Lorraine Michael Question Period (12.12.2012)

MR. SPEAKER: The hon. the Leader of the Third Party.

SOME HON. MEMBERS: Hear, hear!

MS MICHAEL: Thank you very much, Mr. Speaker.

The Minister of Natural Resources said in Question Period yesterday that in regard to Muskrat Falls, there is still a role for the Public Utilities Board, but it will not be the same role as they would otherwise have.

Mr. Speaker, I ask the minister: Will he please tell us in this House today what this role of the PUB in relationship to Muskrat Falls is going to be?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Minister of Natural Resources.

SOME HON. MEMBERS: Hear, hear!

MR. KENNEDY: Thank you, Mr. Speaker.

Section 5.1 of the Electrical Power Control Act outlines circumstances or situations where the government can direct the PUB to take certain actions or to follow direction. Section 5.2 outlines situations where exemptions can be granted, Mr. Speaker, as we have seen in the past with the former government.

Essentially, Mr. Speaker, we will be dealing with this next week and we will be looking at a situation where we do what is best in the public interest. In order to obtain the $1 billion of financing that is coming to us from the federal government, Mr. Speaker, we have to comply with some of the terms that are outlined in the federal loan guarantee.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Leader of the Third Party.

MS MICHAEL: Thank you very much, Mr. Speaker.

Section 5.8 of Bill 53 says Muskrat Falls is exempt from the Public Utilities Act.

Mr. Speaker, the Premier and her Minister of Natural Resources keep insisting that the PUB must have a restricted role in relation to Muskrat Falls because they require a guaranteed revenue stream in order to satisfy the terms of the loan guarantee. The PUB’s mission is to achieve an equitable balance between the interests of consumers and electric utility service providers, among others.

Mr. Speaker, I ask the Premier: Why doesn’t she trust the PUB to do this job in relation to Muskrat Falls as it already does with other corporations?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Minister of Natural Resources.

SOME HON. MEMBERS: Hear, hear!

MR. KENNEDY: Yes, thank you, Mr. Speaker.

It is important when we talk about the PUB, we are talking about a regulatory board, Mr. Speaker. They act upon directions given to them by government that is outlined in legislation. Essentially, Mr. Speaker, they look at various issues as requested by government.

They were requested by government to look at the issue of Muskrat Falls and whether or not it was the lowest-cost option. After $9 million, Mr. Speaker – excuse me, nine months and $2 million – they chose not to offer any advice. That obviously caused concern, Mr. Speaker.

We have a situation with Muskrat Falls where there has to be a guaranteed revenue stream. There is nothing unusual about that in commercial arrangements. Next week we will talk about how we are going to achieve that result while still recognizing the role of the PUB.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Leader of the Third Party.

MS MICHAEL: Thank you, Mr. Speaker.

There are terms and conditions in the federal loan guarantee that cannot be met until after government sanctions the project, which I understand now is not going to be tomorrow. This could mean billions spent before a federal loan guarantee is secured.

Mr. Speaker, I ask the Premier: How much money will government spend before they know whether or not they will qualify for the federal loan guarantee?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Minister of Natural Resources.

SOME HON. MEMBERS: Hear, hear!

MR. KENNEDY: Yes, thank you, Mr. Speaker.

There are terms and conditions in the loan guarantee as there are in any other commercial arrangement or loan guarantee.

Mr. Speaker, the requirements for the federal loan guarantee is that of sanction. We are looking at when and if we can get to that process. However, I have indicated and the Premier has indicated that prior to sanction there will be no further money spent on Muskrat Falls, at least in terms of coming out of my department, Mr. Speaker.

We allowed for money to go to Nalcor a number of months ago to build a road. At this point there has been no further monies come out of the department, Mr. Speaker. After the decision on sanction, when we know we have the loan guarantee based on sanction, that is when the go-ahead will be.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The Leader of the Third Party.

MS MICHAEL: Thank you, Mr. Speaker.

The loan guarantee term sheet stipulates the federal government is to receive regular and thorough financial and operational reports.

Mr. Speaker, I ask the Premier: Will she make these reports public and available to the people of the Province?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Minister of Natural Resources.

SOME HON. MEMBERS: Hear, hear!

MR. KENNEDY: Thank you, Mr. Speaker.

One of the interesting arguments over the last year or two is that we do not have enough oversight in Muskrat Falls. We have SNC-Lavalin up there and it is not enough to have Nalcor oversee them. Mr. Speaker, what we are doing here, we are ensuring financial accountability. The independent engineer, under section 4.9, has to ensure that matters are proceeding in accordance with good utility practice.

So all of this, Mr. Speaker, is meant to ensure that the project is going the way it should go, and the more oversight the better, because it ensures that the people of the Province and, in fact, the people of this country are protected.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The Leader of the Third Party.

MS MICHAEL:Thank you very much, Mr. Speaker.

I am glad the minister mentioned this independent engineer. I wonder then: Could he tell us what is the name of the engineering company to whom this independent engineer belongs?

Mr. Speaker, that person is also supposed to give reports, regular reports as to what he or she finds. So will those reports be made public?

There are two questions there, I am aware, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Minister of Natural Resources.

SOME HON. MEMBERS: Hear, hear!

MR. KENNEDY: Thank you, Mr. Speaker.

I am looking at section 4.9 of the federal loan guarantee there now, which looks at the independent engineer, and it indicates that the independent engineer will represent the guarantor and the lenders. So, obviously, the independent engineer will be appointed by the federal government, Mr. Speaker. Again, that is arm’s length from us. It allows for a degree of oversight, Mr. Speaker.

In terms of the independent engineer, I do not know who it is. We are not even at sanction yet. First, when we get to sanction and the federal loan guarantee kicks in, Mr. Speaker, then the federal government will appoint an engineer, and I am assuming they will publicly disclose it.

Associated Caucus Members: 

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