FrancoFrenette.com

I’m against the sale as proposed

Here is the MOU for the proposed deal.

First let me start by saying that this is the first time I feel compelled to take a strong stance in any political issue. This stance is not motivated by political preference, in fact when I vote, I vote based on the ideas proposed, not the political party of the candidate. I’ve voted for Liberals, PC, and NDP in the past.

It’s not personal against Shawn Graham even if it’s hard to remain indifferent to someone who outright lies in your face and has the nerve to try and sell you those lies as truth with your own money. Prior to this issue however, I thought Shawn Graham did an ok Job… he took difficult decisions that seemed to be geared towards the greater good of New-Brunswick.

That changed when he decided to negotiate secretly with Quebec & Hydro Quebec leaders to sell the greatest asset that New-Brunswickers have in their name.

My stance on this issue is not an emotional response. In fact when I first heard Shawn Graham describe the deal and the benefits like lower rates, elimination of provincial debt, retention of regulations and rate increase protection… I was almost sold. Then, I read the MOU and did some research and found out all the selling points that got me thinking “hmm, maybe it is a good deal” were all debunked… turns out it’s all untrue, it’s not as good a deal as it might appear on the surface.

Let me outline each reason why I’m against this proposed deal (for the record, let me re-state that I’m not against ever selling NB Power to another Crown corporation or even to the private sector… but it has to make SENSE).

1) This government does NOT have the mandate to sell NB Power.

That’s the whole point of a democracy isn’t, to get to vote for who we believe will represent us to make the good decisions on important issues? I understand that it’s sometimes impossible for government to predict the future and that they have to deviate from the electoral promises, however when it’s a big issue that affects the rest of the population forever in the future and you got elected because of a specific stance you took on this important issue, you can’t change your mind unless the people that elected you agree with you.

You’re merely a representative of the people. If you’re going to do the opposite of what they elected you to do, you have to check with them to see if they agree with you. Let the democratic process decide, not your personal opinion – there’s too much at stake to rely on the personal opinion of a few. Instead we should rely on the opinion of experts to get FACTS and then let the people make a decision based on those FACTS.

The stance they got elected for: (please read page 16 of the 2006 liberal electoral pamphlet “Charter for Change – Shawn Graham’s plan for a better New Brunswick” )

1) The people of New Brunswick are the shareholders of NB Power.
2) Maintain NB Power as a publicly-owned utility that will serve all New Brunswickers equally. (please note the emphasis with the text in bold, that’s their emphasis from their own pamphlet, not mine)

Now a few weeks ago we learn that they have been negotiating  behind closed doors for quite a while on a deal to sell. Members of his own party are frustrated by this change of stance as they know it will make it hard for them to earn votes in next Septembers’ election if they stay with this party.

At their biennial policy convention in Fredericton last Saturday November 14th 2009, One fellow delegate pointed out that Graham had promised during the 2006 campaign not to privatize the utility. His simple reply: “I changed my mind.” (source: Canadian Press Via Yahoo News)

I say that if you want to change your mind on such a critical issue that got you elected in the first place, you should then let the people go to the polls to see if they change their mind in having you represent them on this issue.

2) This does NOT reduce the province’s NET Debt or make any economic sense whatsoever

One of the biggest selling points Shawn makes for this deal is that it will represent the biggest payment in history on the province’s debt. He mentions that it will represent paying off 40% of the province’s debt. And so, it would help our credit rating and allow the province more financial power to invest in other important provincial sectors.

The problem here is that it’s all false! NB Power’s debt is self-served. NB Power pays down its own debt. What this means is that paying off that debt will NOT help the province’s financial position AT ALL. In fact, it will actually Worsen it! We will be getting rid of a profitable asset (2008-2009 income statement) (nice overview by CEO in letter to staff) to pay of a debt that is already getting paid down by this asset . NB Power has disbursed around $100 million per year for the past 5 years in profits, taxes and fees to the provincial government. Money the province will stop receiving after the sale (because Hydro Quebec will not be paying taxes to New-Brunswick) and will have to recoup elsewhere by either cutting other services, increasing the provincial net debt or finding other ways to generate that money (like perhaps increase taxes?).

The New-Brunswick Auditor General shares this opinion:

3) There’s no financial benefit to residential & small businesses customers

The second big selling point Graham mentions is that residential customers will receive big savings. He says that of the anticipated 5 billion in savings (more on that below), residential customers will be receiving over 60% of the savings. Yay, sounds good doesn’t it? It would sound better if it were actually true and not some imaginary figure he must have dreamed up. In reality small businesses and residential customers will only be receiving about 21% combined while Industry will receive around 79%. Hmm, could it be that Industry influenced or encouraged this deal to happen? Even if that’s not true, I’m not sure why he lies to people to make this deal sound like a good thing for them. In actuality there is NO immediate savings. There is just savings IF Shawn Graham can effectively predict the future and if he does then I’d like to get his opinion on a few stocks.

