Vindication, sort of

Despite all the confusing double speak, I suspect Bernard Lord feels sort of vindicated by the deal NB Power struck with Venezuela. I was very critical of this thing when it happened and after reading the government press release, I am still very confused and therefore cranky.

The press release says the settlement is worth “equivalent to $29 million annually”. What does that mean? Is it cash or equivalent? Is that future value dollars against present day costs or what?

I mean, how hard is it just to tell people things the way they are? NB Power and the government should have issued a press release that was direct and honest. It should have included this information:

1. A restatement of the cost of refurbishing Colson Cove.

2. The actual current day (present value) of this deal.

3. The net loss to taxpayers (if any) – someone said on this blog that the refurbishment costs were not a complete loss.

4. The total loss over the life of the deal from having to replace Orimulsion with a more costly energy source.

5. A clear statement from the utility on what policies and procedures have been changed to ensure that this kind of thing never happens again. Like, for example, a clear policy never to do deals with unreliable third world dictators.

But, of course, we did not and will never get this type of information. Further, I suspect the journalists in New Brunswick won’t ask these questions either. In fact, I heard the News 91.9 report and it was basically – drum roll please – a restatement of the government press release – almost verbatim. Is that journalism? Or is it reading transcripts? Maybe that is journalism these days.

I’ll end with a few choice snippets from the government press release. This is heady stuff. It looks like the Libs retained the best of the spin doctors from Lord & Co.

“I am very pleased that the settlement of the lawsuit will result in such a significant reduction in the cost of electricity for the benefit of all New Brunswickers,” Energy Minister Jack Keir said. “The end result, a reduction in NB Power’s rate increase from 9.6 to 7.1 per cent will be of tremendous benefit to all ratepayers. This is great news for all New Brunswickers.”

Now, once again, are they just assuming we are all stupid? We are being led to believe that the Orimulsion ‘fiasco’ was actually “great news” and “tremendous benefit”. Huh? If our power rates go up by X% because of Orimulsion and they get reduced by Y% as a result of a settlement, how is that “tremendous benefit”. Maybe it’s just semantics but if I was Keir I would have said this “lessons the impact of this terrible ordeal. We will learn from it and work to ensure it never happens again”.

Of course, that is not likely because of this:

NB Power is pleased to have reached a mutually acceptable settlement and looks forward to working with the Venezuelans in the future.

This speaks for itself. Unless they can say (and I don’t know because they are not saying) that this ‘deal’ ended up providing us with at least the same fiscal benefit that the original Orimulsion contract would have provided, how can we possibly say we are “looking forward to working with Chavez again”? Of course, ConocoPhillips and Exxon Mobil are pulling out but NB Power is gleefully telling us how excited they are to work with the Venezuelans in the future.

Am I wrong about this? Read the press release and tell me I am wrong.

Here’s a parallel. I enter a deal with you where you agree to fix my house for $500 (the Orimulsion contract) but I have to give you $200 upfront (the refurbishment cost). I give you the $200 and you decide not to fix my house (Chavez pulling out of deal). I go to court and you grudgingly give me $5/year for the next 20 years (the settlement).

I run and tell my family (voters) what a great deal I got from you and how I am looking forward to using your services again.

Now, based on this press release, it seems my scenario is correct. If they had issued a clear press release maybe I am totally wrong.

By the way, in that scenario, my wife would thump me over the head with that ‘deal’ wrapped around the baseball bat.

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0 Responses to Vindication, sort of

  1. Kit says:

    Of course the Orimulsion deal was of great benefit to this government – they used it as one of their main planks to get elected.

    Now if they can make it go away…

  2. mikel says:

    ‘Third world dictatorship’? Come on. Chavez was elected twice with majorities no canadian politician has EVER seen. Plus, stayed in power even despite a recall, that democratic tool that lets people ‘vote out’ a leader during their mandate if they dissaprove of what they are doing. A democratic tool, by the way, that doesn’t even exist in Canada.

