2010-04-25 Privatization of our resources (potash, uranium, electricity, water, knowledge, CBC, VIA Rail). $700,000,000 Natural gas power plant, North Battleford. “likely used for oilsands”
The Government of Saskatchewan is well-advanced in the privatization of a large chunk of Saskatchewan’s electricity supply.
Saskatchewanians were pretty clear during the consultations on the nuclear agenda (Bruce Power – the UDP Report) last summer: we do not want our electricity supply privatized.
Given the historic record (items # 1 and #2 below), we are fools indeed, if we do not get this stopped.
California Governor Gray Davis (2001): “We must face reality: California’s deregulation scheme is a colossal and dangerous failure. It has not lowered consumer prices. And it has not increased supply. In fact, it has resulted in skyrocketing prices, price-gouging, and an unreliable supply of electricity. In short, an energy nightmare . . . we have lost control over our own power. We have surrendered the decisions about where electricity is sold – and for how much – to private companies with only one objective: maximizing unheard-of profits.”
The first step is to spread the word, get the information to people.
1. CALIFORNIA’S EXPERIENCE WITH PRIVATELY-OWNED POWER GENERATION
2. SASKATCHEWAN HISTORY, PRIVATIZATION OF URANIUM & POTASH. EXORBITANT WINDFALLS FOR THE FEW.
3. INITIAL WORK FOR NEW POWER PLANT HAS BEGUN, COMPANY OFFICIAL SAYS , March 26, 2010
“… Balan indicated the power produced by the plant will likely be used for the oilsands and …”
4. NORTHLAND POWER TO BUILD $700 MILLION BASELOAD POWER PLANT IN SASKATCHEWAN, Feb 8, 2010
“ … Under the PPA (Power Purchase Agreement), the project will receive monthly payments that are designed to cover all fixed costs and investment returns. The PPA also provides protection against changes in the market price of natural gas, as fuel costs are passed through to SaskPower. Northland Power will be responsible for operating the plant to achieve specified efficiency and reliability levels. …”
5. CBC, VIA RAIL CONSIDERED FOR AUCTION BLOCK, JUNE 1, 2009
(Federal Conservatives) “ . . . Finance Department documents, obtained by Canwest News Service under the Access to Information Act, reveal that the review will focus on enterprise Crown corporations, which are not financially dependent on parliamentary subsidies. … “ WHICH MEANS that the money-making crown corporations will be privatized. There is more than one way to privatize, as this example of Northland Power, at the provincial level shows.)
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(1) CALIFORNIA’S EXPERIENCE WITH PRIVATELY-OWNED POWER GENERATION
From email sent June 8, 2009
SUBJECT: Nuke: the WHY of nuclear reactors in Saskatchewan and Alberta
From “Why Did California’s Lights Go Out?” by Brendan Martin, 2002
“ . . . when California Governor Gray Davis said (these) words in his 2001 State of the State address, he was not about to tell his electors anything they did not already know. Referring to how the Golden State had lived up to its reputation of way-out fads by partially de-regulating and privatizing its electricity supply, Governor Davis said:
“We must face reality: California’s deregulation scheme is a colossal and dangerous failure. It has not lowered consumer prices. And it has not increased supply. In fact, it has resulted in skyrocketing prices, price-gouging, and an unreliable supply of electricity. In short, an energy nightmare . . . we have lost control over our own power. We have surrendered the decisions about where electricity is sold – and for how much – to private companies with only one objective: maximizing unheard-of profits.”
There is more on the 2000 California electricity disaster at:
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(2) SASKATCHEWAN HISTORY, PRIVATIZATION OF URANIUM & POTASH. EXORBITANT WINDFALLS FOR THE FEW.
Excerpt from email
SENT: June 15, 2009
In 1988 the Conservative Government of Grant Devine privatized the uranium industry. Two crown corporations became Cameco.
In 2007 the CEO of Cameco, Gerald Grandey, received a salary of $950,000 with bonuses amounting to $2,781,058. Cameco paid out over $8,000,000 in bonuses to their top 20 executives ($400,000 each, on average, just in bonuses).
In 1989 the Conservative Government of Grant Devine privatized the potash industry.
