise

  1. mikel says:

    It WAS a ‘good faith disagreement’-until you spent a blog basically calling everybody who disagreed with you idiots who talked smarter than what they knew:)

    Either way, according to CBC this morning there’s more bad news about Lepreau. The quotes from the guy in charge aren’t exactly encouraging:

    “They said to us, `When’s Lepreau going to start back up?’ And we said, `Not sure.’ They said, `Well, OK, will it be by the end of 2011?’ We said, `Boy, we sure hope so but we’re not sure,'” Keir said.

    “They said, ‘OK, is it going to run at 90 per cent like it used to? `We sure hope so.’ Right? That’s not anybody being tough negotiators. It’s just a fact.”

    Isn’t that the kind of reassurance you want from a guy making a multibillion dollar deal on your behalf-“Boy we sure hope so”.

    I don’t think people shouldn’t be allowed NOT to comment because they aren’t experts. For one thing, even an asset valuator isn’t necessarily an expert in UTILITY companies, and it may be that assumptions they have made are easily refutable.

    Many groups all along have been asking for independant evaluations, and that MAY be it, I don’t know. Some though have called for a PUBLIC evaluation, meaning making sure what NBPower puts on the books is ACTUALLY the costs. Critics from both sides have stated that they don’t believe the financials. So that should be job one. Get an independant evaluator that all parties agree on to do exactly that. I think everybody NOW agrees its a serious issue, so ‘every penny counts’ and all aspects of NBPowers operations need to be sifted through. Again, I’m hoping that some of the 30,000 at the facebook site will do that, I’ll probably do a little, and people here, like bloggers or posters, will be welcome to do the same.

    I DON”T think you need to be an expert to understand basic energy policy. It seems what killed this deal wasn’t anything technical, its stuff that actually ANYBODY could be involved in-and would probably have more brains than to say things like “Boy we sure hope so”.

  2. I never called anyone an idiot. You had better check the transcript. I think there might have been a post where I was sharper in my criticisms but I never insult people – let’s say almost never because after thousands of posts over seven years – never is a long time.

  3. Don Dennison says:

    There is an issue of responsibility in matters like this. Opponents of a ‘deal’ get quite buoyed by the process of opposing, for some it even plays out as a sort of sport, but are free the morning after to move on without any responsibility for the consequences.
    And indeed, the morning after, life goes on. The consequences take time to accumulate.
    Having lived through the Meech Lake and Charlottetown exercises, I don’t hear those who opposed those noble attempts to not only find accommodation but lay out better ways of dealing with long-standing problems accept any responsibility for the fractured and ineffective politics which have plagued us at the national level ever since.

  4. adam says:

    Lots of parallels between this blog post and the process we just went through. http://www.predictablyirrational.com/?p=755
    Will future proposals to do something about NBPower be tainted with the residual emotions from this process? Was opposition to this deal an example of the Ultimatum Game?

  5. Samonymous says:

    It’s interesting when you noted that certain individuals “all of a sudden became instant – and seemingly credible experts – on all of these issues.” The first time I remember this happening was when I was in Ottawa during the 911 tragedy. I usually put in long hours at the office so on any given day during the week I was usually surrounded by individuals that spoke only in the “so-called” political language. Which is why I always looked forward to the weekends as I could just hang with my brother’s inherited family (traditional Italians) that knew nothing about politics in general and just like to engage in the easy things in life (eating, watching the sens and talking about the most recent evictions from Big Brother house). But all that changed on September 11th.

    When I came over to hang out I was shocked that my brother’s mother-in-law, who had not got passed 9th grade and had trouble reading, was touting words like “harbouring (terrorist)” and acronyms like WMDs as well as becoming a clear expert on Sunni and Shia cultural/religious differences. Now don’t get me wrong, she, like many millions of others on this planet have the right to their opinions on any given subject[s] (the benefits of free speech), however, the public can sometime mistake slanted journalistic opinion with fact and when that happens you get quite a few pseudo experts running around touting one side as if they studied the subject at Yale grade school for 8 years and knew this to be so.

