What the new Atlantic Accord deal says and does not say

The renewed Atlantic Accord which Premier Dwight Ball and federal Indigenous Services Minister Seamus O'Regan unveiled at the Sheraton Hotel on April 1 landed just in time for the Newfoundland and Labrador election season.

The symbolism of holding the event on the anniversary of Newfoundland's entry into Canada, not to mention in the very ballroom where then Premier Brian Peckford and Prime Minister Brian Mulroney signed the original Atlantic Accord, was meticulously orchestrated.

The original 1985 deal an election promise extracted from Mulroney after a battle royalover offshore profitsharing was indeed a landmark agreement.

It guaranteed the province control over its offshore industry and that it would be the principal beneficiary of those resources forever. It is a seminal agreement that has afforded fiscal and social benefits that would have been otherwise out of reach.

Paid from ownership stake in Hibernia

The deal that Ball and O'Regan announced is a five-page agreement six if you count the page signed by Ball and federal Finance Minister Bill Morneau called the Hibernia Dividend Backed Annuity Agreement. It isworth $2.5 billion to the provincial treasury.

Sixty per cent of that money is what's called "front-end loaded," which means the province will receive it by 2030. This is new money that comes from Ottawa's 8.5 per cent stake in the Hibernia project, paid out in annual instalments over 38 years.

To understand this deal, it is important to differentiate between this legally binding, $2.5-billion Hibernia Dividend Backed Annuity Agreement and the accompanying news release that refers to "rate mitigation" because the two are being conflated.

In plain language, "rate mitigation" means your electricity bills will not increase dramatically when theoverbudget Muskrat Falls hydroelectric megaproject comes fully online in 2021.

In the Hibernia Dividend Backed Annuity Agreement which is being billed as the "new Atlantic Accord" there is no mention of how to make electricity cheaper for ratepayers.

The news release does say there is a "federal commitment to further engage with Newfoundland and Labrador to expeditiously examine the financial structure of the Muskrat Falls Project, so that the province can achieve rate mitigation."

But a news release is not a legally binding document.

No timeline, no dollar figure

What this province got from Ottawa on offsetting power rates is simply a promise not uncommon in election season and it contains no timeline or dollar figure to indicate how cheaper power to the consumer is to be achieved.

The provincial Liberals have made an election promise to stabilize electricity rates at 13.5 cents per kilowatt-hour.

• What's the deal with Muskrat Falls? Answers to a few frequently asked questions

They have calculated the cost of rate mitigation at $726 million, but their calculations, once all the savings are tallied, puts them $200 million short.

They are looking to Ottawa to fill the financial shortfall so that can keep their promise to offset how much you pay on your power bills.

In this week's leaders' debate, Ball said, "Ottawa has already committed that they would actively negotiate or discuss that option with us."

He went on to say, "This is about changing the fundamentals of the financing arrangement."

How, when and if $200 million can be found to alleviate the burden of increasing power rates, it is clearly not written into the new Hibernia agreement.

The federal Liberals may well be committed to helping ratepayers deal with offsetting the crippling cost of the Muskrat Falls project, now estimated at $12.7 billion.

Morneau came to St. John's, where he privately met Ball for two hours on April 5. No joint statement or news release of any kind followed that meeting, not even the customary photo op.

When the CBC's Katie Breen wrangled Morneau in the lobby of Confederation Building, he gave brief boilerplate comments about collaboration, but directed any further questions to Ball.

Previously, O'Regan who is Newfoundland and Labrador's federal cabinet representative had given public assurances that the federal Liberals were looking "under the hood" on rate mitigation.

But none of this makes the $200 million the province needs real.

In a year with both federal and provincial elections, it's anyone's guess what the political landscape will look like by year's end.

Governments may change, be reduced to minorities, or simply find themselves unable or unwilling to keep a $200-million promise.

Unlike the new Hibernia agreement revealed in that auspicious St. John's ballroom, there is nothing in that deal that binds anyone to anything on rate mitigation.

Lessons learned the hard way

When it comes to the precarious nature of election promises, Newfoundlanders and Labradorians should have learned the hard way by now.

Rewind to the high-profile fight between then-Tory premier Danny Williams and Ottawa for a reminder about how excruciating extracting promises from Ottawa can be, even when your political cousins are in power.

Williams threw tantrums, tore down flags, and in 2007 embarked on an ABC Anyone But Conservative campaign.

In the years since this retaliation against Conservative Prime Minister Stephen Harper for reneging on his election promise to shelter the province's oil royalties from equalization, only one federal Conservative (Peter Penashue in Labrador, in 2011) has been elected in this province.

Those issues that industry did expect to see some improvements on in a renegotiated in Atlantic Accord have been punted down the field for up to two more years: joint management of land tenure, worker safety, regulatory efficiency and regulatory modernization.

These concepts are crucial aspects of the Atlantic Accord and have a material impact in the future direction of the province's energy sector.

In this agreement, there is a promise to strengthen them. But that is the extent of it.

So, unlike the Hibernia Dividend Backed Annuity Agreement, which is binding on both and subject to an independent dispute-settlement mechanism, rate mitigation is merely a promise at this stage.

Full stop.

When government officials who briefed reporters were asked why there was any reference to electricity rate mitigation in the agreement at all, they were told: "Ask the politicians."

What we have now is a promise from federal Liberals seeking re-election in the fall, to provincial Liberals seeking re-election on May 16.

By no means does that put $200 million in the bank.

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