In 2007 the top five executives of Potash Corporation of Saskatchewan were paid $32 million, or $6.4 million each on average. Gerald Grandey’s $2.7 million is small potatoes compared to the take of Bill Doyle, CEO of PotashCorp, who cashed in with $17 million. That’s for one year.
You may remember a news story from a couple of years ago: one retiring Vice-President of the Potash Corp cashed in $26 million dollars in stock options. That’s over and above the years of salaries, bonuses and perks.
Remember: the potash company was a crown corporation, it belonged to the people of Saskatchewan. Grant Devine for whom Brad Wall once worked, was the Conservative Premier who transferred both crowns to the private sector. Now we have Brad Wall effectively doing exactly the same thing with the electricity resource, through Northland Power Inc.
The “compensation” paid to the “executives” has everything to do with:
- unfettered access to a public resource
- high commodity prices
- surrounding yourself with people who understand the advantages of the position and
- a lack of accountability such as would have happened, had these two companies remained as crown corporations.
There’s a funny side to it. We know there is a widening gap, that salaries in Saskatchewan society used to be more equitable. We complain when we read Bill Doyle’s and Gerald Grandey’s remuneration packages. And we know that their expense accounts will pick up wining, dining, travel and expensive hotels. The funny side is that WE are the ones who let it all happen!
Anyhow, so you see the picture. Privatize a public resource and a small number of people get very rich. … okay honey, so what’s the next resource to privatize? Ooooh! Gotta be careful here. Elections in Saskatchewan can be lost over privatization of a “crown”. You can’t get away with what Grant Devine did and get re-elected.
(INSERT: I was wrong! Brad Wall is doing a repeat performance of Grant Devine on the privatization front. And it seems we are also going to have the debt legacy of the Devine Government to deal with again, too.)
The extremely valuable resource, and becoming more so, is electricity, traditionally under the control of a crown corporation.
Earlier emails described the situation in the western U.S.: looming loss of capability for hydro-electric power generation because of falling water levels in Lake Mead and Lake Powell. There is similar bad news for electrical power generation (nuclear) in the southeastern states where falling water levels threaten to shut down the nuclear reactors (just as they would with falling water levels in Saskatchewan as the glaciers disappear).
If only we could privatize electricity we could make a bundle of money. But you can’t touch crown corporation, SaskPower, not if you want to stay in office. Hmmm . . . Never mind, there’s another way. Enter, stage right: Bruce Power. The people of Saskatchewan have to pony up the money to build the reactors, the power transmission lines and so on. But don’t do it through SaskPower, do it through Bruce Power. We’ll have another Cameco and PotashCorp.
(INSERT: I was wrong! The privatization of electricity was not done through Bruce Power. It has been done (almost) through Northland Power.)
As I connect the dots . . . economies are based on products. Fish in the Maritimes, wheat in Saskatchewan, an oil-based economy in Alberta. Natural resources like potash and uranium. If you can gain control of the resource you can make money, at least until the resource runs out locally. At which point you look around the globe for more of that resource, so you can keep making money. The resource becomes more valuable with resource depletion, as the electricity example shows so vividly. Or, as in the case of diamonds, if you can control the supply you can dictate the price.
Take it a step further. We are well acquainted with the battles over corporate efforts to privatize the water resource, making it into a saleable, money-making product. Recent emails have discussed electricity in these same terms. . . . but what’s the “new economy”?
Read about it in the financial pages of the newspaper. It’s a “knowledge-based economy”. You turn knowledge into a product. The next step, as in the potash and uranium example – – you have to move the product out from under public control.
Now we’re talking about the university.
What’s the blueprint for privatizing a university (or any resource)? As with potash and uranium (INSERT: and electricity and water) you have to get the cooperation of the Government:
- Cut backs on government spending on the university or the Crown Corporation or the Government Department. This is an Essential first step.
- Then Oh! The only thing left for the University/Crown Corp/Govt Dept is to seek dependence on corporations.
- How unfortunate.
It takes a while but the process is already well underway.
- The Conservatives did it once with Cameco.
- The Conservatives did it a second time with PotashCorp.