    And thats in a country with much higher voter turnout plus has local democratic tools that make Canada look like the most autocratic nightmare you’ve ever seen. Here, of course, is a province which is being completely run by a guy who placed SECOND in the votes of New Brunswickers.

    As for Coleson Cove, its impossible at this point to know. Keep in mind that much of the ‘secrecy’ was because of the lawsuit, although I’ve found articles that states that NB Power had dropped the lawsuit (the one the liberals thought was a complete waste of time and who wanted to sabotage it long ago by releasing all those details, many of which would have (NB Power claims) would have scuttled the lawsuit.

    But if you’ll remember, Coleson Cove was never a ‘writeoff’. The ‘conversion’ was meant to ‘clean it up’, which it did, regardless of the fuel type.

    And if you’ll remember, the Irvings are intimately involved in this. Though you may not like Venezuela, where do you think most of the province’s oil comes from? Alberta?

    So to state ‘we’re not doing business with them anymore’ would be just plain dumb dumb dumb. That’s like New Brunswick saying ‘we’re not doing business with Irving anymore’.

    Remember also a few details which would have had lord knows what effect. People don’t like conspiracy theories but its certainly ‘interesting’ that Irving supplies Coleson with its Bunker C oil, NB Power switches to Venezuelan Orimulsions which Irving CANT supply, Venezuela enters into a partnership with Irving and co owns half of Maine’s largest port, then announces “hey, no orimulsion, but look, WE (Irving) can supply you with a new fuel (one that looks suspiciously like orimulsion combined with leftover oil from Irvings refinery), for just as cheap or cheaper (so they say).

    To quote two canadian stereotypes “take off, how convenient!”

    Keep in mind that this is a company whose four ships are ‘owned’ by europeans and just under permanent ‘lease’, only one of which is even registered in Canada. This is a company which owned a shipbuilding company but didn’t even build its own ships (its too expensive you see).

    So as usual, everybody ignores the elephant in the room and argues about the cramped quarters. But back to that, its interesting to note that there was never a signed contract with Venezueala, and why would there be? Some people like to think that energy can be ‘locked in’ but the reality is that it is market driven. It may have been a convenient out, but V was overproducing its OPEC quota and was TOLD to smarten up.

  3. David Campbell says:

    Mikel, Chavez is nationalizing industry, shutting down the press and oppressing any opposition. While I sympatize with your position on democracy and populism, it is clear to me that doing business with Chavez is a highly risky proposition.

    As for Irving, I have heard of the Venezuela connection – for many years. However, Irving is not New Brunswick and how Irving’s interests intersect with NB Power’s is a mystery to me.

  4. mikel says:

    Some other interesting asides include:

    There were several other countries that used orimulsion, I still can’t find out if there were any other lawsuits. As they said, a ‘memorandum of understanding’ is NOT a contract. I suspect this payoff was a way to keep a permanent customer happy, otherwise perhaps those conversations of a natural gas supply to quebec may start to include an oil pipeline.

    Also interesting: those ‘bad guys’, those evildoing environomentalists including CCNB were saying BEFORE the Coleson Cove spending spree that it shouldn’t take place. This place is an environmental disaster. Way back then they were saying that natural gas was the way to go.

    NOT listening to them has put New Brunswick a decade and a half behind every other jurisdiction. NOT listening to them has cost the province far far more. Always refitting coleson and the other plants for whatever the cheapest fuel is at the time has easily cost more than running natural gas lines (which actually would have only cost ratepayers to cover rural areas).

    Once again, some personal information: we pay a power bill of approximately $20 a month. Thats because the only ‘power’ we use is for computers, lamps, dryer and washer. Natural gas provides the rest. Perhaps people should be listening to the CCNB a bit more since they’ve got the track record to back them up.