    I think the same thing has happened in this debate as many opposed to this deal played on the general public’s fear of a deal that seemed cooked up behind closed doors. So instead of having more weight placed in the hands of experts, we saw the furor rise above reasonable debate. And when that happens all bets are off.

    Anyway, to make a long story short, now that the deal has been killed, I look forward to ordinary NBers resuming their usual discussions about Kate Gosselin on dancing with the stars and whether or not Brad and Angelina are on the rocks. It beats having to listen to pseudo experts using terms like “heritage pool” and “MOU” over their early morning Tims.

  6. Samonymous says:

    For the record, I was just joking when I said that NBers should stand down and disengage themselves from the process. The worst thing you could as a NBer is do what this guy Ernest King is doing. Thinking that everything is all rosy because the deal is dead and things can go back to normal. Normal is not good. The status quo is dangerous. Remember that Ernest.

    There’s a lot of work to be done and feeling content because you think you brought down a deal is ludicrous and will not stop the heavy flow of outmigration, lack of jobs, investment and in migration.

  7. mikel says:

    I meant the quote that Sam posted above, but I was mostly joking-hence the smiley face.

    However, I just have to respond to Don’s post. First, the failure of Meech Lake primarily goes to only three people at most, McKenna being one of them. Nobody TOLD him how to act, and even he admits now that he was mistaken, so I assume when you talk about taking responsibility, you mean Frank McKenna.

    As for the Charlottetown Accord, in case there are young readers here, it needs to be pointed out that the Accord was a SERIOUSLY flawed document that like this deal, the government didn’t even provide information on. The document itself was very short and the ‘details’ were to be worked out later. Even that short document wasn’t released to the public until well into the ‘campaign’.

    Meanwhile, there WERE serious issues where canadians agreed. In polls right after the failure of the CA polls showed that canadians SERIOUSLY wanted the government to get to work dealing with native issues and treaties. The situation at Oka had a VERY vocal group opposed to natives, but the population wanted native issues to be a top priority.

    This, like ALL things that canadians want, was completely ignored by the government. A constitution is a HUGE document,and to say ‘yes or no’ to dozens of issues is just nuts. Even in Venezuela the very popular (IN Venezuela, and by a majority) Hugo Chavez lost a referendum where he was pushing the population to vote ‘yes’ to numerous changes in the constitution. However, NOTHING has stopped the federal government here from having a referendum every year on single aspects of its charter. It doesn’t do that, of course, because the last thing it wants is canadians getting used to ‘democracy’. Patrick Boyer, Canada’s guru of direct democracy pointed out that the feds were so scared of the population after that that another referendum wouldn’t be held for a century, and here we are almost one fifth of the way there.

    This is quite similar. There’s no doubt that there are problems in where people get information, I faced it during the ontario referendum on proportional representation where every old geezer fella I met spouted the same nonsensical rejection that appeared in the newspaper editorial that week. But it was Grahams doing that turned this into an energy war. And yes, I suspect there will be some residual feelings come out of that-many people are apolitical and distrust virtually EVERYTHING the governemtn says. There are some people that are so ‘religious’ in their views that it would be impossible to change their minds. However, whether its higher rates, debt, or higher taxes or worse service, people WILL be ‘taking responsibility’, one way or another. And again, all we know about the deal for rates is that for five years they’d be frozen-after that the bets were off. So its not a ‘one or the other’ kind of issue.

    This isn’t simply newspaper people where this is a problem, I’ve worked with a LOT of seniors, and I sometimes think at age 50 or so the connections between the ears and brain simply cut out. Everybody is an expert on everything. I don’t think my dad has ever believed a word I’ve said, but the gospel that comes from “this guy I met from Burlington” or “this guy on the CBC” is simply irrefutable. Which is why they say in politics you do like advertising-and aim for the under thirty.

  8. Paul says:

    I find you a bit harsh on Lisa Keenan “As rates go up, if companies exit the province – there will be a lot of fingers pointed her way.” WTF?

    I think you give Ms. Keenan way more credit than she deserves.

    I don’t read her much anymore, but I did because I wanted to know what outlandish thing she might have said that was going to have everybody blame her and the people like her for a mass exodus of companies?! Nothing. Just the normal Lisa Keenan fluff and puff.