- We don’t need to repeat the mistake a third time! We must have a public policy that says the electricity resource REMAINS firmly in public hands, the same as the water resource. No privatization. Bruce Power needs to be run out of the Province, as far as I am concerned. (INSERT: I THINK we managed to do that – – )
- There is sufficient evidence to show that we have some work to do at the University, too. There should be no doubt that the knowledge base remains firmly in the public sphere, under public control, with no tampering or encroachments by industry. Bastardized information is detrimental to the public good. It’s actually dangerous because it leads to bad decisions. It’s time to stop the process at the University, which would be a 4th coup.
INSERT: Change in plans – – electricity takes priority for the moment!
Please get the word to business people. They often have VERY LARGE BILLS for electricity. Many business owners will remember the fiasco in California in 2000. We are all very naïve if we think that the same thing won’t happen here. /Sandra
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3. INITIAL WORK FOR NEW POWER PLANT HAS BEGUN, COMPANY OFFICIAL SAYS , March 26, 2010
(Link no longer valid) http://battlefords.powerflyers.com/BATTLEFORDSDAILYNEWS/tabid/109/articleType/ArticleView/articleId/489/PageID/1518/Friday-March-26-2010-News.aspx
Initial work for new power plant has begun, company official says By Doug Collie, Editor The initial steps toward construction of a $700 million power plant to be built near Brada, just east of the Battlefords, have already begun, says Northland Power Inc. Director of Communications Boris Balan. “They’ve already started in the RM (of North Battleford) to upgrade the road to the site,” he said during a luncheon at the Battlefords Chamber of Commerce building Thursday. “It’s very exciting to see things starting already.” Toronto-based Northland, the city of North Battleford and SaskPower announced in February that Northland plans to build a $700 million power plant at Brada, to produce 261 megawatts of power. It has a 20-year contract to sell that power to the Crown utility. The plant should boost local businesses, Balan said, as the general contractor will need lots of supplies, and it makes sense to obtain them locally. Balan said construction of the plant is expected to begin this spring and be completed in late summer or fall of 2013. The plant will be operational around that time. Once it’s up and running the plant is expected to employ 22 or 23 people. It will operate 24 hours a day, seven days a week. Balan described those jobs as “good paying” jobs. It will be located right behind the Brada substation. Balan says the company has an agreement with the landowner to buy the land. Balan said the company plans to begin work on the plant in April or May this year, as soon as weather permits. He confirmed earlier predictions that it will take about three years to build the 261-megawatt plant, and during its peak of construction, 400 to 500 people will be working on the site. There are 600 people building another similar plant in Ontario, but Balan said there likely won’t be quite that many people building the Brada plant.
He encouraged local businesses to visit the contractor during Northland’s open house, held Thursday at the Don Ross Centre. He said the company will need lots of electricians and pipefitters as the plant is built. Balan told Chamber First Vice-President Scott Campbell that the plant is expected to have a 30-40-year life before it will need upgrades. Balan said the 261 megawatts produced by the plant would provide enough power for 100,000 homes. He said it works out to nearly 10 per cent of the total amount of power currently produced across the province by or for SaskPower. Balan said Northland Power was created in the 1980s when the Ontario government allowed private companies to get into the power production business. Since then they’ve set up and/or own power plants from various parts of Ontario to the Washington D.C. area. They’ve built and operated everything from gas turbine plants like the one being built at Brada, to biomass plants and windfarms. He said they came to Saskatchewan because he was sure there was an opportuntity to build plants and make money in Saskatchewan’s booming economy. “You have an economy you should be proud of and the rest of the country should be jealous of,” he said. Balan indicated the power produced by the plant will likely be used for the oilsands and mining projects up north, but that’s not up to Northland, they simply sell the power they produce to SaskPower and the Crown utility decides where it will be utilized. Balan said Northland was one of eight or nine companies bidding on the project to build a power plant. He said he started coming here last spring/summer to work on the project, working out the details of the bid and scouting locations for a plant. Balan said the plant will be extra efficient as it will use steam from water piped in to cool turbines to, in turn, run turbines and create more electricity. As reported previously in the Daily News, water from the city’s sewage treatment plant in the east end of the city will be used for those cooling processes. Balan said originally company officials had planned to use water from the North Saskatchewan River but it simply doesn’t have enough water. Balan stressed Northland will cover the cost of building and operating the plant. He said what makes it attractive for SaskPower is that they produce the power and “we give them a guarantee on the efficiency of the plant.” Balan said the R.M. of North Battleford and the city were “extremely helpful and extremely supportive.” North Battleford Mayor Ian Hamilton welcomed Balan and the news he brought regarding the power plant. “I’m excited by what I’m hearing,” he said. “It’s really good news for North Battleford.” Hamilton said even though the plant is being built at Brada, it’s close enough to the Battlefords that lots of supplies for it will likely be bought in the city. He repeated earlier observations that the Battlefords are expected to see more than $1 billion in construction activity in the commmunity in 2010. That figure is arrived at by calculating the cost of the Northland plant, the SaskPower peak power plant being built in the city’s industrial park as well as construction expected to begin on other projects this year, like the multiplex. “That’s a number that’s unheralded before,” Hamilton said. Battleford Mayor Chris Odishaw described the news from Balan as “fabulous.” “It’ll be great for all service industries, the casino, the hotels, electrical,” he said. Odishaw said it will also confirm the Battlefords as the logical jumping off point for oil and gas businesses developing projects in the Northwest. He said the community “is the place to be” thanks to its strategic location on Highways 16 and 4 and the CN rail line.