    This is all being done for the one major reason nobody is talking about-NB as a power exporter. Remember the plan to hook up Coleson Cove directly to New York City? Gee, sound like Atlantica? NB pollutes the hell out of itself while providing NY with cheap power. Isn’t it great to do business with such a ‘stable ‘ partner. Taxpayers keep paying the refit for cheap polluting power, the province takes all the hits for being a massive polluter and New Yorkers can sleep easy. Talk about third world economics.

    Lets compare a deal with Venezuela that fell through because Venezuela honoured its contractual obligations in OPEC , but set up a partnership with Irving to provide cheap fuel and is now sending money to NB to help lower costs even though there was no contract.

    Geez, you should be kissing the very ground that Chavez walks on. Compare that with potatoes getting stopped at the border, a beef ban even though most canadian slaughterhouses are owned by americans, or a softwood boycott that still has the US holding onto billions. Wow, do you ever have a bizarre notion of ‘stable business relations’. I’d take Venezueala any day of the week.

    Finally, an old report from out good friend crowley was quite interesting, but not in the way he intended. Almost a billion was spent on the pollution refit, and yet as crowley says, ‘this was a big part of the reason for NB Power’s 77 million dollar debt this year’

    When you can do a billion dollar refit and only add less than 77 million to debt thats a pretty big accomplishment. That’s the opposite of what we hear, that NBPower is just a giant CC with bad business sense. Remember, the liberals barely squeeked out a balance budget by adding 300 MILLION to debt. Hell, by that accounting, New Brunswickers should be lobbying to have NB Power run the province!

    One final thought, those details you look for are probably somewhere on NB Powers website, but the one thing this should have taught us, is the nature of NB Power and the province. It’s not a coincidence that when things go bad politicians distance themselves, while when things go good they are right there. Read the bottom of that press release, notice how they almost make it sound like this good news is due to the hard work of THIS energy minister (since last fall-yeah, right).

    It was interesting that the orimulsion deal actually made Lord look good- the refit was done, and a fuel as cheap as orimulsion was found (and is now again being supplied by Irving). That makes both the tories AND the Irvings look pretty good. Which makes it all the more interesting why it was virtually never mentioned in the press or during the election. Call me cynical, but at the very least that’s ‘interesting’.

  5. mikel says:

    Chavez is only doing what Norway has already done. Do people say “doing business with Norway is a highly speculative venture”? Not at all.

    As for journalists, there is this: “caracas Connect writes about a group of Venezuelan journalists that have been accused of receiving money from the CIA, but they explained that they merely took part in cultural exchange programs.” Yea, I’ve heard about the CIA’s ‘cultural exchange programs’.

    The media, if you’ll recall, was directly involved in the coup that attempted to oust Chavez. If anything Chavez has been the model of restraint, just take a look at how reporters are doing in Russia for example. And of course right there you had Charles Leblanc who was arrested as a ‘troublemaker’ for doing what the judge called ‘journalism’.

    That’s an aside though, the main point is that one of ‘dependability’, and I’d agree the country ‘may’ be unstable for the simple reason that the US wants it that way. However, Saudi Arabia has always been very unstable, its government is nowhere near what its people want. So no place is ‘stable’.

    However, it is also moot. Irving has the partnership deal with Venezuela and they are the supplier, simple as that. So the argument would go: we don’t want to deal with Venezuela so we want you guys (Irving) to find somebody else with a similar type product (which doesn’t exist) for colesone cove.

    That seems pretty implausible, but of course nobody is HAPPY with oil suppliers, they range from creepy to creepier. Perhaps more stable oil could be gotten from, say, Iraq:)

    It’s interesting that somebody who says (and we have no reason to disbelieve) he reads about five different newspapers a day, three of which are in NB; also says that the relationship between Irving and NBPower is a ‘mystery’. That REALLY says something about the media, don’t you think?

