A Case Study in Unbridled Spin: the BC Liberals and the Fortis-Heco LNG Deal.

On May 19, 2016 with great fanfare, Fortis and the BC Liberals announced that Fortis had signed a 20 year agreement to supply Hawaii with LNG via Fortis’s expanded LNG facility on Tilbury Island in Delta.  The agreement was subsequently touted on social media by the BC Liberals at the time, including Premier Christy Clark, as being a done deal (see below).Done Deal

Ashton

and was accompanied by several very, very fancy info graphics (ignoring the climatic effects of fracking of course) (see below).

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As is now customary with any announcement from the BC Liberals these days, then the usual group of serial retweeters (see the great Justin McElroy article on the use of social media by BC Liberal MLAs (or BC Liberal MLA twitter retweetbots as I like to call them) began spreading the good word (again without any sort of qualification).

Serial Retweeters

Serial 2

Then various op-ed posts started appearing such the Vancouver Sun piece by Greg D’Avignon, noted cheerleader for the BC Liberals and President and Chief Executive Officer of the Business Council of British Columbia, trumpeting the Fortis supply deal as effectively a done deal (“finalizing an arrangement” is hardly a sincere measured qualification), suggesting that the Fortis-Heco deal as well as the recent Woodfibre-Guangzhou MOU Announcement (well MOU re-announcement for political reasons during the recent trade junket really if truth be told) were “good for jobs, economy, climate” as the title of the article indicated and that:

“The recent agreements reached to sell B.C. LNG will create more long-term jobs, businesses and services in the province and spur economic development that will sustain local communities.”

So what was it with all the unbridled, exuberant, highly-politicized Boosterism you may ask?

Well you have to remember that all this was taking place (as identified by Bob Mackin) within a context in which bureaucrats and BC Liberal MLAs were searching for something, anything positive to say about the failing LNG dream in B.C.  The dream that was touted so forcefully by the BC Liberals during the last election and in their 2013 throne speech was still alive (on life support really) and there very little to show for it.  In fact, to date no final investment decisions had been made at all meaning that the Fortis deal was at least for the immediate moment, essentially all they really had.

Should the BC Liberals have been a bit more subdued and measured in their announcements concerning the Fortis LNG deal?  Well as it turns out yes, as events recently played out have shown.

First of all, as with anything and with any major corporate deal, the devil is in the details, and while there was some tacit admissions in select news releases at the time that the deal was contingent on regulatory approval in Hawaii and in B.C., what the BC Liberals were not saying at the time (and what was not readily available at the time) was that the actual contract between Fortis and Heco had 13 conditions attached to it with the first and most important condition being that the proposed merger between Heco and Nextera had to happen before the deal could be closed (or at least the condition had to be mutually waved by both parties).

Condition 1

Moreover, even a half-hearted effort at doing some background research regarding the deal and the proposed use of LNG in Hawaii as a transitional fuel would have suggested that the deal itself was unlikely to happen given the numerous forces in Hawaii lined up against the proposed merger including almost all of the interveners in the PUC process including: Life of the Land, Puna Pono Alliance, The Alliance for Solar Choice, Friends of Lanai, County of Hawaii, Hawaii Solar Energy Association, County of Maui, Hawaii Department of Land and Natural Resources, SunEdison, Hawaii Gas, SunPower, Tawhiri Power, Ka Lei Maile Alii Hawaiian Civic Club, Sierra Club, Hawaii Chapter, Blue Planet Foundation, Hawaii Office of Planning, and the Hawaii Consumer Advocate. (see the excellent Ililani Media Webpage for an excellent detailed review of the history of the Heco-Nextera merger saga.).

As well, perhaps they should have acknowledged the statements of the Governor of Hawaii, David Ige, who was  vehemently against the deal and the use of LNG as a transition fuel arguing that “time and energy spent on development of LNG are resources not being spent to get Hawaii closer to its long-term goal of complete reliance on renewable energy sources” by 2045.web1_22-a1-ige1-300x188

In addition, it was well-known at the time that Hawaiian Electric wouldn’t pursue LNG if the merger with Nextera didn’t happen.

So how did it all play out you ask?  Well not so well for Nextera, Fortis, the BC Liberals, and yet another BC LNG project as it turns out.

On July 15, 2016, it was announced that the Hawaiian PUC had voted against the proposed Heco-Nextera merger by a vote of 2-0 (with one newly appointed member of the three person tribunal abstaining).  See the full PUC decision here.

While the termination of the deal was big news in Hawaii and on Wall Street, in Canada and in B.C. specifically, the news and the implication of the merger rejection only inspired an extremely brief news release by Fortis on July 16, 2016 acknowledging that the deal had fallen through and that “all parties are reviewing the decision”.