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4. NORTHLAND POWER TO BUILD $700 MILLION BASELOAD POWER PLANT IN SASKATCHEWAN
(Link no longer valid) http://ca.news.finance.yahoo.com/s/08022010/28/link-f-ccnmatthews-northland-power-build-700-million-baseload-power-plant.html
Northland Power to Build $700 Million Baseload Power Plant in Saskatchewan
Mon Feb 8, 8:55 AM
TORONTO, ONTARIO–(Marketwire – Feb. 8, 2010) – Northland Power Income Fund (the “Fund”) (TSX: NPI-UN.TO)(TSX: NPI-DB.TO)(TSX: NPI-DB.A.TO) announced today that a wholly-owned subsidiary has entered into a 20-year Power Purchase Agreement (PPA) with the Saskatchewan Power Corporation to build and own a new natural-gas-fired power plant to provide baseload power to the Saskatchewan energy system.
The 261 megawatt natural-gas-fired combined cycle plant will be built near North Battleford, Saskatchewan, about 150 km north-west of Saskatoon. All power produced by the plant will be sold under the PPA to SaskPower. The plant will use a General Electric gas turbine with associated heat recovery and a steam turbine to produce the electricity. Construction is expected to begin in July 2010, and the plant is scheduled to begin commercial operations in 2013. The total cost of the project is budgeted at approximately $700 million.
“We are very pleased that SaskPower has again shown its confidence in Northland Power and selected us as their partner to help meet their needs for reliable generation capacity”, said John Brace, CEO of the Fund. “With construction of our peaking plant near Spy Hill to begin in the spring, this will further strengthen our presence in Saskatchewan and allow us to participate in the province’s continued growth. We are very confident that the North Battleford facility, modeled closely on our cogeneration plant that is about to begin commercial operations in Thorold, Ontario, will satisfy SaskPower’s requirements in an efficient and economical manner.”
Under the PPA, the project will receive monthly payments that are designed to cover all fixed costs and investment returns. The PPA also provides protection against changes in the market price of natural gas, as fuel costs are passed through to SaskPower. Northland Power will be responsible for operating the plant to achieve specified efficiency and reliability levels. The contractual structure of the project is designed to ensure predictable, stable and sustainable cash flows over the entire 20-year term of the PPA. The Fund intends to finance the project largely using non-recourse project debt, its line of credit and cash on hand.
The North Battleford project is one of the greenfield development projects acquired by the Fund through its July 2009 merger with Northland Power Inc. The Fund will continue to develop the assets in the portfolio, as well as looking to add new ‘Clean and Green’ acquisitions and projects.
In other developments, the Fund has concluded arrangements with its banking syndicate to increase its committed line of credit available for investments and acquisitions to $130 million.
