A recent edition of the Weekend Telegram reported on a forum that was convened to discuss the current state of review of the GH2 concept for two massive wind energy farms in southwestern Newfoundland (‘It’s so disheartening’: World Energy project a done deal, Memorial University professor speculates). It was reported that one speaker, Professor Russell Williams, has drawn the conclusion that the project is a fait accompli, a conclusion with which I am inclined to agree. The question being asked by many is: why the rush, not only with the GH2 proposal but any other that may come along?
Residents of the province of my generation, and perhaps younger, can recall some of the more disastrous development projects dating from the early sixties. The phosphorous plant at Long Harbour cost taxpayers so much that a later government determined that it would be beneficial for the province to shut down the operation and pay every employee a generous annual income for their lost jobs. The major environmental damage caused by that operation covered a wide area of the Avalon Peninsula.
Then we experienced the “bridge financing” fiasco over the original Come by Chance refinery, as well as the subsequent bankruptcy. Along the way, a private company associated with the refinery suffered the largest bankruptcy in Canadian history, to that point.
Later, we witnessed the virtual sinkhole for taxpayers’ dollars in the Labrador Linerboard disgrace.
There is the disastrous power contract where people of this province have been subsidizing Quebec to the tune of billions of dollars for 50 years, and we aren’t done yet.
And there is Muskrat Falls, for which we are committed to paying substantially above-market power rates for the next 50-plus years.
Considering this incomplete history, it is time to ask a few more questions in addition to those associated with a possible detrimental impact on our environment that could result from any wind energy project. The Muskrat Falls Inquiry showed the public how drastically wrong things can go when governmental secrecy is at play.
I am not suggesting that the currently proposed wind energy projects are inherently flawed. On the contrary, I applaud all properly executed projects which will improve living standards for our population and do so with minimal negative impact on our environment.
It may be deduced from the scant public information that is available that the GH2 wind turbine concept, design, and planning is incomplete. For example, NL Hydro was advised recently by the proponents that 150 megawatts of power will be necessary for an uninterrupted hydrogen/ammonia operation. Will our Public Utilities Board be allowed to exercise its mandate and responsibility to assess the request for this major connection to the provincial grid? Will it have access to the required contracts between NL Hydro and World Energy GH2? Will it be allowed to review the impact of an interconnection on the operation of NL Hydro’s power system? Will it be allowed to review and approve the power rates to be charged by NL Hydro and those charged to it for the periodic transfer of power from the hydrogen/ammonia project?
As with any major project where new concepts and technologies come into play, there are many unknown aspects regarding the design, planning, oversight, financing, markets, and long-term viability for this type of project. The prominence of wind energy in the media suggests that there will be many proponents and therefore serious competition. Will the province seek independent expert advice to help it understand the considerable risks attendant with major capital projects of this kind before it gives its consent to proceed?
The province should identify the range of risks, which would include some of the following:
Will the capital markets be willing to supply all required construction financing, over and above the equity investments of the proponents? How will cost overruns be covered, and will the government be required to step in and provide completion guarantees? Will it be the province that will be asked to provide the financial backstop if sufficient funds are not available? Will the province be required to provide blanket exemptions from provincial taxes during construction, as was the case with Churchill Falls (a private company at the time)? Will the province be required to take an equity position in any enterprise as it has done, inexplicably, in our offshore oil industry?
Will projects have long-term energy contracts, inflation adjusted, that will ensure profitability? Will the operations be subject to all provincial taxes, including income tax? Will the companies be required to pay annual royalties to compensate the province for the use of our resources?
These and other questions, as well as those already raised in relation to our environment, need to be asked and answered before the four proposed projects reach the point of no return.
Considering our experience with major projects, the people of the province, most of whom are rate-payers and taxpayers, expect their government to manage the province for their benefit.
The undertaking of independent risk analysis and adequate due diligence would be major steps in that direction.
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