The savings are not even real savings. There would actually be NO rate reduction for NB residential & small business. Read that again- None. The “savings” they speak of are based on a 5 year rate freeze (while industry get a reduction to what Hydro Quebec Industry customers pay). You only save with a rate freeze IF rates would go up. How can he predict it will go up with certainty? And even if it does go up, we’re not really saving all that much. Then after 5 years what happens? We have a foreign company controlling our rates. If you thought government was doing a poor job regulating rates when THEY were the shareholder, then just imagine how good a job they’ll be doing when it’s actually owned by someone else.

In fact, if our government had even ASKED that we pay the same rate as Hydro Quebec customers pay (representing a REAL saving of around 30% of our current rates) my guess is that they would have accepted. But he never even TRIED to make that part of the deal. So who is he REALLY doing this deal for, Industry or everyone else? You decide.

Here’s the CEO of Hydro Quebec on this. Read between the lines and see what he thinks of the great negotiating prowess of our fine government

Here’s a video with similar questions being asked by CBC News (note the avoidance of answering the question of residential rate reduction )

Of course now that the government is seeing that New-Brunswickers are not quite as gullible as they had estimated, they’re already starting to back-track on these promises a bit I’d like to encourage them to continue in that direction. Beep Beep Beep… keep on backing up that big stinky truck all the way back to when you were keeping your promise not to sell out NB Power and maybe your Liberals party will stand a chance to get re-elected again in the future.

4) The deal only makes sense to Hydro Quebec

Quite simply Hydro Quebec would be idiots NOT to take this deal (almost bigger idiots than we are for offering it). Let me explain why I came to this conclusion.

1) We’re selling a PROFITABLE business for the debt it owes -not what it’s worth.

A debt that is currently being paid down by the customers it services (debt interest and capital repayment are built-in our rates).

Now to put this in perspective imagine that you own an apartment building that is producing income for you every month… you use this money to pay your own personal debts and finance a portion of your lifestyle. You’ve owned this building for years so you don’t really know what it’s worth but you know you owe $20,000 on the mortgage. Lately, your own personal debt is getting a little out of control and the income from your apartment building is not enough anymore. So you decide to sell it… before getting it appraised and since you don’t know what it’s worth, you conclude that selling it for the $20,000 you owe on it is great cause you’re going to pay off that debt… PLUS to sweeten the deal, you made the buyer agree to NOT increase the rent for the unit you rent for yourself and live in for the next 5 years.

Does that make any sense at all? First off, why would you sell something that is potentially worth much more than what you owe on it. Secondly, your financial position is worst because you’ve just gotten rid of your income producing asset that was helping you pay down your other debts and live your lifestyle. Also, what happens after the 5 year rent freeze? If I were you, I’d start looking into buying your own house and getting a job, cutting down on your current expenses, begging for money or declaring bankruptcy because if you thought your debt situation was bad then, you’re in for a shock when you realize you made a big mistake in getting rid of an income-producing asset to pay off a self-paying debt and kept the real liability debts

2) We’re giving them NB Power for FREE.

So if we’re paying that debt through our current rates and our rates will stay the same. What are we paying? I’ll tell you – we’re still paying the debt, except it’s Hydro Quebec’s Debt now… so we’ll be paying THEIR debt. Hmm… ok so we’re not really receiving 4.75$billion, we’re just transferring the debt to Hydro Quebec but also paying it for them. Sorry for the language here but there’s no other words to describe it – we’re getting screwed from every side here. New-Brunswickers need to think about this.

We’re giving them NB Power in exchange for assuming the Debt it owes but yet, will continue to pay that debt for them. Read that a few more time and see how you like this deal Back to our apartment building analogy. It’s the same as if I told you I’ll give you my apartment building if you just assume the mortgage. You would be crazy not to take it… the tenants from that building have been paying down that debt and will continue to do so until it’s paid off! You’re getting a building that is going to produce income for you for no money out of pocket. Talk about the deal of the century.

3) It’s NOT a 10 billion dollar deal

That one makes me smile . They keep using the figure 10$ billions, “we’re in the middle of a 10 billion dollar deal here, we can’t put all our cards on the table” Hey, you don’t have any cards left to show, you already showed your middle pair and dealt them a royal flush.

So lets look at where they get that self-gratifying 10$ billion figure. They say we’re getting 4.75$ billion because we’re transferring our debt to them. Fair enough, but where is the other 5.25 billion? Oh, well, that’s the “potential savings into the eternity of the future”. What the hell! Do they really think we’re that dumb. It’s easy to make up numbers for the future and say that rates won’t go up, inflation will not go up and that we’ll be saving in the long run and then make up numbers to go along with this wishful thinking. First of all, you can’t predict the future, no one can and besides if someone could, it wouldn’t be Shawn Graham!