ABOUT THE FUND
Northland Power Income Fund is a Canadian income trust that has ownership or economic interests in 10 power projects totaling over 1,100 megawatts (“MWs”) (net 872 MWs). The Fund’s assets comprise natural-gas-fired plants which efficiently and cleanly produce electricity and steam as well as facilities generating renewable energy from wind and biomass. Sales are made almost entirely under long-term contracts with a current average duration of 14 years. The Fund’s plants are located in Canada, the United States and Germany. In addition, the Fund’s 86 MW Spy Hill project and the 261 MW North Battleford facility are in advanced stages of development. The Fund also has a diverse development portfolio of high-quality ‘Clean and Green’ energy projects, including wind, solar, natural gas, and hydro assets that supports the Fund’s strategy of sustainable growth primarily through internally developed opportunities.
The Fund’s trust units and two series of convertible debentures, which trade on the Toronto Stock Exchange under the symbols NPI.UN, NPI.DB and NPI.DB.A respectively, are qualified investments for RRSPs and DPSPs under the Canadian Income Tax Act. The Fund has in place a distribution re-investment plan that allows Unitholders who are residents of Canada to automatically have their monthly cash distributions reinvested in additional units. Participants do not pay any costs associated with the plan, including brokerage commissions. For further information or to join the plan, contact your financial advisor or broker.
John Brace Northland Power Income Fund President & Chief Executive Officer 416-962-6262 x 115
Boris Balan Northland Power Income Fund Director, Communications & Business Development 416-962-6262 x 116
Barb Bokla Northland Power Income Fund Manager, Investor Relations 416-962-6262 x 156 416-962-6266 (FAX) info@NPIFund.com www.NPIFund.com
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5. CBC, VIA RAIL CONSIDERED FOR AUCTION BLOCK, JUNE 1, 2009
(Link no longer valid) http://www2.canada.com/news/rail+considered+auction+block+documents/1652330/story.html?id=1652330
CBC, VIA Rail considered for auction block: Documents
Andrew Mayeda, Canwest News Service
Published: Monday, June 01, 2009
OTTAWA – The federal Department of Finance has flagged several prominent Crown corporations as “not self-sustaining,” including the CBC, VIA Rail and the National Arts Centre, and has identified them as entities that could be sold as part of the government’s asset review, newly released documents show.
In its fiscal update last November, the government announced that it would launch a review of its Crown assets, including so-called enterprise Crown corporations, real estate and “other holdings.”
Finance Department documents, obtained by Canwest News Service under the Access to Information Act, reveal that the review will focus on enterprise Crown corporations, which are not financially dependent on parliamentary subsidies. Such corporations include the Royal Canadian Mint and Ridley Terminals, which is a coal-shipping terminal in Prince Rupert, B.C.
But the documents also reveal that the government will consider privatizing Crown corporations that require public subsidies to stay afloat.
“The reviews will also examine other holdings in which the government competes directly with private enterprises, earn income from property or performs a commercial activity,” states a Finance briefing note dated Dec. 2, 2008. “It includes Crown corporations that are not self-sustaining even though they are of a commercial nature.”
In the briefing note, the Finance Department identifies nine Crown corporations that fall in that category, including Atomic Energy of Canada Ltd., the CBC and VIA Rail.
The government announced last week that it will split AECL in two and seek private-sector investors for the Crown corporation’s CANDU nuclear-reactor business.
The Crown asset review comes as the government struggles to contain the country’s deficit, now expected to top $50 billion this year. The Jan. 27 budget assumes that the government will be able to raise as much as $4 billion through asset sales by the end of March 2010.
The budget identified four federal departments whose Crown assets are being reviewed first: Finance, Indian and Northern Affairs, Natural Resources, and Transport and Infrastructure. VIA Rail is overseen by the Transport Department, while the CBC and the National Arts Centre fall under the portfolio of the Canadian Heritage department.
The Finance Department documents confirm that all government assets will eventually be reviewed.
Privatizations tend to work well when Crown corporations enter a reasonably competitive market with a good chance of turning a profit, said Aidan Vining, a professor of business and government relations at Simon Fraser University. Unlike successfully privatized firms such as Canadian National Railway, it’s not clear that CBC and VIA Rail could operate as profitable ventures while maintaining the public mandates they provided as Crown corporations, he noted.
“They’re not the classic privatization candidates, where you sell and walk away,” said Vining, an expert in Crown corporation privatizations. “Unless, of course, you’re prepared to fully withdraw from the public purpose (of the Crown corporation).”