    The irony, (or finger pointing, if there is any of that to be done) will be at those who were in favour of the deal. Despite all the best experts, and the support of at least one powerful media outlet, they failed to show people the genuine benefits of the deal, and make them feel secure they knew what they were doing.

    I think Don Desserud said it best. “The image of a reckless government that makes rash moves and then desperately tries to fix them up afterwards has now been entrenched. It’s very adolescent behaviour.”

    Poor political leadership will be where the fingers will point, not simple newspaper columnists.

  9. Samonymous says:

    I meant the quote that Sam posted above, but I was mostly joking-hence the smiley face.

    Quote above by sam posted above? What? Anyway, I probably wouldn’t have jumped into this discussion had u not used me as an example mikel. First off, like David, i never called anyone an “idiot.” Secondly, let’s make a quick forensic audit of comment section in this post. Your statement, the first one in the comments section, was made @ 9:28 where you obviously didn’t call me an idiot because the quote contained within “good faith disagreement” was made by David not me. So there is no way you were referring to my quote above, it happened after u made that statement, no? Unless there’s another statement by u with a smiley face at the end that i’m missing.

  10. richard says:

    “Despite all the best experts, and the support of at least one powerful media outlet, they failed to show people the genuine benefits of the deal, and make them feel secure they knew what they were doing. ”

    The failure there is really one that goes back several decades; the current govt simply continued the standard line ‘everything at NBP is hunky-dory’. Successive govts ordered that rates be kept low as a mechanism to keep the noise down from the public. Graham suddenly reversed course and said that NBP was a mess. It’s no wonder he could not sell the deal to the public. No one could have under those circumstances.

    We will see who gets the fingers pointed at them; it all depends on how quickly the impact of NBP’s financial predicament shows itself in higher power rates. A rapid rise in rates might result in many questioning whether the deal was so bad after all.

  11. Paul says:

    I don’t think the deal was bad richard, which only makes the failure worse. It was a political failure, no matter how you cut it.

    In retrospect, we may think it was a good deal, however, perhaps now we will undertake a regional approach to energy with our neighbors. Perhaps new opportunities will develop.

    One very positive result from the entire episode is the general population have a better idea of the condition of NBPower. We may disagree on what it means, but I don’t think anybody doubts that the utility has some big issues going forward.

    Perhaps gov’ts won’t be so quick in future to hide the facts from the public and mandate those lower rates.

  12. mikel says:

    Sorry, should have explained that better. I was referring to DAVID basically calling people idiots-although like i said, I was mostly joking, but the way David criticized people it often seemed implied that critics didn’t know what they were talking about. But it was only ‘implied’, which is why its mostly a joke.

    Samonymous then posted the quote by David that I was referring to, and rather that repost the quote I referred to it, which seems to cause the confusion as Samonymous’s comments aren’t used as an example by me at all-I was just talking about the same quote he was.

    Now back to the discussion. Over at facebook they are one step ahead of this blog and have taken up the media comment about energy policy by the various parties. The CBC reported that both the NDP and Greens had a policy, the other two main parties did not. So at the discussion thread people have opened up comments on the policies of the NDP and Greens, and it turns out they aren’t really policies at all, just some vague statements.

    I doubt very much that EITHER party is going to get very far into the election without SOME kind of policy. It’s unfortunate the liberals handled this so badly because there is now a fairly broad consensus of distrust against them, combined with other policies they’ve had. However, they CAN at least say “look, we TRIED this”, and that does count for something in politics, unless what you tried gets people so mad they want to tar and feather you.

    A lot of different groups want a certified guarantee on the numbers at NBPower, about the only comments so far at Facebook has been two people that have said “lets freeze rates for THIS year and get the audit done, then have a public debate”. That, at least, SEEMS reasonable, but I’ve seen numerous people say that even Grahams ‘threat’ of the 3% increase would be just fine. That gives a good year to make concrete long term energy policies with the public in mind, thats quite a bit of time when you aren’t a government only concerned with wasting time.

  13. Samonymous says:

    Thanks for the clarification, mikel. I’ll make sure to try and talk “dumber” than what I know the next time. Wouldn’t want anyone thinking I know what I’m talking about. 😉

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