Fortis announcement

To my knowledge, no BC Liberals at the time even acknowledged that the Fortis LNG deal was in peril, and there was very little if any local mainstream media coverage of the failed merger which very clearly and profoundly affected the very viability of Fortis LNG deal.  Only a few LNG trade web portals noted that the Fortis Hawaiian LNG deal had “run into difficulties”.  Local mediawise, only Bob Mackin and an interested local blogger with too much time on his hands (ahem) seem to be have been following the story closely and with any insight, understanding the implications of the merger rejection.  A couple of days later, on July 18, 2016, the merger between Heco and Nextera was officially terminated effectively killing the Fortis LNG supply deal.

Then yesterday, on July 19, 2016, the apparent final nail in the coffin for the Fortis LNG deal came in the form of an official announcement from Heco (below) stating that they had withdrawn “their applications for approval of a liquefied natural gas contract with Fortis Hawaii Energy Inc, plans to upgrade Kahe Power Plant to use natural gas, and a waiver from competitive bidding to upgrade the plant.”  The formal termination of the agreement (SEC filing) can be found here.  And so yet another BC Liberal LNG project bites the dust.

Release

And what about those long-term jobs, businesses and services in the province, and economic development that will sustain local communities that Mr. D’Avignon was eluding to?  Nope, not happening.  Are the people and State of Hawaii now considered part of the “Forces of No” I wonder?  Not sure.  Have to ask Simreth Grewal, the apparent expert on identifying the “Forces of No” on that one.

One wonders if any of the BC Liberal cheerleaders will even acknowledge that yet another failed BC LNG project has fallen by the wayside.  As is apparent, it is all now seeming like a broken record.  Perhaps it is finally time for the BC Liberals to just move on and admit that it was all a big mistake (not all of their own doing of course as market forces clearly influenced what has happened since the dream of BC LNG and its accompanying windfall was announced), and stop wasting the Province’s time and resources on something that just seemed like a good idea at the time (in 2013) but that is not currently viable now given current market and social conditions.

Prosperity

For a group that so highly touts their business acumen, the BC Liberals appear to have a great deal of trouble acknowledging when they are throwing good money after bad.  The elephant in the room has no clothes as they say (well they do now anyway).

Post Script:  So is this the end of the LNG dream in Hawaii?  Perhaps not. There were/are rumours that Berkshire Hathaway Energy might be interested in purchasing Heco if the Nextera merger was not approved and that Heco might pursue a LNG supply deal on their own.  However given the long-term goals of Hawaii and the expressed opposition to the use of LNG, neither of these events are likely to lead to a reviving of the Fortis supply deal.  It seems that indeed the Fortis deal is indeed dead.

Updated

So Wednesday July 20, 2016 came and went with only a select few MSM articles acknowledging the Fortis LNG supply contract cancellation being published (for example, a Vancouver Sun article and a Business in Vancouver article).  However, it should be noted that these articles mainly dealt with the announcement from a purely business perspective, largely ignoring the political aspects of the cancellation given the past exuberant cheerleading by the Province and the BC Liberals that had taken place previously.

So where were the majority of MSM yesterday?  Dutifully covering the announcement regarding the expansion of human rights legislation to protect transgender people.  Now forgive me for being a little cynical here but wasn’t the timing of the transgender announcement just a little too convenient as a channel changer?  Was it all just a coincidence?  You have to wonder if this wasn’t in the back pocket of the BC Liberals braintrust for a quite a while only to be pulled out when a major channel change was necessary (which losing one of the only last viable LNG projects would most certainly qualify).  BTW, did anyone notice the non-standard signage at the announcement in comparison to most other pressers?

Signage

Compare that to the more standard presser/announcement signage seen here.

proxy

Perhaps because the announcement was a bit rushed? Hmmmm.

You have to wonder if it is possible that the more Conservative elements of the BC Liberal caucus acquiesced to the demands of some of the more Liberal elements of the party and agreed to the announcement purely for the perceived channel changing effect that the announcement could have.  Too far fetched?  Given the past track record of the BC Liberals, their win at all costs mentality (see Triple Delete etc.) and their propensity to view everything through a political lens, I wouldn’t put it past them one bit.  Again, call me cynical but it would fit the general pattern.  If it walks like a duck…

 

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4 thoughts on “A Case Study in Unbridled Spin: the BC Liberals and the Fortis-Heco LNG Deal.

  1. Thanks for this.

    I’ve written letters to the editors of The Sun and Province, two publications that didn’t even whisper of the Fortis fail.

    Readers need to know!

    Like

  2. Update. An earlier search for “Tilbury LNG” didn’t turn up any coverage of this fail in the Sun or Province — but now I see the Province DID run a story on July 19.

    I want to be fair.

    Like

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