Certainly, the sale of a flagship Crown asset such as the CBC would be politically controversial. After the CBC announced this spring that it would lay off hundreds of employees, opposition critics accused the government of turning a cold shoulder to the public broadcaster’s struggles.
Under the Financial Administration Act, Parliament would have to approve the privatization of any Crown corporation. “It’s hard to believe that some of these sales would go forward in a minority Parliament,” said Vining.
The Finance Department has also begun to examine the government’s vast real-estate portfolio, which includes 31 million hectares of land, and more than 46,000 buildings totalling 103 million square metres – more than double the office space available in the Greater Toronto Area, according to the Finance documents. The government’s holdings are worth at least $17 billion, Finance officials estimate.
A briefing note labelled “secret” said that the Department of Indian and Northern Affairs acquired $7 million in surplus properties between 1998 and 2006 for potential use in land-claims deals. Over the same period, the properties cost $2 million to maintain. Divesting such properties could not only generate revenue for the government, but also cut “ongoing operations and maintenance costs,” states the briefing note.
A Finance Department spokeswoman said the asset review won’t necessarily lead to sales in all cases.
“Reviews will assess whether value could be created through changes to the assets’ structure and ownership, and report on a wide set of options including the status quo, amendments to current mandates or governance,” department spokeswoman Stephanie Rubec said in an e-mail. “In some cases, it may be concluded that selling an asset to a private sector entity may generate more economic activity and deliver greater value to taxpayers.”
Crown corporations identified by the government as “not self-sustaining”:
(Company name, commercial revenues, parliamentary subsidy, expenses)
Atomic Energy of Canada Ltd., $614.2 million, $285.3 million, $1.3 billion
CBC, $565.5 million, $1.1 billion, $1.7 billion
Cape Breton Development Corp., $5.1 million, $60 million, $94.1 million
Federal Bridge Corp. Ltd., $14.6 million, $31.0 million, $42.9 million
National Arts Centre Corp., $26.0 million, $40.6 million, $65.7 million
Old Port of Montreal Corp., $16.7 million, $15.1 million, $32.0 million
Parc Downsview Park Inc., not available, not available, not available
VIA Rail Canada Inc., $293.9 million, $266.2 million, $505.5 million
Source: Department of Finance, Public Accounts of Canada
Note: Financial results are for 2007-08
From: John Clark
Sent: Sunday, April 25, 2010 10:31 PM
To: ‘Sandra Finley’
Subject: RE: TOP PRIORITY Our power supply privatized & Tar Sands: $700,000,000 Natural gas power plant, North Battleford
The Alberta experience by a Conservative Government:
They separated the generation from the transmission by law.
If a company owned both the generation and the transmission one or the other had to be sold off.
Most generation and transmission was owned by the same party; Government with the exception of Genesee which was owned by the city of Edmonton.
Power was dived up and sold off as “PPAs” Power Purchase Agreements. In the course of the first 3 months of this some of the PPAs were flipped as many as three times, each time pumping up the price of the utility while the insiders pocketed the difference. Who bid what for the PPAs and who finally got them was never disclosed; all done behind closed doors, in secret.
The City of Edmonton sold of Genesee by privatizing EPCOR. The City of Edmonton still controls the board of EPCOR.
ENMAX fell into the hands of Calgary.
The power lines were sold to a US company who still operates them. They were given the power lines at a price of less than 1 cent per dollar of value. At the time it was reported 60 millions of dollars was given away.
This put us into the realm of indirect taxation in a very big way. Prices were ramped up.
Now the cities and municipalities can charge whatever they want for power water and sewage. There are no controls.
The Government of Alberta claims the lowest taxes in Canada.
When considered how much we pay in indirect taxes now I would expect Alberta is the Highest Taxed province in Canada.
search “electricity” and/or “power”
Sent: Sunday, April 25, 2010 10:10 PM
To: Sandra Finley
Subject: Re: TOP PRIORITY Our power supply privatized & Tar Sands: $700,000,000 Natural gas power plant, North Battleford
I am astonished at the amount of work you do.
Sorry I did not get to your trial on March 16th but wound up being away then.
Maybe we could meet for coffee some time.