But lets play along with this lala Dreamland scenario for a second but lets put all the figures on the table. Why are they only figuring the money we’d be “saving” to come up with this 10$billion figure? If you’re gonna make up numbers, at least put all the numbers in the equation. How about subtracting the 100$ million per year revenue you’ve been banking from NB Power each year? You won’t be receiving it anymore and I have news for you, even in lala dreamland 100$million / year X infinity = more than 5$billion so let me make up my own number without backing it up since you seem to like to play make believe like that. I predict that inflation will go up higher than you’re predicting it, I predict Hydro Quebec WILL increase rates higher than you’re thinking and I’m subtracting 100$million a year in lost revenue for the next 100 years so I say this is a NEGATIVE 5 billion dollar deal (-5,000,000,000.00). Wow, this is fun, while I’m in lala land, I’m going to go see how much money I’m gonna win from the lottery next week and go hop on Shawn Graham’s orange unicorn and go ask the bank to loan me the money beforehand.

4) We’re giving up our energy infrastructure…

…To another province and the only province that has tried multiple times to separate itself from Canada and become it’s own country. That’s a scary thought. And they don’t really have a good track record of being fair in deals with other provinces in matter of energy. If you’re not familiar with the rotten Churchill Falls deal Newfoundland got stuck in for 65 years then just do a Google search or take a look at this video for an overview of what happened.

Take a look at the warning the premier of that province has for us. If he gives you the impression that he cares more about our future than our own premier, don’t worry, you’re not alone, I get that impression too.

Now I’m not saying they’re going to lock us into any 65 years contract or be unfair in any way to us like they were to them or anything like that, I mean they could be nicer to us because we have a larger population of french people or we’re their buddies or something, never know.

One thing’s for sure though, they have their own agenda. Go figure, they’re not just doing this to help us out. I know, I know… disappointing, here we were thinking they were the good Samaritans helping poor little NB out. No actually it turns out they would like to create a central energy hub and use our favorable geographic position to sell more of its cheap Churchill Falls hydro electric power to the US. That rings a bell actually, not sure why… oh yeah, that was the same thing Shawn Graham promised he’d set up during his term… well if you can’t accomplish it, no reason to let the idea go to waste… let Quebec make the money off our back, at least someone will benefit from that great idea.

Forbes: “Hydro-Quebec sees U.S. growth via NB Power assets”

Montreal Gazette: “New Brunswick is ideally positioned to be an energy hub and Hydro-Québec will develop that potential, Vandal said.”

Canadian Press: “Hydro-Quebec eyeing P.E.I. power deal, weeks after swallowing N.B. utility”

Interesting choice of words “swallowing” isn’t it? It’s easy to see the pattern here.

So if you think this deal is out of the blue, think again. They’ve been planning this energy hub for a long time and they’ve known New-Brunswick is the ideal corridor geographically to deliver that energy.

Of course if we were smart, we’d look at better alternatives to leverage our assets like for example; keeping our assets and lease our transmission lines, effectively increasing profits and paying down that debt faster but it’s much easier to sell the farm to pay what we owe on the pigs isn’t it.

5) The people are opposed

The last reason I’m opposed to this going forward is because the vast majority of people in New-Brunswick are opposed. Since this is a democracy or what’s left of it… the democratic thing to do is to let the people decide.

The government are spending 1$million of tax payer’s money on a propaganda campaign, putting ads on the radio, tv, newspapers and sending out full color brochures by mail, touting the positive benefits (after reading this post, I’ve debunked every false benefit they’ve brought forward). That alone is frustrating enough but what’s more frustrating is when the brainwashing doesn’t work and the people are STILL opposed, they continue to push forward, chalking up the lot of us to a group of emotional people who’ll eventually come around

Just take a look at how many people are at this protest. For a small population of 750,000 people in the middle of the week when people are working to have this type of turn out says it all (estimates are between 1,000 to 2,000 people showed up at this first rally):

Take a look at what people are saying on facebook, this group of people OPPOSED to the sale has amost 25,000 people in it. Don’t get me wrong, there’s still people in NB who think this is a good deal, there’s a group on Facebook for them too here. They’re 28 at time of writing this. 28/25,000 nice ratio.

You can also get a feel for what people think about this by looking at the comments section of any news item discussing this.

You can also just look at the website the government setup called “lower Rates NB” in the section “Join the conversation” to see what people think of this deal. (btw, I think that’s an interesting choice for a name. They could have called it something neutral like “NB power Sale” but that would against they’re propaganda / brainwashing strategy)

What do you think about this deal or the points I discussed in this post? Agree? Disagree? If any politician read this, I’d love for you to contribute to the dialog, just leave your comments bellow.