    We KNOW that Irving is the main supplier of oil to Coleson Cove and probably to Belledune and Dalhousie. For that just ask what the relationship between any customer locked into a monopoly deal are.

    So IF the complaint is that ‘we don’t want to deal with Venezuela’, then not only do you have to change government policy, but you have to change Irvings policy. As said, its at least illuminating that with Orimulsion Irving would only get shipping costs, but now is back on board as the main supplier, instead of Venezuela.

    So like I said, the most interesting aspect in all of this is EASILY the Irving connection. Any ‘real’ media would have in depth investigations on exactly what THOSE deals are. But since nobody even knows the basics, then the questions they ask are the ones about NBPower. Those ARE good questions, but certainly are not the most interesting ones. But like you say, for most people, the relationship between Irving and NBPower is a ‘mystery’. You really have to wonder why that is the case. (well, unless you buy into the ‘conspiracy’ theory).

    PS Keep in mind that Irving does come off as the ‘good guy’ here (sort of). Nobody is saying that they got Venezuela to stop making orimulsion so that Irving could get back in on the contract (I don’t know, but I seriously doubt they have that kind of clout since Venezuela had at least four other clients).

  6. Kit says:

    After reading the long winded lecture, I am reminded of the saying, “the conspiracy theory is the refuge of the weak argument.”

  7. David Campbell says:

    I expected the T&T and the TJ to be positive about the Venezuela orimulsion settlement (because of the Irving connections) but I didn’t expect them to be downright giddy. Both in the articles and editorials terms like “great news” and “huge deal” are liberally salted around and not as quotes from NB Power or the government. There’s nary a mention of the overall loss (one would assume that NB Power had pegged that at $2.2 billion the amount of the lawsuit). So we get $300M and change (only $100m cash, the rest in cheaper fuel) but of course, if we discount those future dollars to present day, the deal is worth well below $300m. Anyway, I still believe that something is almost always better than nothing but the TJ’s assertion that the province took lemons and turned them into lemons – that’s still a mighty sour lemonade if you ask me.

  8. mikel says:

    There is NO ‘argument’, because none was mentioned. No conspiracy theory was mentioned either, I only said its ‘interesting’. And David’s comments about what the Irving paper’s say is very much in that same line.

    So its ‘interesting’ that it takes a blogger to bring up some interesting facts about the issue and ask some serious questions. Of course the Irving media is in a position to not only ask them, but get some answers.

    So the ‘isn’t this wonderful, nothing to see here anymore, move along’ line is once again ‘interesting’.

    So we can compare that to, I don’t know, say, the reporting on the Irish development near Sussex. Now, there were some hard questions put right to the government which had to come up with good answers or look like idiots.

    Of course in New Brunswick most of this stuff isn’t ‘conspiracy theory’ to a good many people. You can go to other blogs and talk to other people and lots will simply SAY that the Irvings literally govern the province-at least the energy issues.

    THAT would be the conspiracy theory and though they have clout, I don’t think its as simple as that. I suspect the move toward nuclear power and a gas pipeline from Quebec is evidence of that. Of course Irving could be simply happy with what its got and recognizes that if it controls TOO much then people will really get antsy. However, if Irving used some of those tax savings it got off its terminal and used it to build pipelines to northern New Brunswick for cheaper than the Quebec deal, I doubt many people would complain.

    But that’s a pretty basic question. If you are suing somebody for 2.2 billion, then how is 300 million a good deal? The conspiracy theory would be that Irving simply doesn’t want people paying attention to energy and just wants them to take good news and move on. We don’t know that, but even as a conspiracy theory its not that far fetched, even David says he was pretty much guessing how it would be played (Shame on you David, partaking in a conspiracy!)

    Most importantly, Irving doesn’t like making connections with itself and NBPower known. So you can have educated guys like David saying that its a ‘mystery’. Incidentally, that is EXACTLY why people state that a strong media is a necessary part of a democracy, because otherwise people simply have no idea what the issues are.